With advances in technology, digital transformation is finally starting to take hold in the Lean manufacturing sector. While future opportunities look bright, many companies are struggling to identify that first step in their journey. In this webinar presented by the Association for Manufacturing Excellence, Mike Louderback, VP of Operational Excellence at Morgan Technical Ceramics, and Richard Lebovitz, CEO of LeanDNA, cover what, why, and how to use cloud-based analytics built on Lean best practices to drive the first steps of digital transformation in your manufacturing operation.
Darlene King, AME:
Hello, and welcome everyone to today’s Association For Manufacturing Excellence webinar titled, Digital Transformation of Your Lean Manufacturing Enterprise. I am Darlene King the director of administrative services for AME and I will be your moderator. Today’s presenters are Richard Lebovitz and Mike Louderback. Before we start just a couple of housekeeping items you will be in listen only mode throughout the webinar. If you have questions during the webinar, please type them into your question area in the panel and click on submit. We’ll review the questions at the end of today’s presentation and answer as many as we can. Richard and Mike have also graciously agreed to provide a PDF of today’s presentation. We will be sending that along with a recorded link for a webinar replay to each of you next week. Now, I am pleased to introduce Richard and Mike who will present digital transformation of your Lean manufacturing enterprise. Take it away, gentlemen.
Richard Lebovitz, LeanDNA:
Thanks Darlene, my name is Richard Lebovitz, I’m an AME board member, AME awards assessor, and CEO of LeanDNA. I’m pleased to introduce our presenter, Mike Louderback. Mike is currently the VP of Operational Excellence at Morgan Advanced Materials, with past leadership roles at Meggitt, Cobham, Hampson Aerospace, Nexaero, and more. He is a strategic Lean Leader with demonstrated strength in identifying and assessing the engineering operational challenges and opportunities in technical processes resulting in profitable revenue streams and organic growth. Welcome Mike to our webinar.
Mike Louderback, Morgan:
To get started Mike, could you tell us a little bit about Morgan Advanced Materials and why the digital transformation of lean manufacturing is even important?
Yeah, Thanks Richard. Before I jump into that first, thank you. Just a couple of quick bits of context. I’ve been doing this for a lot of years and just wanna make of the general comment that what we’re gonna talk about today is my no means the only way to do things, but we’re gonna chat a little bit of the way I’ve done this, and the way I’ve worked with LeanDNA and Richard.
Also, we’re gonna condense a lot of years of experience and a lot of years of implementing these types of digital transformations into a very short period of time. So inevitably, we will probably miss a few things. So please ask questions.
I’ve been working across a lot of countries, a lot of sites implementing lean over the years. And I’ve always had a passion for technology, particularly when it comes to making our manufacturing, our operations more competitive. It’s always been a challenge to manage consistent systems or production systems across multiple platforms and multiple countries and time zones.
Over those years, a lot of people have been talking about the big data, other industries were using it for years. I think for Lean and for the manufacturing industry, for our industry, we’re finally seeing that big data capability catch up. And now through that big data, we have the ability to really start making what I call, we have the ability to implement factory intelligence and make actionable decisions or provide actual intelligence, called AI.
Okay, very similar to you. I started my career in Lean, and I was working with the Japanese firm for about 25 years, and I remember the push to keep everything on white boards and pencil and paper. In fact, my Japanese partners always felt the need that it was important for people actually walked the floor with those sheets and put them on the board and just kinda touch everything. And jumping ahead, even today that still approach exists in many companies. From your experience, What factors went into your decision to start to digitize your Lean manufacturing enterprise?
There’s a few key pieces that I’ll talk to, and again, I’ll just reiterate that there’s a lot of different ways to come at this. There’s no wrong way, but from my experience, you really need to be moving towards a structured deployment of production systems. And we really lean heavily on strategy at play with our Hoshin to launch into the sites. Like I said before, Morgan in particular has multiple sites across multiple locations. So if you’re in that sort of scenario, that’s a great place to start looking at this.
When you’ve got to track KPIs and you’re trying to track those KPIs and see an actual business impact across all those sites, and you really need an easy way to link the metrics to the performance and then to projects. And then frankly, when you start spending just too much time trying to manage complex Excel sheets, working on Sharepoint files, which have a tendency to get a bit corrupted or working on complex powerpoints, There’s just that point where you’re spending too much time working on formats, and not enough time advancing the projects.
As part of your key transformation. I’ll just say, you really gotta focus on automating metric selection with direct integration to ERP. You wanna try to move away from Excel to online collaborative solutions. That was really one of the big benefits for us. And then that sort of flow of strategy deployment and linking goals to initiatives or projects, to metrics to not only site performance, But right down to individual performance or the whole organization, and then driving a standardized production system and Lean projects across all those sites. When you get to this point, that’s what I think you’re really ready to go.
I’ll just make one other comment we’ve watched over the last couple of years. There’s a generational shift in the generation of operational leaders, we have coming in. They’re very socially social media or mobile device savvy, and where a lot of, us can’t see everyone, but myself, personally, a lot of the folks in leadership positions around me, we grew up doing a lot of this on paper, on Excel sheets on those tools. This next generation just not gonna work that way. They want instant data, they wanna be able to make decisions based on data. And so now when you marry up these sort of things to the ability to actually grab that big data and marry it up with this next generation, the fact that they’re really comfortable with this kind of management, you’ve got some real real advantages here.
Just a follow-up question. When do you think is the right time to start to go digital if you have some interest in it?
Yeah. I’m biased here, so what I’m gonna say is the sooner the better. In today’s industry, and I’ve worked through a few, in today’s environment, there’s a constant challenge on cost, and whether it’s from your customers or from stakeholders, Lean is just, it’s gotta be part of the equation. And I will say that the more savvy or the more educated stakeholders will drive you to it, or the customers will drive you. But either way, there’s a real push to drive our collective costs down. And I think Lean is just a way of doing that and making working and getting to those goals easier.
For us, We’re focused on LeanDNA here, but LeanDNA really improve that daily work, and it helped drive quicker adoption of Lean methodology. And frankly, it also made it easier to track and sustain the game to the end of the day. I just say, go, you wanna go soon as you can and using tools like this, especially if you have multiple sites, you’ll go faster.
Let’s say that you make a commitment and you’ve been doing this and a lot of different companies and you decide you wanna make that commitment to start the digital transformation. There’s so many different options out there, different technologies. From your experience, what are some of the foundational building blocks that you think a company would need to get started?
Yeah, good question, Richard. So there’s two aspects to this. There’s the mechanical or the structural aspect to it, and then there is the human factor of this whole thing.
So I’d say, first, we’re looking at the framework. It really does help if you’ve got a basic operational framework or a production system. It doesn’t have to be a fully developed production system, but you’ve gotta have some of the basic tools and vision to progress your sites through that lean journey. You really have to have established and committed leadership buy-in. And that’s the big part of the human factor side of this. This is not a CI tool you just throw out of the floor, you’ve gotta engage team members. So this has to be to a site-wide cultural shift. And we’ve just found over the years that using things like strategy deployment or Hoshin, it’s a great tool to drive all this.
But I wanna go back to human factor just for a second. What I’m asked this question, how do you guarantee success? The thing I’ll hit on every time is you gotta have committed and passionate leadership. Depending on where you are in your organizations, the CEO, the president, right down to site lead. If they’re not behind this stuff 100%, you’re gonna have a hard time pushing this through. You need to have a culture and team that are open to change and a system to initiate, and then sustain that change. And I’ll just say, as a lean operational leader, my goal was always to make this easier and to be that person leading the charge around the lean journey. And frankly, it’s to clear barriers and sustain the change, things like transitioning to digital systems, it gives me that ability to really track that change.
When all these components are in place, the digital transformation will help you create a broader capability and give you factory intelligence, and that’s something we couldn’t even get until a few years ago to this level.
And so as you started actually then let’s say you made a commitment, you’re starting to work on the transformation. When you joined Morgan and you wanted to put in what you’re calling this factory intelligence, Were there some specific goals that you’re trying to drive to, based on this type of implementation transformation?
Yeah, absolutely. And I’ll say these goals have sort of developed before Morgan and they’ve gotten tighter every time we do this. For Morgan, and again, for other sites, our key goals for digital transformation were really, the top goal was really a consistent and standardized system and a capability across all the sites, and then probably right behind that, or maybe as a result of that, is the ability to improve customer delivery quality and price while improving our bottom line profit.
And I’ll just make a comment here. The customers I’ve dealt with over the last five to 10 years, they really get this at their level. These are multi-billion dollar traded companies. They know how to assess if you’re doing these sort of things. So they’re looking for it.
To accomplish this, we really need it an online real-time metric capability. When you’ve got 20+ sites, you just have to have a consistent way to manage projects and drive actionable intelligence among all those sites. You’ve gotta be able to do that site by site at that cross-site capability. Almost every company I’ve been in has the single challenge to manage inventory and prevent shortages, both from a delivery standpoint and from balancing the right inventory to delivering or converting cash. And you’ve gotta have the ability to standardize all these best practices. You can do that with these types of systems.
So accomplishing this meant we really could law to standardized layered accountability. We run factories through standing daily accountability meetings, and LeanDNA is being used to drive all the above and give access to real time factory intelligence at every level to make the right decisions.
Maybe now, moving a little bit more to some of the examples. You’re starting to begin digital transformation. There’s a lot of things you can do to make these Lean companies even more efficient. So based on your experience, are there some first steps that the organization needs to take and maybe start the foundation for some examples we can walk through that successfully implemented there at Morgan in other sites?
Yeah. We’ve used LeanDNA software, help us driving accelerate line transformation for many years now. Sorry, Richard. Say that question again?
Just in terms of so many examples, and maybe if you want Mike, we can start to move to some of the examples of what you’ve done around digital transformation?
Yeah, let me walk you through some of examples of digitizing lean. I’ll just say, as I mentioned before, organizations need to be ready to do this. Once committed, LeanDNA is very quick to deploy and bridge into our ERP systems for us having multiple year systems, digitizing lean was sort of critical in that we had a common platform to interrogate all of those ERP systems. This was the first time we had something like that. In this case, digitizing lean was really using LeanDNA. In addition, the above we also used LeanDNA, it was sort of my go-to. It really was built by lean experts and it has that feel of lean about it. It might help walk through some of the examples of things we were doing, Richard?
That’d be great, Mike. And I know we’ve talked about this around the control tower, so maybe starting with this would be great for some of the attendees.
Yeah, I’m gonna list a few and then I’m gonna hit on the control tower. So we were able to launch live metrics at different layers of accountability meetings that make a huge difference in talking to the goals. We’ve got to hit at really a daily, weekly cadence. We’ve got live cross site project review capability now, and this was a big one for us live SPC capability to really gauge the health of the whip, running through the factory. Data-driven supply chain and inventory management, really to make actionable decisions. And then really to focus on what you’ve got here, Richard. Live, cross site KPI control towers, to really jump in and assess where we we are with different key metrics and what we had to do to address those.
If you look at this particular control tower, it’s really a standard way for us to look at metrics between business units. Business units have multiple sites. We’ve got value streams within sites and factories, and then driving down all the way to cells. And then, it’s not shown here, but then we have the ability to go cross-factory and compare, say, finance or customer satisfaction at any number of sites to see how we’re tracking as a whole.
We were doing something similar to this in Excel, and I’ll just say it was a full time job at every factory, and it was just a nightmare to control that capability. And really to keep the math consistent, we had folks that would just sort of apply a different rule to how they came up with a metric, and it would just throw off the whole system. We don’t have to do that. Now with this, we focus really on the metric itself as we bridge it out of the ERP systems.
For us, the LeanDNA software was able to integrate into those existing ERP systems and pull that data. We then built this particular tool and some others we’re gonna show you, into the running communication plan that we run through all the sites, and that communication plan really outlines the way sites function operationally from an hour to day to week to monthly sort of cadence. If you look at some of the ones in here, inventory’s a good example, under finance. When we see things start to go red, we’ll start to ask that standard work question around, why is it red and what are we doing to get back to that? And that question is gonna come up at Daily Value Stream meetings, at daily site level meetings, and then at weekly, more intense KPI reviews. And we’ll attack that problem relentlessly, until we can figure out a corrective action. What you’re seeing now is really a set of key goals that we’d link to that inventory metric, key projects, that are all being worked by different project leaders, but all with sort of the common approach coming from different angles to attack, improved inventory and cash conversion. You can see there. We’ve got six different projects that all in different ways are attacking aspects of inventory. All of those get managed by relational database.
Every project we wanted our companies and these projects are the output of intensive. We do strategic yearly meetings around how sites will meet goals that are flowed down, we manage this through strategy deployment or Hoshin. Out of these meetings come a series of actions or projects manage by all different departments. This is an example of a particular project, you’ll see within this project, and it’s hidden here, but you’ve got description, team member, strategic goals, you’re linked to, if you’ve had some experience with X matrices, you gotta lake projects to those goals, target benefits, actual benefits, every project we work, or spending our companies dollars. So we have to tie this back to an ROI. What are we doing to advance key metrics you’ll see at the bottom and then a standard set of tasks that we run through.
The next thing with this set up as we review these on a monthly basis for our comm plan, we can track where events are slipping. You can see where there’s a hash mark through the February 28 day. So that’s an example of a task that slipped. So as we review these in a monthly basis, there’ll be more discussions around what are you doing if you’re not on track and why are things slipping? If projects are on track, we progress through them very quickly, and using LeanDNA gives us the ability. If you go ahead and switch the next slide, Richard?
We take all of our projects and we’ll roll these up into what you’re seeing here is, it’s a project summary for us, a project cash flow, if you will, and it gives us the ability to look at all the projects that are being actively worked for the sites, all the projects that will help us accomplish the five to six strategic goals that we’ve agreed to, and that in most cases, roll up to a broader business unit’s set of strategic goals. And then again, up to any corporate level or an executive level. You can see in this case to the left, you’ve got a graph. The green is the savings goal for the site. The orange shows the total targets savings that have been identified by our improvement teams and projects, and then the blue bars show the actual savings that they realize each month and that we’re forecasting each month. For this particular slide, we’ve got a pipeline of 17 million dollars of targeted savings and projects. Actual savings are 11.3, 39 projects, 23% complete. It also gives myself and the executive team a view on projects as broken down to see in the bottom left hand corner here, quadrant. Projects broken down by, say, supply chain versus production versus finance. And then we can also see the targeted savings by those same groups.
I’ll just sort of comment that the savings were typically going after, the operational or financial improvements we’re going after, are typically a significant amount less than what we’re seeing here. Part of our process is to create a pipeline of greater opportunity, and then to prioritize those pipeline opportunities against those particular items it’ll move the needle faster if you’re looking at different impact versus investment. Right? Richard?
So as we’re talking about projects, we’ve walked you through metrics we’re having issues on to the way we manage different projects or different groupings or projects on those metrics to the way single projects are managed. What you’re seeing here is a classical X Matrix. I’ve been sort of referring to this throughout the presentation. We used to build these again using Excel spreadsheets, Sharepoint, Powerpoint files. What we now have is a fully relational database that has the west, with the key strategic goals. I’m pointing this on my screen. You can’t see it, but it’s the West strategic goals. These are tied to strategic projects in the last page, the 39 projects that I was just talking to, in this case we’re just listing out a few, those then tie, that’s the north. Those tie to the west, which are the key metrics. So you can see what strategic goals are being worked by which projects, and which projects are tied to which metrics. To the far right again, on the west on the compass, you’ll see the individuals that are working the projects and at the bottom, then probably the most critical as you roll around the wheel or the compass, you see the savings were going after and how they link around to all those different projects.
As I talk back to that last slide, I mentioned that every one of those projects is tied to one of these strategic goals. The dots represent, when we look at value stream, SIOP process, it’s linked to the first third and fourth goals, strategic goals for the site. And we develop all projects using Hoshin and strategy deployment starting with these strategic goals. We do that as a group. There’s a lot of different ways to do it, That’s particularly how we do it, but it all gets migrated into this relational database X Matrix. So none of our folks have to deal with Excel spreadsheets or powerpoints. They’re focused almost wholly on. How do you manage the project as you saw on the previous slide? Very nice.
As we think about the project tracking and goals. It’s a little bit backwards looking, How have we done, and it’s obviously really important with the linkages. There’s another area that I know is getting a lot of buzz right now, which is around big data, predictive analytics. Can you walk us through some examples of how you’re using some of these technologies at your companies to kind of improve the business?
Yeah, absolutely. We talked earlier the buzzwords right now, are big data predictive analytics. The reality is, and supply chain is just one example of where data and marrying to customers, MRP requirements and managing the ERP databases is one really particular challenge. I’d love to have you all in the room, but not being able to do that, I’m sure everybody’s dealt with the problem that customers move their MRP all around. It’s a very difficult problem to manage. As we’ve linked with us against LeanDNA, We’ve linked and bridged LeanDNA and our ERP system, we’ve really gotten a chance to look at our customers demands, shifts in the MRP requirements or requests, and it’s given us a really good view of the opportunity versus what we can do if we manage predictively actions around the different supply chain events or actions. And again in the past, Supply Chain Management has been almost wholly backwards looking. And it’s not to say you can’t do this with the Excel spreadsheet, but is the companies grow as you grow from, say, if you happen to be this particular sort of classification, as you move from an entrepreneur business to maybe a larger enterprise or you’re an enterprise business getting bigger, the number of transactions you’ve got to manage in a supply chain database, linked to factory flow and WHIP, and materials and customer, sometimes not so friendly requests, it is daunting. And so working with LeanDNA, we’ve been able to really get a handle on the series of I call it, actionable intelligence or actions to realize the sort of opportunity we’re showing here.
I think the next slide Richard talks to here, you see basically almost a script and an interrogation in the database. It’s looking at that future. It’s looking at the data to the big data, the demand of the customers. It’s really honing in on the opportunities as we were just showing you. And it starts to list out a series of actions that our individual buyers can work to in this particular screen. Again, we’re highlighting the top actions our buyers can take to affect the burn down or opportunity where we’re showing you. As these actions are being completed, you’ll see the green check mark. So these are things they’ve actually worked through checked off, just called another check towards realizing that opportunity, which again, for me, any inventory burn is immediate cash conversion if you manage your receivables. But it also means that we keep our customers on time.
The red dots, these are things that we’re unable to fix now because we can’t fix on this time. They may be locked in contractually. The order may already be here, whatever, it doesn’t mean that we’re not gonna go look at these as we perform formal root cause and corrective action assessments using things like standing accountabilities or different review processes. For us, we review these sort of things daily. So we’ll keep an eye on that red dot and we’ll figure out how to avoid it next time.
And I guess sort of the sum up here having this sort of AI actionable intelligence, it really gives the visibility to allow sites to perform, and again, burn down those inventories to the levels that we all think we need, and we can actually pull those levers within LeanDNA to burn down even more. So you start safe and then you hone in to even those getting down to the buffer stock levels. And for us, again, this is one of the key tools we use in the com plan or communication plan by sites, and in our standing accountability meetings.
Just maybe to transition to the next topic, this is one of the key ways we manage shortages. You see here an example of a line a balance shortage sheet. Now that we have the ability to, again, interrogate vast amounts of data. Again, I gotta emphasize trying to do this with an Excel spreadsheet, or maybe you’re an access whiz, and we tried, but doing this amount of transactions, this amount of just sheer calculations from an ERP system to a database. And I’ll even say we’ve got ERP systems working, but we just couldn’t get this amount of data to drive into actionable intelligence to make sort decisions and algorithm just couldn’t get to. Having this, we’ve now been able to really get a handle of shortages, multiple shortages tie back to dynamic customer changes, MRP changes. And we’ve driven this all the way back into, again, a call it a standing almost daily to… I’m sorry, a standing daily accountability meeting, and so we attack these regularly until that red is calling.
I’ll just tell you as a sort aside every time we do this in a site, but I’ve probably done this at 10+ sites. Now we’re able to actually find errors in the system in the ERP database, even if it’s set up really well. We start to find different opportunities through stuff that’s been either legacy order or is in there incorrectly or is tied to the wrong forecast. So we’ve really been able to not only clean up the database and attack shortages, but stay ahead of the shortages and manage our inventory down. I’ll also say, we now push this back to our supply chain. We do this through our own MRP views. We assess supply chain through ratings and we give our supply chain a view of where shortages are coming, and we ask them to work with us to address those. We do this all through LeanDNA, and we coordinate this through all of our buyers. Now, every buyer has a dashboard to attack their grouping of pieces or parts. Okay.
So Mike, from your experience, you’ve done this in quite a few sites. You’ve had a chance to start to look at the benefits of it. Could you highlight for some of the attendees, what you’ve seen or some of the bigger benefits that you achieve or experience through this type of digital transformation?
Yeah, sure. Richard. I’m just gonna list a few. We could probably spend the rest of the call, just running through some of the benefits, but I’ll just like set a few. We now really have a centralized platform to manage and track lean projects throughout all of our sites. And I’ll just tell you, in general, depending on where a site is and how big it is as you can have between 15 and, say, 40 really strategic projects that can span one to two years. Trying to manage all of those has just become from a benefit standpoint, it is significantly easier to look at every site and even aggregate those savings among sites, and really understand what every site’s working on.
All of our metrics are now standardized and pulled in automatically through LeanDNA. I’ve worked extensively with LeanDNA, and I‘ll tell you it’s sort of refreshing because I’ve worked with other software developers and knowing where the package is not lean, but getting a change implemented was painful. We work really quickly on a fast pace with LeanDNA, and we’ve standardized every metric across every site. In the past, I would get the same metric cut five different ways from five different sites, and we’d spend more time trying to figure out how they got the metric or how they got the particular reading. Now, it’s all exactly the same and we can manage it through dashboards, control towers, however we wanna go and interrogate or manage that data.
Where we’ve used LeanDNA in the past, we’ve been able to drive the quick wins on inventory, 10-20% returns in the first year, and I’ll just sort of quantify that by saying, as you first roll this out, you’re gonna get the quick wins. The system is gonna find the errors in your ERP system. It’s gonna find those quick opportunities. So the 20% is real in future years like anything else that will slope out a bit.
We’ve seen an increase on on-time delivery performance, you tend to achieve what you measure. For us, that’s the key piece of any lean system is getting tight around your metrics and getting those metrics visible, so we can then gauge whether the actions were implementing actually has some intelligence behind them.
The biggest benefit for us is really not just seeing the gains, but it’s also making sure those gains stick. With a system like LeanDNA, being able to look at a live metric day after day, it allows us, again to focus on our daily, weekly, monthly, meetings rather than having meetings where they sort of fall apart because we don’t have the metric and then the whole meeting gets focused on actions to go get a metric. We worked that offline and bridge right to the ERP system.
Now, I will tell you it sort of a lesson learned when you log systems like this, you’re gonna find those quick opportunities to clean up your ERP system. And that’s the great thing about working with LeanDNA is we’ve done a nice cleanse, but you’re gonna have to spend some time figuring out the metrics, what you gotta do anyway, and you might have to enter some stuff, manually. Then the goal is, how do you get from manual to auto within your system, and that’s really a natural progression anyway, as you focus on growing your business. I said this over and over.
For me personally, it’s about the resource of spending more time managing the projects and delivering to the customers than building Excel and Powerpoint files. I love those applications, but not for running a lean operation. Right. Okay.
And just maybe a question. Lean is a journey, at least the way I think of it. It’s almost like, I know some of the things that you’ve done in the past from a journey perspective, I would think some of the people on the call, maybe just beginning, and some people are midway through and you’re almost done quite at Morgan, it would be maybe helpful for the attendees just to walk through like, are you done or you see that there’s more things for Morgan and maybe what some of those next steps could be for more gonna beyond where you are today?
Yeah. So I’ll walk through some next steps, but just philosophically, that question about, are you ever done? Toyota, will tell you ,they’re the ones that really blazed the trail here, they’re not done. and they’ve been doing this for 50 years. So I think we’re at least 49 years away from saying, we’re still not done. It’s a long journey.
For us. We’ve created, I’ll call it five levels of production system, and just to get to level five, it doesn’t mean you’re done, but it could take five, six, seven, eight years. It just depends on the commitment of the sites, how quickly people wanna go. But I’ll emphasize that journey’s never done and using tools like this, it just… sorry, we just keep identifying new initiatives, new opportunities, just when we think we have processes locked, we’ll find things that, in reviewing KPIs, we’re going the wrong direction. There’s never gonna be an end to the opportunity. And if your businesses are growing, you’re gonna keep coming up with new opportunities to do this.
The other side of this, to be fair, is you gotta address the human factor side of this. You’ve got to address, how do you develop a lean culture? How do you get people comfortable with change? What are the tools you use to do that? Again, I’m a big proponent of Hoshin Kanri or strategy deployment. It’s a really powerful tool to drive folks together. And frankly, things like LeanDNA, it’s the only one I found, it’s built around deploying projects or managing projects to come out of things like strategy deployment.
What’s next for Morgan, we’ve laid out a multi or deployment. The goal is to get every site on the path. We launch sites under a focus site plan, so every site is a bit different. Consistent operations management and discipline, assuring cost reductions of organic wrote is a big next goal for us. Our teams really benefit from… I’m sorry, beyond operations or finance, sales HR EH&S teams. They’re all involved in this, so we find a lot of cross functional relationships. A Lean operation is way beyond just the operation for us. We have sort of an expectation that sites will reduce cost bases in early years. It’s a 3 to 5% rule that sites become more mature and run through higher levels. We expect them to ratchet their cost basis every year say 5 to 7%. The super stars, they’ll beat the 70, but we have to reset projects every year. So for Morgan, we’re gonna be hustling to get every site on their lean journey and into their first stage or first level of the production system, and running with a LeanDNA platform for their site. And again, really honing in on the metrics, you gotta get on with the metrics first.
Surprisingly, we walk into some sites and they’ve just got the basic metrics they look at once a month. It’s just not enough. That’s a lesson learned for me. You gotta be looking at metrics, you gotta be driving to daily, and then eventually you get down to almost hourly. We’re excited, we see a lot of cross-site alignment between supply chain value stream evolution, continued KPI management. We’re now driving this between sites. Sites can see how each other are doing. That’s a big change in the way sites used to operate and sort of silos.
Yeah, I think that’s just a few things that we’re planning on doing for Morgan, Richard.
That’s great. So we’re getting towards the end of the webinar, and I did wanna thank you for taking the time and just sharing some of your experiences a little bit about what’s worked, what the future is, some of the results. Again, a lot of people are different levels of the journey. So hopefully this will give a lot of the attendees, some ideas, and what they could do today, but what’s also coming out in the future.
So Darlene, what I would say now, I think that closes the presentation part of the webinar, and we thought we’d use some of the time that we have left to take any questions from some of the different attendees.
Hey Richard. Real quick that I’ve like one minute here. If I were to throw in a couple of quick tips to folks, one would be this current day and age, you really wanna be focusing on integrating digital transformations in your house of lean. The other two really important ones or don’t over analyze them. Just take the shot. And the final piece is you’ve gotta be flexible as you put this into sites and cultures. Don’t break your business in doing stuff like this.
Okay, thank you, Richard, Mike, and now I’ll review any questions. If you do have any questions, please submit them on the right side of your screen and we’ve got one here.
Can you connect directly with ERP systems like SAP and Oracle to perform this type of analytics?
Yeah, absolutely. It’s a great question because part of the child with a lot of factories is that they always have some existing ERP system. So we definitely can connect to all those different ERP systems, I would say it’s worth highlighting t’s not so much just getting connected. That’s the easy part. The real challenge most companies have is, how do you actually transform that data in a way that’s standard across the sites? And also it can provide and drive a lot of the analytics that we’ve covered during the webinar. So connection is easy. It’s something that’s pretty common and straightforward these days. The real challenge and what we spend a lot of our time with LeanDNA and Morgan other companies is, how do you then transfer that data into meaningful information, which is really where much of the challenge lies for most companies.
Yeah, Richard, I’ll just tag on and be a bit blunt. Any growing business, especially where we have just in one of our business units, we’ve got 20+ sites. We have multiple ERP systems. Me personally, I don’t have the time to learn every ERP system. So we use tools like LeanDNA to bridge and create a common platform among all those ERP systems. And I can get… and the teams can get the data they need. It all looks exactly the same.
Okay, great. We’ve got a second question. Do you ever display this information on the shop floor?
So yes, we don’t have pictures in here, but we drive this all the way down to the cellular level. So whether you’re using presses, machine shops, we drive this down to cell level boards, and we typically will run live metrics for the cell, and then we’ll run wide metrics for a value stream. And then we run all the way up to a level three, where we run live metrics for the site.
I’ll say my last remit. We probably had 50-60 monitors on the floor, and it’s really easy to do it because it’s a web-based solution. We run very affordable, say 19 inch monitors with Android type boxes on the back for us. So it was a very low cost implementation to drive the metrics to the floor.
And one thing I would just add to what Mike just said is, when you look at lean and having done it for 25 years, the thing I always tell people, the thing I’d like to preach is you need to speak with data. Just don’t talk theoretical, really speak with information and data. And so as we work with companies to help support this type of digital transformation, we try to incorporate that same philosophy into the tool.
So as Mike mentioned seeing stuff in your room and your office is great, but when you push it out to the shop or now becomes something that drives daily accountability, people are speaking to the data versus just looking at in an office. And when you get people thinking that way, that’s where you really start to see not only the results, but there’s much more accountability and people really own and drive those the results on the shop floor level. And when that starts to occur in your transformation, that’s where again, you get better results and you get people really owning it and driving this ongoing sustainability, which is really a big challenge in a lot of companies have.
Okay, great. We’ve got one more question. How long did it take to get started and it’s there good for step to begin your digital transformation?
I will tell you working again, I’ve done this at three different companies in multiple sites. It’s quick. and it sort of goes back to my don’t get caught up in the over analyzing. We go very quickly with building a bridge with LeanDNA, and as soon as we can get that bridge built, where we focus is pulling everything we can out of the ERP system in terms of key metrics, and then we start focusing on cleaning those up. So that’s sort of step one for the implementations I’ve gone through.
In parallel to that, we will typically start to develop the key projects that then need those metrics to drive to strategic goals. So for myself and my team, It’s a two step process. Get the bridges built and those go really quickly start identifying where you have issues and fix the ERP system ’cause you will have them. I guarantee you this garbage and every ERP, and then you start managing or developing your projects.
Another thing I would just add to what Mike said is, when Mike mentioned about the quality of the data. That’s probably one of the biggest questions we get is, should we hold off on doing these types of digital transformation until we get all the data perfect in our systems? And the reality is, one it’s never perfect, but the other thing is that’s the data that’s running your business. So if it’s not correct, that’s what’s driving current decisions. So the sooner you can go live and get this information visible and people can understand what’s really driving the business, what do we need to change? How do we improve? And it’s a good thing. So to Mike’s point, we like to try to get up in a week and seeing data, and then that starts to help you make decisions around not only improvements, but where those big opportunities are.
Okay, well I believe that concludes our webinar. Thank you, Richard, mike, for an insightful presentation. We will be sending a recorded link for webinar replay to each of you next week. This brings our webinar to a close. Our next schedules webinar will be on thursday, March 31st, titled leadership, ABCS to sustain change. Please visit AME.com under the events and training, then click on the AME webinars for more information and to register. Please don’t forget to fill out the short survey that will be in your inbox. Thank you everyone for attending and have a great day.