Imagine you could achieve:
- 1,000 discrete insights to improve processes and supply chain outcomes
- US$1.8 million in operating cost savings
- 52% increase in lean capability review scores
- Positive effects on the customer experience, operational capabilities, compliance, and the bottom line
Well that’s what has happened at Johnson & Johnson (JnJ) whose idea it was to break from some of the existing inertia where people believe that lean was not really applicable to them or was really just for the sake of generating some cost improvements.
JnJ wanted to build competency in using lean as an approach to create value. You see, they already had goals and objectives and things they wanted to do to create value for customers. But what they needed was a potent methodology and approach to attack these problems to help achieve those goals and objectives.
Lean, they felt, fit that bill because it helped marry up the goal and then to create an approach to define, measure, analyse, improve and control that problem.
Although the overarching emphasis of these lean projects was on waste reduction in end-to-end value streams, many of the initiatives paid specific attention to value and process enhancement.
The value stream consists of all the activities or processes necessary to deliver a product or service to the customer. Value stream mapping is a technique using flow charts to identify the key elements and activities in the process and flow of information. In value stream mapping, each activity is identified as either a value- or non-value-adding activity. Lean management seeks to minimize and eliminate non-value-adding activities from all processes.
For instance, a customer-facing, collaborative project that reduces the overstock and subsequent destruction of seasonal products may not result in momentous cost savings for the manufacturer given the specific terms of sale, but it could create value for the customer. Similarly, a compliance-oriented project may seek to assess historic non-compliance.
How did they learn the methodology?
APICS Certified in Production & Inventory Management (APICS CPIM). JnJ picked individuals who they thought had the drive and had the interest and applying some of these tools. They knew that the results were going to be there. They just need a couple of people to be the first to kind of “jump out on the dance floor” and help them demonstrate the value of this methodology.
They invested in APICS CPIM training and were there every step along the way as the individuals achieved their certifications. From there, they were able to share their stories and were able to share the results and the impact with their immediate team. It’s amazing what first hand results you can achieve using this approach.
JnJ used the APICS Body of Knowledge with a more principled approach. So, in addition to the tools and the concepts and the practices that you would employ to attack a problem or an opportunity, they wanted to use some of the body of knowledge and the principles to give a sense of what value is and how to go about pursuing it.
Did you know that lean management:
- is applied not only in production but across the entire enterprise
- has broad applications in the service industries
- involves the systematic identification and elimination of waste throughout the entire value stream
- includes time and inventory in its measurements
- offers a one-piece flow of the product or service.
According to APICS, there are seven categories of waste:
- overproduction—producing in excess or too early
- waiting—queuing delays around production areas
- transportation—unneeded movement of materials in and outside the facility
- processing—poor process design
- movement—staff activities that do not add value
- inventory—idle stock accumulating cost without necessarily providing value
- defective units—scrapping or reworking products and components.
These and other aspects to the methodology were learned and applied to the JnJ business during the APICS training. It was wonderful to see the impact that APICS had on their confidence and their competencies!
If you would like to know more about this case study, visit the APICS website here and watch the video featuring an exclusive interview with Michael Morand, CFPIM, supply chain manager at Johnson & Johnson Health Care Systems from which this blog has been transcribed.
If you are an Australian company wanting the same results for your organisation, contact Australasian Supply Chain Institute today at firstname.lastname@example.org for quotations and study options.