How to Become Lean & Green Challenges to the Ship Repair Industry A Presentation to HKIEHKIE-MMNC on Nov 11, 2011 By Dr. Mike Ho Ming Chan (mikehmchan@gmail.com) Pressing Issues and Questions How can the ship repair industry stay competitive? How can you meet the demands for Speed f for Q Quality lit for Environmental Compliances and offer lower prices? Basic Principles 1. Hear the Voice of the Customer 2. Integrate the Customer Needs 3 Focus on Meeting these Needs 3. Facts For the last 10 y years China has been a leading ship repair centre Cheaper prices from nearby places h have led l d to t many generall repair i contracts being g placed p outside China Facts More new ships will be launched in the next 5 years than past 20 years More old ships will be disposed with ith less l demand d d for f general ship repair Less Demand for Ship p Repair p Facts The industry needs to compete in Price,, Technology gy & Services It needs to be better than the competitors in the region Global Concerns Global Concerns Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships ( 2009 ) Guidelines for the development of the Inventory of Hazardous Materials Guidelines for the development of the Ship Recycling Plan (2011 ) Facts acts Environmental and social issues are required to be addressed for staying in the market Pressing Issues and Question The ship repair industry needs d to t become b “ Lean & Green “ But how ? What is Lean Lean Operation refers to meeting customers expectations by delivering quality products and services at the least cost when h the h customer wants them What is Lean AL Lean O Operating ti System S t focus f on customer requirements and - flexible / adaptable business approaches - synchronized y flow and p pull operations p - eliminating waste and adding value - built in quality with design - workforce empowerment - continuous ti improvement i t M Many Lean L Tools T l are Available: A il bl - 5 S and Visual Management - DMAIC (Six Sigma) - Mistake Proofing (Poka Yoke) - Continuous Flow Production - Pre Production Planning - Cellular C ll l Manufacture M f g - Value Stream Mapping - Total Cycle Time - Just In Time What is Green Green Operation refers to managing environmental impacts and improving overall performance of handling - regulatory environmental responsibilities - un un--regulatory environmental risks - resources conservation gy efficiency y - energy What is Green AG Green O Operation ti typically t i ll employs l an Environmental Management System (EMS) which focus on: - improving organizational performance - reducing environmental impacts - adaptable business approaches - workforce empowerment - continuous ti improvement i t EMS is Well Defined EMS is an established framework based on q of ISO 14001 the requirements It integrates the scope of environmental considerations and continuous process of checking to make sure environmental goals are met Differences e e ces EMS: -A system t ffocused d on environmental compliances - Eliminate environmental impacts and risks - Focus on cost cost--effectively manage environmental risks and impacts p - Focus on improvement in environmental performance and showing to the public - Use defined tools and tactical methodologies for environmental compliance Lean Operation: -Ap production oduct o system syste focused ocused o on operational tactics and practical tools - Eliminate non value added activities - Focus on business competitiveness and customer expectations - Focus on improvement in cost/ ti / time/responsiveness/quality i / lit - Use defined tools and tactical methodologies for process improvement Si il iti Similarities EMS: Lean Operation: - A road map by which a company can meet its goal - A continuous improvement process - Employee E l involved i l d in problem solving - Empowerment of decision making - A human based corporate culture - A road map by which a company can meet its goal - A continuous improvement process - Employee E l involved i l d in problem solving - Empowerment of decision making - A human based corporate culture Lean Operation and En ironmental Management S Environmental System stem are highly complimentary Changing to Lean and Green requires i a Systematic Approach To Become Lean & Green the Ship Repair Industry N d Needs A C lt Cultural l Change Ch A Survey by FORTUNE Magazine Business Leaders Failed - Not for lack of abilities - Not for lack of resources - Not for being evil Main Reasons of Failure - Lack of “ Vision “ - Lack of “ Focus” Either they do not see the problems… or they y know there are p problems… but do not focus on making the Change Focus on Change “F “Focus” ” means You cannot do all things However with you and your associates being on the same page… page You can do GREAT things g Focus on Cultural Change g It requires i the th Top T Level L l Decision D i i and a Systematic Approach to implement a Cultural Change Characteristic of Corporate p Cultures C Corporations ti are organic i entities titi They act a lot like living organisms They have systems Corporations evolve cultures from P Personality lit & character h t off leaders l d History y Experience Environment Characteristic of Corporate Cultures Cultures evolve from collective experiences related to some significant events with cultural values and behavior pattern Changes trigger strong emotional responses Cultural Change requires a Change Methodology The Four Levels of Change R ti Rational l/ Conscious Emotional / Sub--Conscious Sub Decision to change Process Change Cultural Change People Behavior Change Left L ft Brain Right Brain Process Performance Enhancement (PPE) Approach PPE works with processes Everything is a process P Processes can be b mapped, d measured and improved p Processes are cross companies and cross functions Improving Processes lead to Performance Enhancement A Systematic Approach to Change C Concept t – Process P - Culture C lt - Behavior B h i PPE enables changes in concept of leadership management functions employee empowerment organization of work optimization of resources corporate culture people peop e be behavior a o Ch Change ffrom a F Functional ti l View Vi off Business B i to a Process View of Business Traditional Culture -People understand only the functions in which they work -Other functions are competitors -Reliance on Individual Experts -Functional goal isolated from other functions Process View Culture -People understand the big g p picture and the other functions -Other functions are partners -Inter dependence on Cross Functional Experts -Common goal such as on y and high g time delivery quality at lower cost Example p of Isolated Functions Sales & Marketing Quality & Environmental Compliance Materials Procurement Design & Engineering Production & Inspection All Functions Belong to One Process S l & Sales Marketing Quality & Environmental Compliance Materials Procurement A Ship p Repair p Process Design & Engineering Production & Inspection A Connected Process Sales & Marketing Quality & Environmental Compliance Materials Procurement A Coordinated Process Design & Engineering Production & Inspection Systematic Approach of Change 7 Continuous Improvement Feedback and Adjustment 5 4 Implementation Plan for Improvement p Fact Finding and Analysis 2 1 Acceptance of Need / Opportunity Recognition of Need / Opportunity Management of Change 7 Reward and reinforce positive actions Create acceptance and support 5 4 Make changes in tasks and processes Identify y new and effective behaviors Minimize expressed resistance to change 2 1 Make people realize the need for change Establish relationship with people Triangle of Improvement People Continuous Improvement Performance Vision Where are you currently operating? Where do you want to be operating? What are the roadblocks slowing down your progress? How can you remove the roadblocks? What will be the Return on Investment? Is it worth the effort? Identify y The Performance Gap p What Do You Need To Get Where Do You Want To Be From Where You Are The Other Side of the gap Baseline Performance Vision Strategy Objectives Initiatives Resources Entitled Performance Road Blocks Culture Gap Mindset Blocks Concept Gap Skill Blocks Techno Gap Personal Block Vision Realized Strategy Executed Objectives Achieved Initiatives Executed Continuous Improvement Focus How do I change the operation to L Lean? ? What results do I want to obtain? How do I change the operation to Green? What results do I want to obtain? Bridging the Gap Baseline Performance High Cost Low Quality Late Delivery Fi Fighting Fire Fi hti No Feedback Over Budget g Unhappy Customers Unhappy Workers Continuous Adjustment Continuous Improvement Lean Operation p Environment Management System Operational Innovation Use Lean Tools Manage g Environmental Risks Remove Roadblocks Worker Empowerment Change from a F Functional nctional Vie View of Business to a Process View of Business Entitled P f Performance Controlled Cost Executed Target First Pass Yield On time Delivery Planned Production Empowered Worker Safe & Healthy Environment Friendly & Happy Workers Bridging g g the Performance Gap Results s Entitlement ((Lean & Green)) (Stay Competitive) Performance Gap Baseline (Where you are now) ((Threatened)) Time Make th the Change Make It Happen