Hoshin Planning Process

Workshop Month xx, 20xx

Agenda
- Introduction/Ice Breaker
5 min.

- What is Hoshin Planning?

- Why use Hoshin Planning?

2 min.
24 min.

- How to Use Hoshin

- Questions and Answers

35 min.
15 min.

- Example (tbd)
- Wrap Up

15 min.
5 min.

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What is Hoshin Planning?

Hoshin Planning
Hoshin is a Japanese term = compass needle

- Designates setting strategic direction of the organization

For HOS Hoshin is:

- A closed loop management system for identifying, focusing and linking the

organization to achieve results. Additionally it contains a daily management that drives constant progress monitoring of these results and reacts to issues as they arise

Traces roots to:

- Management By Objectives (MBO) Drucker - Plan-Do-Check-Act (PDCA)- Shewhart/Deming

Sometimes referred to as:

- Policy Deployment - Management By Policy - Management By Planning

U.S. Based Companies That Have Embraced It

- Danaher, Hewlett-Packard, Proctor & Gamble, Xerox, Florida Power and Light
(FP&L)

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Why Use Hoshin Planning?

Why do we need Hoshin Planning?

Why?: - Proper alignment requires more than independent
establishment of strategies - Hoshin Planning will align those strategies and drive the execution - To Achieve Breakthrough RESULTS!

Common Failure Modes: - No review of actions or accountability - Plans not visible or not measured or measurable - Not aligned or linked to the needs of the site

A PROCESS to help drive Results!

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Hoshin is an active relationship between 2 parts The two parts of Hoshin are - Hoshin Management - Daily Management Hoshin Management (Strategies & Objectives) - Special actions/plans are required to achieve a desired
result

Daily Management (Routine KPI Management) - Can achieve targets with usual improvement activity and
resources

Hoshin Has Two Sides

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Why Use Hoshing Planning?

Hoshin Planning

Strategic Objective is Achieved!

Improvement

KAIZEN

Hoshin Planning
KAIZEN

Hoshin Planning
KAIZEN

Base Base

Base Base
Year 0

Base
Year 1
Year 2 Year 3 Year 4

To Build Sustainable Competitive Advantage

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Why Use Hoshin Planning?

VS.

To Align Objectives and Targets Throughout the Organization

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Daily Management
Daily Management (Routine KPI Management) - A visual management system to highlight day-to-day issues
that drives rapid implementation of countermeasures.

- A communication tool that drives alignment to the lowest

levels of what is important to the site.

- Strong linkage into the Visual Management and Leadership

Standardized Work systems at the site

Daily, Weekly & Monthly Monitoring of Progress

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Hoshin Planning Summarized

Both Controlled by Rigorous Process Control Systems and measured frequently to drive results

OBJECTIVES
Cash
Hoshin Management Growth QMS
People

Daily Mgt.
All activities necessary to carry out the routine work for the SBU

AOP

STRAP

STRATEGIES

Defined to follow and be governed by Rapid Problem Solving methods PDCA Demonstrated through standardized work On the shop floor
Controlled and driven through Leadership Standardized Work in daily gemba walks
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How to Use Hoshin?

What Does Hoshin Planning Mean To You?

Top Mgt Middle Mgt Supervisor

Breakthrough Kaizen Daily Management

Front Line Associate

Adapted From Beyond Strategic Vision, Effective Corporate Action With Hoshin Planning; Cowley, Domb, 1997 pg. 57

How Should You Spend Your Time?

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Timing of Hoshin Planning

JULY

AUGUST SEPT

OCT

NOV

DEC

JAN

STRATEGIC PLANNING
HP LEV 1 COMPLETE
ACTION PLAN DEV COMPLETE HP LEV 2 & 3 COMPLETE

CONCURRENT BUDGETING PROCESS

NEW YEAR HP BEGINS

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7 Phase Hoshin Planning Process

Establish Organizational Vision

PLANNING

Strategic Planning/ Develop 3-5 Year Breakthrough Objectives Develop Annual Breakthrough Objectives and Improvement Priorities Deploy Improvement Priorities Implement Improvement Initiatives

Self-Diagnosis

Catchball

IMPLEMENTATION REVIEW

A
Root Cause Countermeasures

Lean SS CAP Critical Step

Monthly Review

C
Annual Review Annual Review

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The Process of Critical Thinking (PCT)

Step 1 : WHAT Breakthrough Thinking
Step 2 : HOW FAR Annual Breakthroughs

Step 3 : HOW Identify Key Driver Process

Step 4 : HOW MUCH/ WHEN Determine Measures & Track Step 5 : WHO Identify Key Resources & Deploy

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PCT Step 1 WHAT?

World-Class

Best-In-Class
Industry Standard

Breakthrough Objective

GAP

Current Situation

Current Situation

Breakthrough Thinking Leads us to World Class

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PCT Step 2 - HOW FAR?

Breakthrough Objective

Annual BT Objectives Yr 3
Annual BT Objectives Yr 2 Annual BT Objectives Yr 1 Yr 1

Yr 3
Yr 2

Current Situation

Identify First Year Breakthrough Objective

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PCT Step 3 - HOW?

Why? Why?

Improvement Priority

Annual Breakthrough Objective GAP

Why? Why? Why?

Current Situation

Identify Key Driver Processes

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PCT Step 4 - HOW MUCH/ WHEN?

100

Determine Measures & Track

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PCT Step 5 - WHO?

100% 3%

100%

Resource A Team B

Current Distribution Of Resources

Resource C
Resource D Team E

Relative Impact On 20% Improvement Priorities

20%

40%

0%

0%

Identify Key Resources & Deploy

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Daily Management and Hoshin Planning

Once Breakthrough is achieved process is standardized to Daily Management!

Improvement
Hoshin Planning
KAIZEN

Strategic Objective is Achieved!

Hoshin Planning
KAIZEN

Hoshin Planning
KAIZEN

Foundation for HP

Daily Mgmt Year 0

Daily Mgmt Year 1

Daily Mgmt

Daily Mgmt

Daily Mgmt

Year 2
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Year 3

Year 4
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PCT & the Top Level HP Matrix

HOW

HOW FAR
Annual Metrics

All items are listed in priority order starting from the center
Annual Breakthrough Objectives Targets to Improve 3-5 Year Breakthrough Objectives

Top Level Improvement Priorities

HOW MUCH

WHO

RESOURCES

WHAT

= Primary Responsibility = Secondary Responsibility

OWNER

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Complete Top Level HP Matrix

3- HOW
Use dots to show relationship of Improvement Priorities to Annual Objectives Use dots to show relationship of Targets and Resources to the Improvement Priority

5- WHO

Top Level Improvement Priorities Annual Breakthrough Objectives Targets to Improve

NOTE: Only Solid dots on a resource deploy to the next level

2- HOW FAR

3-5 Year Breakthrough Objectives

1- WHAT

4- HOW MUCH

RESOURCES = Primary Responsibility = Secondary Responsibility

OWNER

The whole picture of your company on one sheet of paper!

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Linkage on the Matrix

Top Level Improvement Priorities

Dots show linkage from Target back to Breakthrough for that level
Annual Breakthrough Objective

Targets To Improve

3-5 Year Breakthroughs

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Points to Remember about the Matrix

As soon as a solid dot is placed above a resource, that resource will get a lower level matrix or an action plan. Clear circles indicate support resources. They do NOT get a lower level matrix or action plan unless they get a solid dot on another matrix. TOP LEVEL - Company The dots are to be used as a sanity check The Improvement Priority is deployed SECOND LEVEL - Plant to the lower level matrix or an action plan
Danaher Business System Office - Policy Deployment 1998
Top Level Improvement Priorities Annual Breakthrough Objectives Targets to Improve 3-4 year Breakthrough Objectives Resources l Primary Responsibility m Secondary Responsibility

Second Level Policy Deployment

Second Level Improvement Priorities

Top Level Improvement Priorities

Targets to Improve

Annual Breakthrough Objectives

RESOURCES l Primary Responsibility m Secondary Responsibility

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Transferring Improvement Priorities to the 2nd Level

TOP LEVEL
TOP LEVEL Policy Deployment 2004

Imp. Priorities and Annual Objectives are copied directly onto the 2nd Level HP. Matrices.

The 2nd level 12 oclock and 3 oclock positions have all new text in them nothing is rotated into them from level 1.

Top Level Improvement Priorities

Annual Breakthrough Objectives

Target to Improve

3-5 Year Breakthrough Objectives Resources l m

Primary Responsibility Secondary Responsibility

SECOND LEVEL
Second Level Policy Deployment

Typically, a 2nd Level Matrix is created for a primary resource for each top-level Improvement Priority.

Second Level Improvement Priorities

Top Level Improvement Priorities

Target to Improve

Annual Breakthrough Objectives RESOURCES l m

Primary Responsibility Secondary Responsibility

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Transferring Improvement Priorities To The 3rd Level

SECOND LEVEL
SECOND LEVEL Policy Deployment 2004

Top Level and Second Level Imp. Priorities are copied directly onto the 3nd Level HP Matrices.

Not always suggesting you need 3rd Level. Based on size, complexity, breadth, and maturity of organization.

Second Level Improvement Priorities Top Level Improvement Priorities

Target to Improve

Annual Breakthrough Objectives Resources l m

Primary Responsibility Secondary Responsibility

THIRD LEVEL
THIRD Level Policy Deployment

If necessary, a 3rd Level Matrix is created for a primary resource for each secondlevel Improvement Priority.

Third Level Improvement Priorities

Second Level Improvement Priorities

Target to Improve

Top Level Improvement Priorities RESOURCES l m

Primary Responsibility Secondary Responsibility

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Completing the Second Level PD Matrix

3- HOW
Use dots to show relationships between Improvement Priorities and Annual Objectives

Use dots to show relationship of Targets and Resources to the Improvement Priorities

5- WHO

2- HOW

2nd Level Improvement Priorities Top Level Improvement Priorities Annual Breakthrough Objectives Targets to Improve

Use dots as a check to make sure the Improvement Priorities & Targets meet the goal and support the Annual Breakthrough Objectives
RESOURCES

1- HOW FAR

4- HOW MUCH/WHEN

= Primary Responsibility = Secondary Responsibility

OWNER

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Cascading Priorities to ACTION

TOP LEVEL Company/Group
Danaher Business System Office - Policy Deployment 1998

Top Level Improvement Priorities

Annual Breakthrough Objectives 3-5 Year Breakthrough Objectives

Target to Improve

Resources l Primary Responsibility m Secondary Responsibility

SECOND LEVEL Plant/Business

Second Level Policy Deployment

Point of Impact - Action Plan The level where root causes are addressed! Action Plans can be initiated out of any matrix level.

Second Level Improvement Priorities Top Level Improvement Priorities

Target to Improve

Annual Breakthrough Objectives RESOURCES l Primary Responsibility m Secondary Responsibility

Cascade as many times as necessary to the Root Cause Level

ROOT CAUSE LEVELSub Plant/Dept

Second Level Policy Deployment

POINT OF IMPACT ACTION PLAN Engineer/Supv

Policy Deployment Action Plan
Im provem ent Priority Title: * Review Team : * Departm ent/Location: Managem ent Ow ner: * * Date: * Next Review : * Environm ental Situation Sum m ary: * Tim eline Core Objective: * Target Im provem ent

Third Level Improvement Priorities

Action Step/ Kaizen Events

Ow ner (Lead is bold)

Second Level Improvement Priorities Top Level Improvement Priorities

Target to Improve

POINT OF IMPACT
Milestone Planned Dates

= Original Plan

x = Progress at Review 2003

Status

Jan Feb M ar Apr M ay June July Aug Sept Oct Nov Dec ( P a st D u e i n R e d )

Im pact

RESOURCES l Primary Responsibility m Secondary Responsibility

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Creating Action Plans

Hoshin Planning Action Plan
Im provem ent Priority Title: * Review Team : * Departm ent/Location: Managem ent Ow ner: * * Date: * Next Review : *

Environm ental Situation Sum m ary: *

Tim eline Core Objective: * Planned Dates = Original Plan Ow ner (Lead is bold) Milestone

Target Im provem ent

x = Progress at Review 2004

Status

Action Step/ Kaizen Events

Jan Feb M ar Apr M ay June July Aug Sept Oct Nov Dec ( P a st D u e i n R e d )

Im pact

Create an Action Plan For every Improvement Priority at the Point of Impact
Step 4: Identify the impacts on the improvement priority and top level breakthrough objective
Step 3: What is the current status of the action. Color code background as red to show items past due.

Step 1: Determine actions & write on worksheets

Step 2: Record ownership and timing of the actions

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Action Steps Complete the Cause & Effect Chain

Breakthrough Objective: Attain competitive advantage in Delivery Performance

Effect = Results!
Annual BT Objective #1: Streamline Engineer-to-Order Processes
Top Level Improvement Priority: Use HOS Tools to improve value stream of Engineer-to-Order Process Second Level Improvement Priority: Implement Improved Order Entry Process Action Step 1:
VSM Customer Service Process
POINT OF IMPACT

Effect = Cause

Effect = Cause

Action Step 2:
SW Kaizen to improve productivity by 35%

POINT OF IMPACT

Actions = Cause
POINT OF IMPACT

Action Step 3:
VRK to reduce Quote processing time by 50%

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Where VSM and Fits Into The Process

Breakthrough Objectives Annual BT Objectives Top Level Imp Priorities

2nd Level Imp Priorities

Value Stream Mapping

Action Plans

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Action Plans Drive The Rate Of Improvement

Hoshin Planning Action Plan
Im provem ent Priority Title: * Review Team : * Departm ent/Location: Managem ent Ow ner: * * Date: *

Next Review : *

Environm ental Situation Sum m ary: *

Tim eline Core Objective: * Planned Dates = Original Plan Ow ner (Lead is bold) Milestone

Target Im provem ent

x = Progress at Review 2004

Status

Action Step/ Kaizen Events

Jan Feb M ar Apr M ay June July Aug Sept Oct Nov Dec ( P a st D u e i n R e d )

Im pact

DASHBOARD/SCORECARD

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Scorecards

Targets To Improve are entered in priority order

JOP Jumping Off Point from which you started tracking the target YTD ACT Each month this field gets updated (is YTD from the monthly fields located to the right)

Planned targets are established for each month based on the overall Target to Improve. An actual that is a miss from the plan, is color coded red

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Each Target is Copied to the Top Level Scorecard

Reduce New Prod. Dev. Cycle

TOP LEVEL IMPROVEMENT PRIORITIES

Increase Market Share to 60%

Dev. Cycle to 120 Days by 12/95

Production Department

Materials Department

ANNUAL BT OBJECTIVES

IMPROVE

3-5 YEAR BREAKTHROUGH OBJECTIVE

RESOURCES

= Primary Responsibility = Secondary Responsibility

TOP LEVEL MATRIX

TOP LEVEL SCORECARD CHART

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Sales Department

TARGET TO

Human Resources Dept.

Engineering Department

Marketing Department

Finance Department

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Scorecards are Created for All HP Matrices

TOP LEVEL
Danaher Business System Office - Policy Deployment 1998

Title

SCORECARD

Top Level Improvement Priorities

Annual Breakthrough Objectives

Target s to Improve

3-5 year Breakthrough Objective

Resources l Primary Responsibility m Secondary Responsibility

SECOND LEVEL
Second Level Policy Deployment

SCORECARD

2nd Level Improvement Priorities

Top Level Improvement Priorities

Targets to Improve

Annual Breakthrough Objectives

RESOURCES l Primary Responsibility m Secondary Responsibility

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The Review Process Ensure Plan and Learn

Execute To The Plan
A C P

Conduct Regular Reviews

D

Execute to the plan and perform daily, weekly and monthly reviews of each action plan (Daily Mgt.) Reviews are designed to keep the Hoshin Plan on track

- Improvement Action owners dont come to be evaluated - The intent is to present the results of self assessment
The review team provides focused assistance primarily around the owners analytical process and preparation.

- What did you plan to do? (Plan) - What did you actually achieve? (Do) - How does actual vs. target compare (CHECK) - Standardize whats working, implement countermeasures and/or plan again as
required. (ACT)
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Manage Daily Management Through Leadership Standard Work

Embed the Hoshin Plans into Leadership Standard Work

Make the Hoshin review process part of the daily, weekly and monthly audit process
The key is to constantly monitor progress and drive accountability to the lowest level

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Third Level HP Countermeasure Sheet

Improvement Priority: Targets to Improve:
2003 Plan 2003 2003 Actual Plan 2003 Actual

Process and organization to grow Printos sales in textiles and ceramics Increase Printos valve/module sales in textiles & ceramics from $100k to $2,500k in 2003 Run Chart
50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% Delayed Delayed Print Delayed Evaluation Insufficient Kit Insufficient Sales Evaluation Kit Sales Engine Development Prospects Development Prospects Delivery 45% 35% % 45% 35% 20% Percent

(the "Why" missed) Pareto (the "Why"you you missed)

$500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0
2003 Plan 2003 Actual

JAN $0 $0

FEB $20 $21

MAR $3 $22

APR $65 $61

MAY $65 $136

JUN $123 $164

JUL $345 $330

AUG $397 $350

SEP $286 $150

OCT $333

NOV $400

DEC $453

Delayed Print Engine Delivery

20%

Problem Statement:

$136k monthly miss is due to Delayed Evaluation Kit Development, Insufficient Sales Prospects and Delayed Print Engine Delivery.

Countermeasures
What
Addressed Root Cause: Delayed Evaluation Kit Development

Who

When Short-Term: 10/28/03 Long-Term: 12/15/03

How Much (Impact)

Short-Term: Assign additional Engineer to complete evaluation kit development (delayed one month) in time for ITMA show. Long-Term: Update Tollgate process to include Engineering development for necessary targeted-vertical launch kits.
Addressed Root Cause: Insufficient Sales Prospects

Short-Term: MJF Long-Term: JBR

$61

Execute Sales Funnel Targets for UK 'T' Shirt outlettwice per week follow-up on Sales Funnel Targets with Sales Engineer.
Addressed Root Cause: Delayed Print Engine Delivery

DW/HW

10/15/03

$48

Execute kanban re-sizing process for Printos at once per quarter frequency (currently twice-per-yearwhich is not frequent enough for ramping production).

RZ/ MJF

10/22/03

$27

5 Why Analysis

Systematic method to drive to the true root cause(s) of a problem

Simply ask why in a step ladder approach until fundamental root cause is discovered. Root cause is not simply listing the symptoms of a problem Normally, after up to 5 steps, the true root cause(s) will be exposed

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Action Plans vs. Countermeasures?

Countermeasures are reactive they address how to get back to plan when a goal is missed for a period
Jump Off Point (JOP) to stretch target

60

50
HP miss

40

30

20

10

Plan

Actual

Action Plans are proactive they address how to achieve a particular goal from the jump off point (JOP) to the stretch target
J A S O N D

0 J F M A M J

Inventory Reduction Plan

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Monthly HP/ISC Review Agenda Format

Monthly PD is typically an 8 hour meeting Establish the Growth Agenda for Todays HP Review Financial Review Hoshin Planning - Road Blocks to Growth, Major Predetermined Topics - Established HP Growth Initiatives

5% 15% 60%

Follow a typical MOR session

- New Product Development

- Remaining HP Elements (Q, D,C) KPIs People/Org. Issues Other Business

20%

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Hoshin Planning Summary

Aligns Strategy and Execution
Systematically develops and links plans from organizational vision to operational tactics Ensures deep and common understanding and maximizes ownership and buy-in to plan Requires thoughtful, detailed planning for each and every improvement action Consistently assesses actual performance vs. plan and addresses issues and learns from the process

All Employees are Engaged in the Process

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Questions?