Debra Smith, CMG managing partner and Fredrik Nordstrom, Director Operational Excellence at Wärtsilä have teamed up to co-present their journey to help change one organization from a "push and promote cost centric strategy” to a "position and pull flow centric strategy” using the methodology, rules and tools known as Demand Driven. Wärtsilä has defined 5 guiding principles to show the way to manage and leverage performance. The Demand Driven approach is aligned with all 5 principles, but is the key component for the last three. The guiding principles are:
Wärtsilä’s past efforts and successes to adopt the Demand Driven Flow principals resulted in successful examples, such as choking the release applying CONWIP and having an S-DBR modification in SAP. These practices, however were not widely spread, but rather islands of excellence. The mind-set on how to run operations across the organization has been very traditional based on utilization/efficiency/cost thinking across all the Wärtsilä divisions and we have learned these changes just don’t happen overnight. However, these islands of success resulted in the opportunity to break new ground and captured the attention of Water Systems Division’s management as a way to address the challenges of their current supply chain system and opened the door for a full system approach to Demand Driven.
- Value for Customer
- First Time Right
- Demand Driven Flow
- Make it Visual
- Leadership and Continuous Improvement
A Demand Driven Adaptive System (DDAS) is a management and operational system designed for complex and volatile manufacturers and supply chains. A Demand Driven Adaptive System uses a constant system of feedback that connects the business strategy to the settings and performance of a Demand Driven Operating Model through a Demand Driven Sales and Operations Planning Process (DDS&OP). A Demand Driven Adaptive System focuses on the protection and promotion of the flow of relevant information and materials in both the strategic (annual, quarterly and monthly) and tactical (hourly, daily and weekly) relevant ranges of decision making in order to align tactical actions to increasing ROI performance as change occurs.
Together the Wärtsilä Operations Excellence team, the Water System’s management team and CMG defined the rules, tools and design to enable Wärtsilä Water Systems to become Demand Driven. We will take you through the implementation steps and a demonstration of the tools they use for their visible real time feedback loop to focus actions and decisions on the flow to and through strategic control and decoupling points as well the buffers that protect them.
The Wärtsilä Operational Excellence program emphasizes that for a transformation to be successful and sustainable, it is not sufficient to change just the ‘Operating System’. You also need to address the ‘Mind-set and Behaviours’ as well as the ‘Management Infrastructure’. The last element is very much about the SMART METRICS Poole uses to not only operate but to sustain and improve the demand driven system. The intention is to use the success at Poole as the new blue print for change.
Debra Smith is the co-author of The Theory of Constraints and Its Implications for Management Accounting, (Noreen, Smith, Mackey North River Press, 1995) a grant study co-funded by the Institute of Management Accountants Foundation for Applied Research and Price Waterhouse; The author of The Measurement Nightmare. (St. Lucie Press, 2000); a co-author of The Theory of Constraints Handbook (McGraw Hill, 2010) and co-author of Demand Driven Performance – Using Smart Metrics (McGraw Hill 2013). She is the co-founder and a Partner of Constraints Management Group (CMG), a services and technology company specializing in pull based manufacturing, materials and project management systems for mid-range and large manufacturers.
Clients, past and present, include Unilever, LeTourneau Technologies, Boeing, Intel, Erickson Air-Crane, Siemens, IBM, Wellman Products Group, The Charles Machine Works (Ditch Witch), Avigilon and Oregon Freeze Dry. Debra is a certified public accountant and is also a certified expert in all disciplines of the Theory of Constraints and was elected to the founding board of the Theory of Constraint International Certification Organization. She served for six years before retiring. Prior to founding CMG Debra spent seven years as an associate professor teaching management accounting at both the University of Washington and the University of Puget Sound; nine years in industry and a CFO and a Director of finance and three years in public accounting with Deloitte. Ms. Smith is recognized internationally as an authority on both The Theory of Constraints and Management Accounting and is a noted speaker on both subjects. She has been the featured speaker at National Conventions for APICS, IMA and TOCICO as well presenting internationally in the United States, United Kingdom, Europe and South Africa.
Debra makes her home in Enumclaw, WA with her husband and partner Greg Cass, two dogs, three cats, four horses and one Malaccan Cockatoo. Cockatoo.
Fredrik Nordstrom - MSc, Jonah, TOCICO-certified implementer, is Director Operational Excellence at Wärtsilä Corporation.
For more than 30 years he has acquired broad experience within operations management and development through various managerial positions within discrete manufacturing as well as within project-based and process industry type businesses.
Fredrik was one of the key drivers in developing the use of TOC thinking and applications within ABB, leading to significant sustainable results over an extended period of time for which the ABB Group received the TOCICO 2010 International Achievement Award.
In 2008 Fredrik joined Wärtsilä, where he today leads and acts as a catalyst to create and introduce Wärtsilä Operational Excellence, a program launched to set up a common platform with best practices to improve Wärtsilä value streams globally.
Wärtsilä is a global leader in advanced technologies and complete lifecycle solutions for the marine and energy markets. By emphasising sustainable innovation and total efficiency, Wärtsilä maximises the environmental and economic performance of the vessels and power plants of its customers.