Scania Lean Finance - Lean Accounting Summitleanaccountingsummit.com/2012presentations/Scarborough...

Scania Background

The Griffin is the symbol of Sköne County, the founding place of Scania. “Scania” is the Latin version of Sköne.

The surrounding graphic is a bicycle chain ring. The original company was a bicycle maker.

9/3/2012 Paul Scarbrough 1

Intro Leif MBM Modular Design

Org. Impacts

Houses

All Scania images in this presentation are from publicly available sources



Org. Impacts Houses

This is an introduction to some aspects of Scania that are relevant to the Lean learner at the Lean Accounting Seminar. This is not an integrated presentation, but a short description of some of Scania’s distinctive characteristics. The following sections provide short descriptions of… 1. Scania and its market 2. The main proponent of Lean at Scania, Leif Östling. 3. The other management philosophy in addition to Lean. 4. The importance and impact of Modular Design. 5. Several organizational impacts, in particular on R&D and Health and Wellness. 6. The use of “houses” to both participate in, and resist, Lean

Scania is the world’s third largest make for heavy trucks and the world’s third largest make in the heavy bus segment, as well as a leading manufacturer of industrial and marine engines. The company also markets and sells a broad range of service-related products and finance. Scania is a global company with operations in Europe, Latin America, Asia, Africa and South Pacific. It has about 24,000 employees in Europe and about 4,000 in Latin America. In addition, about 20,000 people work in Scania’s independent sales and service organisation. Founded more than 100 years ago, the company has shown a profit each quarter since the mid 1930’s. Scania’s aim is to grow with sustained profitability and thereby create shareholder value. As a matter of policy Scania does not have financial targets, either externally or internally.

For examples of Scania products follow this link: http://scania.com/products-services/trucks/



Org. Impacts Houses

http://scania.com/products-services/trucks/





Scania has a very strong management culture based, in part, on Swedish values. Their management system crystalized into a system called Management by Means [MBM]. This has been a driving force in Scania for decades, however it was not completely effective at the level of managing the production process itself. Close connections with Toyota after 1994 added strong operations functionality to the existing strong MBM framework. Toyota-style Lean did not replace the existing system, which was not thought to be weak, but the merger created a hybrid. MBM seems to have been strengthened and elaborated by the interaction with the Scania Production System [SPS]. Scania is one of the few examples of a strong, stable company adopting Lean pervasively and successfully.



Org. Impacts

Houses



Org. Impacts

Houses

Leif Östling joined Scania in 1972 as a engineer and was appointed President in 1989. He is a legend at Scania and you can hear Scania people from any continent start a statement with “Leif says….” We have even heard this from hourly employees in Brazil. It appears to have been Leif’s decision to forge the connection with Toyota in exchange for giving Toyota access to the Scania Modular Design system.

My own Leif story: I was with a research colleague at the new St. Petersburg KD truck plant at the end of its first week of full production. Leif and the entire board of directors of the Russian subsidiary were in the plant making a tour. We could see them across the plant with Leif stopping at each workstation to study it and ask questions. My colleague and I were interviewing the production manager, a Russian who had only been at Scania for one year after being a manager for the Russian subsidiary of a major US auto company for 10 years. I asked him, “What is the biggest difference between Xxxx and Scania?” He gave a very, very long pause and then said, “You can see the biggest difference right now by looking around. You see over there is Leif, the most important person at Scania for 20 years on his first visit to my plant and I am here talking with you instead of following him like a puppy. Look around at the plant floor…. This is how it looks every day. We did not work even an extra hour to make things more pretty for Leif. Even with my short time here I already know that such “polishing” would be totally wrong here. Leif has both the desire and the right to see the real process. This is the same for all Scania executives I have met.” “At Xxxx, when a VP from the States would come to visit we would compromise a complete month’s production to radically clean and “polish” the plant into a fake simulation of our plant. It was very demoralizing for us all and yet was never thought to be dishonest by either the senior Russian or American managers. At Scania this kind of dishonesty cannot even be conceived of.”



Org. Impacts

Houses

Here are links to a number of his presentations: Note the willingness to go into detail and the level of understanding of the underlying process through all organization functions, as well as the position of MBM + SPS as the heart of the system. He is relentless in promoting SPS. http://www.vardkvalitet.se/Dokument/Lean_and_six_sigma/110531%20Ledarskap_och%20standiga_forbattringar_inom_Scania_Leif_Ostling.pdf http://www.scania.com/images/VD-tal-AGM2012-final-EN_tcm40-305994.pdf http://www.vda.de/en/publikationen/publikationen_downloads/detail.php?id=413



Org. Impacts

Houses

http://www.vardkvalitet.se/Dokument/Lean_and_six_sigma/110531 Ledarskap_och standiga_forbattringar_inom_Scania_Leif_Ostling.pdf



http://www.scania.com/images/VD-tal-AGM2012-final-EN_tcm40-305994.pdf












http://www.vda.de/en/publikationen/publikationen_downloads/detail.php?id=413



Leif Östling on outsourcing: “ It is important to us to keep production and R&D together and to be sure that the customer is top of mind all the time. We keep outsourcing of key components to a minimum. The exception is when it comes to very labour intensive assembly, like our bus body assembly, where it is impossible [for Sweden] to compete with a European labour cost structure. We consider that outsourcing of production to countries with low labour costs is an easy way out for those who are too lazy to get stuck into the real work of innovation, sustainability and added value. Outsourcing creates a short lived competitive cost advantage at the price of the search for excellence in terms of quality, R&D, and production engineering. “



Org. Impacts

Houses

Leif Östling’s long experience from the truck industry will benefit both MAN and Scania, according to union representatives in Sweden. Johan Järvklo, president of IF Metall [a shop union] at Scania in Södertälje, thinks that Leif Östling’s experience ensures continuity and stability as he takes overall responsibility for trucks at Scania’s main owner, Volkswagen. “It feels safe that the person with the world’s longest experience from the truck industry heads Volkswagen’s truck business,” says Järvklo. Järvklo is satisfied with the choice of Martin Lundstedt as Leif Östling’s successor as president and CEO of Scania. “We have a very good cooperation with Martin Lundstedt and he knows Scania very well,” he says. Håkan Thurfjell, president of Unionen [white collar union] at Scania in Södertälje, also welcomes the leadership changes. “This is the best solution. We would have chosen Martin Lundstedt as Leif Östling’s successor. He is knowledgeable, he knows about trucks and his values are good,” he says. With strong and knowledgeable people in management at Scania and Volkswagen’s global truck group, Thurfjell sees no need to worry. “We still have access to Leif Östling’s services and he can watch over the two truck manufacturers,” he says.

Comments from the two main Swedish unions after Leif Östling is posted to be President of all of VW’s truck businesses. Details: http://newsroom.scania.com/en-group/2012/06/05/unions-happy-with-leadership-solution/



Org. Impacts

Houses

http://newsroom.scania.com/en-group/2012/06/05/unions-happy-with-leadership-solution/











Management by Means [MBM], the other Scania philosophy Documented in the book “Profit Beyond Measure”, which has been read by all Scania managers, probably more than once. This philosophy permeates Scania and is one of the bases for SPS. The following three slides illustrate internal Scania use of MBM and SPS Profit Beyond Measure: Extraordinary Results through Attention to Work and People [Hardcover] H. Thomas Johnson H. Thomas Johnson (Author) (Author), Anders Broms Anders Broms (Author) (Author), Peter M. Senge (Foreword) Paperback: 280 pages Publisher: Free Press (August 5, 2008) Language: English ISBN-10: 1439124620 ISBN-13: 978-1439124628



Org. Impacts

Houses

http://www.amazon.com/H.-Thomas-Johnson/e/B001IR1GAW/ref=ntt_athr_dp_pel_1

http://www.amazon.com/Anders-Broms/e/B004LTGHTO/ref=ntt_athr_dp_pel_2

http://www.amazon.com/Anders-Broms/e/B004LTGHTO/ref=ntt_athr_dp_pel_2

http://www.amazon.com/s/ref=ntt_athr_dp_sr_3?_encoding=UTF8&field-author=Peter M. Senge&ie=UTF8&search-alias=books&sort=relevancerank

http://www.amazon.com/s/ref=ntt_athr_dp_sr_3?_encoding=UTF8&field-author=Peter M. Senge&ie=UTF8&search-alias=books&sort=relevancerank

Common MBM slide often used in Scania internal and external presentations.



Org. Impacts

Houses

Recent modification to include SPS House. This approach is seen more often each year as these concepts merge.



Org. Impacts

Houses

Recent graphic showing what many at Scania see as the three “legs” of the Scania “stool”. All three are known to all managers and a large portion of hourly workers. All managers and many workers can outline a rough history of all three components, although MBM (in Profit Beyond Measure) is much less well-known to hourly workers.



Org. Impacts

Houses

Modular Design, the third main Scania strength. Scania is a world leader in modular design. They have been pursuing this strategy forcefully since about 1957. Toyota got access to Scania design as part of the relationship. Scania got access to Toyota production methods. Currently they produce trucks with only about 25% as many parts SKUs as Volvo Trucks to cover the same segment. In the following slides you will see some of the impact of this approach.



Org. Impacts

Houses

Using sort of a LEGO approach, all Scania trucks are built from the same parts—on the same line—in order of customer demand. No trucks are built to stock.



Org. Impacts

Houses



Org. Impacts

Houses

All cabs made on same line in order of customer order

G series

White Highline

R Highline

G highline



Org. Impacts

Houses

Multiple colors



Org. Impacts

Houses

High Line Low Line

Multiple colors



Org. Impacts

Houses

The new thought is that Scania will not have model changeovers any longer, but engage in continuous improvement and model revision.



Org. Impacts

Houses

There was no plan to introduce SPS into non-production areas, however as experience accumulated, individual managers saw the opportunity for improvement through modification of SPS and there was a slow move in that direction, as shown here for R&D.



Org. Impacts

Houses

Note the PDCA concept embedded into the overall concept for R&D.



Org. Impacts

Houses

This is either a weekly meeting at the R&D Factory or the Daily meeting at the IT office. Both have similar setups and I cannot tell from this photo which it is. At the R&D office about 125 projects are reviewed in 30 minutes once each week. After this meeting each group meets in the same room at their section of the wall to refine their work. If they have coordination questions they can ask the other groups, who are still in the room. Project groups meet here for Daily Steering Meetings in addition. This is 100% manual with no IT version or record.



Org. Impacts

Houses

Every morning, through teleconference, Quality Managers from all 5 main Scania plants, (from Brazil, Netherlands, France and Sweden), review 100% of the production

defects from the prior day and discuss countermeasures.



Org. Impacts

Houses

Every day, at the morning meeting, all Scania work groups review all of their manufacturing defects found the prior day by any downstream

“customer” including the final customer at product delivery.



Org. Impacts

Houses

Note that there is a focus on root causes in health issues, as well as development of a graphic element.



Org. Impacts

Houses

Note the use of all three [SPS House, MBM cascade, Health] elements in one slide.



Org. Impacts

Houses

Scania Houses. Many units eventually created their own version of the TPS House. There does not seem to be a standard version. Notice that there are two slightly different versions of the R&D Factory House. There has been some significant resistance to SPS in non-manufacturing units in Scania. Although a great deal of the resistance appears to be more to the rhetoric of “production” rather than the concepts of improvement and standardization. Additionally, the Management by Means concept was and is very strong and was seen as being sufficient by many participants. They appear to have slowly added the basics of SPS to MBM, although they were quite insistent on modifying it. Since there was no roll-out policy, or mentality, for either MBM or SPS, this did not cause a problem.



Org. Impacts

Houses

The main “House”. This appears in most production documents somewhere. It was the only version for many years, however it is now seen to be mainly for actual manufacturing activities.

The most potent part of SPS in daily operations is the “Normal Situation”, not “elimination of waste”.



Org. Impacts

Houses

“House” for the IT subsidiary, InfoMate. Note the elaboration of a number of concepts as well as the three elements in green, which add clarification.



Org. Impacts

Houses

The most recent “House” it was developed in about 2010 as the Retail System was being developed. Note the graphic swirl element in the center meant to indicate continuous improvement.



Org. Impacts

Houses

The original R&D “House”. Note the hand-drawn appearance to emphasize the traditional concept of the designer.



Org. Impacts

Houses

Later version of R&D “House”. Note the addition of two center green elements, similar to the Infomate House. As well, note a number of other changes.



Org. Impacts

Houses

End


Scania Lean Finance - Lean Accounting Summitleanaccountingsummit.com/2012presentations/Scarborough...

Documents

Transcript of Scania Lean Finance - Lean Accounting Summitleanaccountingsummit.com/2012presentations/Scarborough...