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In this first article of Operational Excellence, I will tell you a little bit about how the puzzle pieces come together to be one system that really can change your business. Keep on reading.

As the Founder and CEO of Lean Dimensions International I’m very proud to be able to show you and explain the model that has become somewhat of our trademark, because often when we talk about operational excellence, world class manufacturing, lean thinking, etc, if you ask somebody who’s into it, ask them to explain everything as one system, they often struggle with that. Most of the explanations is hard to follow since there’s a great deal of practitioners who doesn’t see the system they see a toolbox.


The persons who are in charge are often engineers who are promoted into a position to lead the implementation of continuous improvement and the approach it with an engineers mind, a logical roll out plan that look at it as if it was only a technical concept.

There’s a back side to that, that everything becomes technical. We really believe that IQ times EQ becomes unity and results (IQ*EQ=Unity and Results). It’s about technical aspects as well as emotional aspects that actually generate the results. There are of course engineers who understand that, however my experience is that it’s not the majority.

Companies who are successful in their implementation have managed to address the emotional side to people to really bond with them and with the system, and that’s the point, it’s a system, it’s not a set of tools. The toolbox approach often shows up to be when you are asking people with an engineering mindset to drive it. No offense to engineers, I’m an engineer myself, at least I’m a recovering engineer.

The point is that if you look at it as it’s a nice toolbox that you can use whenever you like to, people choose to opt out more often than not, and it’s not a toolbox, really. It’s a way of thinking and living and acting in a business. Keep reading for more details.

Working ON the business

Let me take you through this model, See picture. As you know, there’s no models that are perfect, but some are useful. We found this model to be quite useful in the interaction and explanation of the operational excellence system, or whatever you would call it where you work. Maybe I could say, what you want to call it, because a lot of companies have not really started to build a system, they’ve started to train people in tools, and it doesn’t hang together.

You’d be surprised how much easier it is for people when they see a picture of things that hangs together, you know what’s going on. You can see that everywhere in life I guess, but especially here, when there’s a lot of puzzle pieces everywhere, and you can see the total picture. It’s not too bad, it helps.

As you can see, this is drawing that has three sides. One side on the right hand, is what we call working ON the business. It’s about disassociating yourself from the content of the work to be able to look at the processes and see if they are meeting your requirements or not.

Think about it like this, I call it, “Watch the family, watch the movie.” If you sit with your family watching a movie, you’re going to see the movie. If you sit behind your family watching them when they are watching it, eating or having a drink, you will know what they do and how they act. Once in a while, you need to do that. You need to back away and watch people working, so that you understand what is really going on. That is working ON the business.

Having said that, it starts with the management team or a steering committee, whatever you want to call it, and they need to send a clear direction where they want to go. If people don’t know where we are heading, they don’t really know what they’re going to leave behind. Does that make sense? When you do any activity in Operational Excellence it most often has two results in mind. One is the deliver the business results needed and the other is to continuously build and strengthen the system. Teaching others, learning what works and what doesn’t etc, is key to delivering a system. It happens in parallel to the all the activities.

You have teams of people who analyze it all, the business in different parts. It’s very hard to analyze everything in one go, so you can split it up in smaller teams, in some systems like world class manufacturing, etc, it’s called Pillars. You have other names and other systems, but if it as a team that takes time out, they will now back away, watch the family watch the movie, and they might concentrate on quality, or maintenance related issues, or industrial engineering issues, or production flow issues, etc. They will understand their own focus area and how they can close the gaps in your business plan.

You concentrate on different parts the business. This means that if you set up a clear direction where you want go, a vision. This team of people could say, here’s why we are not there yet. They analyze that, they do something that’s called loss intelligence in our lingo, bthey make sure they understand all the details of the losses they focus on. They will present to the Management team?Steering committee who owns the resources and after agreement launch improvement teams, they can call it Kaizen teams, improvement teams, continuous improvement teams, whatever you want call it.

It’s important to be a team of people who analyzes and who improves it. We are today so disconnected from each other, from different functions in a business, and different layers in the company, with the customers, that if we never come together to learn from each other, the disconnection stays, Connections, unity that is the difference, that makes the difference. If you are connected to each other, and you’re more unified, you’re going to get the result. Two brains are smarter than one. More details to come on how the system is coming together, keep reading.

Ownership transformation

You put the team together, and they come up with some type of output. The problem here is that when you work on the business, it’s like putting a ball up here (top of triangle in picture), and it rolls downhill, when it comes down to this point (bottom corner of triangle) it go out to outer space, never to be seen again, and that happens a lot.

People run projects, and they promote, and they show people, but struggle to sustain, and everybody knows that. I mean, seriously, we know how often that happens. Why is that? They might never thought about holding the gains. We normally point at people and say you are supposed to do it, supervisors, first line leaders etc. Blaming them also create disconnections. How do you create a system to hold against?

The bottom of this triangle (see picture) is what we call the ownership transformation. It’s about transformation in general, to transform the culture, which is important, and the knowledge and capabilities of the people to build processes, to create value, to bring results. It’s also about taking the output from teams and handing it over to the line organization. This has to be designed. Not to be forgotten, because then all the work you have done improving is going to be wasted soon.

Working IN the business

On this side (right hand side of triangle in picture) is what we call working IN the business. Every day when you’re working, you could potentially use the thought process of operational excellence, and what I mean with that is the only thing you can effect when you are working to change the output, there are two things. Good news, it’s not 200 things, but there are still two.

You can add time. If you want to have more output, a lot of companies add time. We have overtime. In the short term it’s nice, maybe you make a little bit more money as a person and you get that task done. In the long term you also sacrificing home life, hobbies etc, that may be bad for people, nobody really wants that, plus it costs you more money as a business of course, but, you can still add time. Every person, from the CEO down to an operator, or any direction in a company, can add time normally. If you add people you by this definition add time.

The second thing you can do is you can reduce your losses. The definition of a loss is everything outside of idea. If you can do something in an ideal way, you have no losses, that’s as fast as you can go. If you can get it down to zero loss, which should be your target, you have reached perfection as we know it currently. Would your target to have some losses left? It doesn’t make sense. It might be hard to reach that, and sometimes impossible. I do understand that, but … it’s good to be unreasonable at times, aim for perfection.

You focus to reduce the losses and if you had zero loss with the correct amount of time added, your performance is at maximum. That’s it, this means that if you work in an area and you don’t know the losses you have, you cannot eradicate or minimize them. Which means that you need help from Pillars or similar to analyze it. It’s good to practice to find losses, to get new eyes, to see the world with new eyes, to see where the losses are. To find opportunities.

If you don’t know your losses, you actually don’t know your business, I would argue. Imagine if you have a 50% output of a machine. 50% of the time is losses. If you don’t know them, you actually don’t really know your area, would you agree? You need to get those eyes and learn what is really going on, separate normal from abnormal etc.

Performance Control System – Working In the business

I see this as a bunch of candles on a table, they’re burning, and you put your hand on top of it, you burn yourself! You burn yourself everyday on the same candle and on Friday after burning yourself every day you realize what’s gonna happen on Monday? I’m gonna burn myself again. Really? How do you live with that? Exhausting to think about and the next week it’s gonna be another new candle as well that you’re going burn yourself on.

In the performance control system, which is this side (right side of triangle), working in the business, it’s all about understanding what losses you have, and attack them to create the output. It’s not focusing on the output, because you can’t focus on that. It’s like focusing on the gross profit of the United States. Right? How do you do that? You focus on something you can actually do something about.

Operators meet starting and ending shifts, you summarize on days, you have trends, you see where you’re going, so if you’re getting better or worse. Do we need to do something? What is actually sabotaging our shifts every day. You can see trends in the week, and then attack that once a week, and every month you will add money to it.

The three sides they create Working ON the business, Transformation, Working In the business. That is Operational Excellence as a System. That is world class manufacturing, that is lean thinking, that’s the system. In the core of it all is PDCA plan, do, check, act. And I know that people say, “No, no, it’s DMAIC, or 8D, or A3, whatever.”

Think about it like this. It doesn’t have to be that complicated. If you’re going to train people, and you have PDCA, if you understand that you are in good shape. You could also argue that all the other systems are linked to PDCA. Maybe you don’t agree, let me know if you don’t. The thing is that if there’s a mindset of following a process it’s more effective.

You want to build a good leadership of managing change, create processes fro loss intelligence, loss eradication, and loss prevention. Prevention means holding gains, but also making sure that the you learn from the losses you designed into your own processes, isn’t repeated next time a new product is introduced or when a new machine is installed and of course when you hire new people.

This is a short simple way to explain The Operational Excellence System. We call it Operational Excellence 2.0 for the reason that we think that the heart has to be involved, it’s not only the brain. A Real System considers who it supports the people to perform to their best level and to ensure they develop.

IQ*EQ=Unity and Results. One system, success. Like and share this article, please. Send an email and talk to me about that.

How and where you start to implement the System isn’t easy and you can learn a great deal from somebody who has done it before.

Johan Majlov, CEO Lean Dimensions International

Not a Toolbox but a System, Seeing The Whole

Hello everyone, my name is Joe Majlov and today I’m putting this video together to talk a little bit on the culture of 5s. 5s is a very famous method based on the idea of world-class manufacturing or Lean Thinking. During this video, I’m going to tell a little story, an idea about what I think is important around the culture of 5s, and why it works in some areas and why it doesn’t in others. To find out more on the culture of 5S, watch the video .

The culture for 5S video

Hey everyone! Today, I’ve been thinking about learning and how much I enjoy learning new things. In fact, I think that’s one of the main reasons I’m a consultant.I like to learn new things, how things are made etc., But sometimes, it can be hard to find the time to learn. How well do you find the time to learn new things, on an everyday basis?

To find out my tips on how I continuously learn, check out the video .

2 Min Drill Continuous Learning

Hi everyone! Today, I wanted to focus on talking a little bit about resistance to change. Inspired by watching television, seeing the protests going on, as well as things happening in other countries, one thought struck me: I can’t help but think that the less you are a part of the change, the less you’re a part of what’s going on. The decisions are happening, but because you’re not apart of the decision-making process, you’re more prone to resist the change.

To find out how to better manage your reactions to change, check out the video .

2 min Drill Inclusive Leadership

OFE is a Performance Indicator that is meant to put the focus of improvement activities on flow of material. With flow of material, we mean flow of products from incoming raw material to shipment of billable products. Focus on flow will lead to an improvement of business targets like:

  •      Improved On Time Delivery
  •      Decreased inventory days of supply
  •      Return on Sales/EBITDA
  •      Return on Net Assets, RONA

These business KPI’s are the result of the processes and can only be reached by reduction of losses.


Historically businesses have focused on Overall Equipment Effectiveness (OEE and more about OEE later) as a Performance indicator that has a big impact on the business. In part that is correct, however, it has led to an unhealthy focus to improve OEE. It’s unhealthy in the way that companies have targeted set up time as one big and easy to attack loss, that has led to bigger batches. Bigger batches of products that sit in the house too long and in some cases, are finally obsolete and causes a cost when scrapped.

Running a business where machines are working in a flow to deliver the products means synchronization of the products must take precedence and the OEE focus disrupts that thought process. The disruption comes from the fact that running a machine with OEE focus makes you chose products that shouldn’t run now and batch size bigger than the customer need. Running a bigger batch, putting several customer orders together or adding a safety stock to the batch, is reducing the number of setups which gives you more time to produce and your OEE will increase. Doing that also means that you are producing products you can’t sell right now and that will lead to high inventory, low On-Time Delivery, and a lower financial result.

Definition of Overall Equipment Effectiveness

OEE=Produced parts of correct quality/Theoretical number possible.

A simple way to say this is; If you plan to run for 10 hours and your technical run rate (as fast as the machine can run) is 100 pcs/hour you should have 1000 pcs. If you, for example, have 650 pcs of the correct quality you have OEE=650/1000 =65%. There are many reasons why you lost 350 pcs during that time. The reasons are called losses. A loss is basically the difference between the perfect ideal state and reality. Examples of losses are; Set-up time, shortstop, breakdown, defects, speed loss etc. If you reduce a loss you will gain time in the machine and produce more parts or the time can be used for other things like setting up to a new order line. This is driven by the actual business need. Do you need more volume or do you need to run more exact to customer demand? All business wants both however at a certain point one is more important than the other.

What will an OFE focus lead to

A focus on OFE leads to a combination of OEE and planning for the customer need.

Definition of OFE


Good Production Factor is defined as the products you produce that can be sold within a defined time frame. The time frame is set by a good business standard for the respective industry you are in. GPF can be and should be, changed over time to create a base for continuous improvement.

Good Production Factor – GPF

For example, if your industry standard says that product should be sold within 30 days of completed operation, you can evaluate the percentage number of products that were sold within the time frame.

Example calculation

For a given machine the OEE is 65% and 50% of the products produced are sold within the time frame. OFE calculation gives OFE=OEE*GPF OFE=0.65*0.50 OFE=0,325 =32.5%

If we would reduce the batch size and do an additional set-up we will lose in OEE, however, we might sell a higher amount of product produced. In this example increased set up reduces OEE with 5% units but gives you a chance to run another order line and increases GPF with 20% units. This is just an example and reality is different.

OFE=0.60*0.7=0.42 OFE=42%

This means that we carry less inventory, deliver more order lines. It costs in OEE but if we still can deliver the volume and don’t have to hire more people to do that, there’s no real cost to it.

A higher OEE can lead to a better OFE as well if the GPF is constant.

If set-up time is reduced by actual improvements to the standard and the time saved is used for more setups to allow more orderliness through it will potentially keep OEE at the same level while improving the GPF. If you reduce other losses like shortstops, breakdowns etc. and OEE goes up a higher volume can be produced and the OFE will be better as well.

If the focus on OFE can be done over the whole production line the real output improvements can be tracked.


Johan Majlov

CEO, Lean Dimensions International. 2010-01-05



Overall Flow Effectiveness – OFE

When I was a production manager for an area and I had a team of fantastic people that I worked with, one day when I was walking to a meeting one of the guys there told to another guy that “if I was intelligent I will be working in design.” I stopped and asked him “what do you mean if you’re intelligent to work in design”? He said “yea, I meant exactly what I said!” so I thought it was a bit strange and when I walked into the meeting, I addressed that to everyone and I said “do you feel the same?” basically, they said, “yeah if we’re intelligent, we will work in another area”. These guys for assembling jet engines …

[Listen to the rest, on the video]

2 Min Drill, The real focus for better output