So, let’s first get an understanding of the environment where we’re at.
The joint venture is set up by three independent contractors, who choose to bid together, rather than separately, for a contract which includes the research, design, engineering and construction activities for a client who currently builds around 35 plants every three years with a yearly turnover of 70 million EURO. The contract holds some interesting details, aimed at the promotion of continuous improvement, and will in principle last for the next 10 years. Let’s call the joint venture JV, the client being the Firm.
Projects included in the project have already passed Waypoints (or Tollgates) 1 thru 3, and have completed the Identification, Assessment and Selection Stages. After that, they’re considered to be either small (with up to 3 months of lead time), medium (with up to 6 months of lead time) or large (with up to 12 months of lead time):
- Identification (WP 1)
- Assessment (WP 2)
- Selection (WP 3)
- Definition (WP 4)
- Execution (WP 5)
The Firm and the three contractors as assembled in the JV, are all involved in the Definition and Execution stages of the projects. Sometimes they play an active role, sometimes they’re more at a distance. They may act as a client, or also as a supplier, or both. Then, the JV makes use of subcontractors for specific low value jobs -and they purchase parts,engineering or machines at different suppliers-.
The margins in their industry are getting smaller, and competition from other countries is waiting to jump into the market of both the Firm and the JV. So, it’s considered essential to become more flexible and to allow for rapid deployment of new high quality plants. For this reason, both the client and the contractors wish to learn to reduce lead times and expenses of all their projects.
Meanwhile the morale among the workforce is quite high. The JV has already served the same Firm during the previous 10 year tender period -with considerable success-. Quality has been quite high: Projects tended to be delivered exactly according to clients’ specs and there used to be very little non conformity issues at the moment of delivery. As a result, sense of urgency to change doesn’t seem to be top of mind for most of the workforce. Faster, better and lower cost, yeah right…
This blog is part of my Lean & Agile Implementation Journal