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Peter Handlinger

Peter Handlinger: KPO or Production Control function?

By Peter Handlinger, - Last updated: Sunday, January 6, 2013 - Save & Share - Leave a comment

The wording of the question takes as a given that a KPO should be formed and focusses on the practical aspects of creating and maintaining a KPO.

The obvious linkage between OMCD in Toyota and a “KPO” is seductive to use as a template for other organisations. But one needs to be aware of the scale issue – Toyota’s OMCD is a small group (around 25 people) that is Head Office based to serve the entire group globally. To the best of my knowledge there isn’t an “OMCD” at each of its manufacturing facilities. But what does exist at each Toyota owned plant is a PC function (Production Control) – often linked directly with the Logistics line function. There may well be a TPS Office but this, in my experience, has tended to focus on providing TPS specific training and facilitating QC Circle activity. To me the question is whether one forms a KPO or alternatively establishes a well managed PC function through which the Kaizen activities are driven. Which approach to follow will depend on the size of the target the equity partners want to turnaround – large global operation = “OMCD”/KPO structure. For the rest it would be best to utilize the PC approach.

Question KPO PC
What is the role of the KPO to serve the organization? 1. Provide governance & reporting on Kaizen

2. Provide expertise to support line function re Kaizen

1. Traditional PC functions

2. See items 1 & 2 under KPO

How do we best leverage the KPO for leadership development? Rotate staff through KPO 1.PC experience is invaluable for future leaders – rotate future staff through PC function

2. PC reports to the leadership and reflects the entire value stream – prevents local optimization within leadership.

What is optimal size of the KPO organization? Small – difficult to be specific. But for a USD 500 million T/O company probably 5 people. Each PC member to be versed in Kaizen facilitation. Size of PC function? Pure PC is small(ish). If Logistics included can be quite large (relatively speaking).
What is right mix of internal / external hires? Since KPO represents company expertise external involvement is small – probably simple ‘sensei’ type support. ‘Sensei’ support plus some technical competent ‘hands & feet’.
Who should the KPO lead report to? CEO PC reports to CEO
How is the KPO best organized in order to sustain Lean both inside/outside of the plant? (i.e. sales, distribution, marketing, product development in addition to manufacturing)” Cover the entire value stream. Cover the entire value stream. (In Toyota the Product Development process is managed through PC via their PPMD [Project Planning & Management Division] department).

A slightly different perspective. Hope this helps.

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