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Lean Assessment Overview

Lean Sensei International


Introduction

 The journey to become a world-class company may


be long and challenging, but the navigation of the
trip itself can be much more effective when the
“right” strategy has been developed after going
through a thorough, comprehensive diagnostic
assessment
 The Lean Diagnostic Assessment provides a
“snapshot” of company’s current weaknesses and
strengths, a possible future state, and the resulting
gap which paves the way for constructive changes
 The project provides a high level, 30,000 ft
overview of the current strengths and weaknesses
 The project utilizes a proven Lean Assessment Tool
which measures performance and progress of the
company in 50 key lean topics critical to the
success of the organization

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PILOT

P – Partners & Suppliers


I – Input into the Organization
L – Lean Organization
O – Output from the Organization
T – “The Customers”

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For some companies, assessments are performed
as part of recognition programs

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For some, the primary objective is benchmarking

 More commonly, the assessments are used to benchmark progress


against other companies, and to gauge understanding of how
much “gap” exists between current state and future goals

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Others use the assessment tool to set strategy

GAPS

CURRENT BEST VISION FUTURE


ASSESS
STATE PRACTICES & GOALS STATE

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Primary Objectives of Lean Assessment

Ultimately, the objectives of performing assessment varies from companies to


companies

Recognition
Performance
Measurement
Problem
Solving
Bench-
marking
Progress Strategy &
Check target
Setting

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Best approach to assessments

 The most effective method for performing assessments is to


combine the diagnostic portion with process improvement portion
 First diagnose the problem and find the “gap”
 Then attack the area needing most change with lean improvements
 Sustain the results through regular monitoring of progress through
assessments
 Use kaizen methodologies to ensure sustainability

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The assessment must produce tangible results or
the actual process is not value-added

 Assessments give us understanding of our weaknesses, strengths and


areas of potential improvement opportunities
 This provides a basis for kaizen and process improvements, making the
assessment value-added and cost effective
 This is where the fundamental difference lies between some North
American companies and benchmark organizations such as Toyota

Kai Zen

Change Good

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Key Steps

FRAMEWORK
Next
Steps
Ideas

High Level
Assessment
Phase 2
DIAGNOSTIC
Operational
Assessment

Diagnostic
Interviews
Phase 1

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What is the difference?

 Our assessment is simple


 Our assessment can be done by variety of different people, but
still produces consistent results
 The focus must be on Action and Doing, not on Checking as
much
 That is, get things done and move onto the next solution as fast
as possible

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Lean Assessment Methodology Principles
Kaizen & Kaikaku – Based
on findings, develop specific
ASSESSMENT PROJECT INFORMATION ANALYSIS & REPORT KAIZEN & solutions to improve
PREPARATION KICKOFF COLLECTION RANKING OUT KAIKAKU Kai Zen

continuously (kaizen) and


strategically (kaikaku).
Implement simple solutions
Change Good
and move into more complex
ideas. Make a difference.
Assessment Prep –
Prepare for the event by Report Out – Present findings of
gathering basic company the assessment, including
info, schedule kickoff, quantitative and qualitative
distribute basic handout, Project Kickoff – Conduct evidences. Provide possible
and plan for interviews Assessment Overview solutions and Toyota benchmark
Company Name:
General Company Information
Your company name here
presentation. Do a gemba information. Recommend project
walk around, confirm details
Category Data Comments
5S Shopfloor
Annual Gross Sales Goal: Reduce setup time

timelines.
Avg annual sales growth over past 3 years (%) by 25%
Number of employees:
Setup Reduction Team TPM Team
Shopfloor
Staff
Total employees this plant
Size of the plant (sq. ft.) PhaseValue
I: Stream
Initiate
Team
Phase
Shopfloor
Office
Lean can be applied throughout the organization
Basic Performance Metric Project Advanced Performance Metric Project
Total space this plant
Production Capacity/Volume (units per year)
Average Takt time (if known)
Basic Lean Training – All Shopfloor
Over 40 lean tools
What % of unit cost is from materials vs labour?
In business for how many years?
Launch Lean Journey
Or programs
Privately or publicly owned?
5S Office
Shopfloor unionized?
Any layoffs in the past 3 years? If so, how many? • Performance Management
• Design Collaboration Company-wide Value Stream
Location(s)
Headquarters Suppliers • Cost Reduction Collaboration
• Vendor Managed Inventory Key Lean Sensei Coaches Goal: Reduce Lead
Other sites • Alliance & Partnering • Collaborative ProgramBottleneck Value Stream
List • Voice of Customer
Time by 50%
• Kanban Initiate
List • Logistics Analysis • Lean
• Automated Diagnostic Assessment
Processes
• Centralized Info System
• Current State Mapping

Information Collection – Begin


List • Transportation Optimization Implement Gems/Quick Hits
Legend Implement mid-term solutions
List • Freight Consolidation • Demand Forecasting
Total Plants • Freight Audit Assistance • SWOT Analysis
Implement Shopfloor Activities
• Strategic Planning
When did the company start its lean journey? Reward & Recognition Project
List Lean Practitioners & their qualifications List Qualifications (Greenbelt, Blackbelt, other Certifications) Office Activities • Implementation Planning
List Names • Change Management Planning
Lean Assessment
Basic Lean Training – All Staff
Sustain
BUY MAKE MOVE STORE SELL
List
List
• Lean Philosophy and mindset

Overview & Preparation


List

interviews, create high level value


List

Additional comments?
Total Practitioners Seven Key Categories • 5S
• Root Cause Analysis • Warehouse utilization
(eg. Lean Diagnostic Score) • Strategic Sourcing • Value Stream Mapping • Kanban
• Buying Pattern Analysis • Setup Reduction • Vendor Managed Inventory
• Consolidation • Poka Yoke
• Invoice Reduction • TPM Sustain Lean•• Material
Journey Flow Analysis
Inventory Reduction

stream, collect details and


• Commodity Leveraging • Lean Tools & Technique
Lean Sensei International • Specification Changes •

Spaghetti Plant Layout Analysis
Team Building
• Procurement Cards
Design Customers
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• DFA/DFM

General Company Info


• Synchronous Engineering

comments, look for issues, gather


• Lean Project Management
• Process Simplification
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Vision & Strategy

Report Out presentation


Change
Management
Foundation
For Lean
Lean
Philosophy
Lean
Implementation
Specialized
Lean Tools
Problem
Solving Tools process information
Potential Performance Measures

Legend
Blue text – internal measures
Order Entry & Procurement Red text – external measures

Analysis & Ranking – Analyze


Inventory Management
–Error rate Circles indicate currently
–Turnaround/lead time measured (T, M, P) –# of turns
oIncoming –Inventory levels
oOutgoing –Days of inventory
Receiving –Obsolete inventory
–Invoicing error
–% backorders –Error rate –Inventory accuracy Copyright Lean Sensei International
–Turnaround/lead Time –Warranty returns %

all the information collected


–On time delivery (vendor) –Other returns %
–Stock out (vendor)
ata

s)

–Error Rate (vendor)


yr
k
D

–% freight vs cost (vendor)


ar

3
ny

Shipping

Kickoff Presentation
m

(in

–Defect rate (vendors)


pa

ch

et

Sales
en
om

through interviews and process


–Delivery-to-promise
rg
B
tC

Ta

–On time delivery


y

–% of successful “wins”
str
en

re

–Fill rate Invoicing


–Actual vs forecast
tu
rr

du

Key Metrics
Cu

–Turn around/lead time


Fu
In

–Vendor Invoicing Error –Customer satisfaction level


–Freight cost –Freight invoicingOn Time
error 85.0% buying pattern
Delivery –Customer 99.0% 95.0%
–% freight return against
First Pass Yield –Customer
89.0% complaints
99.0% 94.0%

evaluation. Rank and rate the


sales –Error rates
–Error rate Number of Turns 3.0 20.0 10.0
–% damaged delivery Manufacturing
Sales Per Employee $85,000 $175,000 $150,000
–% internal vs external freight
–Stock transfers –Defect rate Fill Rate 73.0% 99.0% 94.0%
–Cycle time/Takt time Error Rate 7.0% 1.0% 5.5%

company and develop possible


–Lead time
Metric A
–Improvements/employee
Metric B
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Metric C
Metric D

solutions. Prepare report out.


Good
OK
Needs Improvement
Key Measures
High level value stream
Collect Data and Metrics Criteria
Vision & Strategy
Rank the company
Circle One
Company visiting:
Comments
Corporate Vision Poor Below Avg Avg Good Excellent

Lean Strategy Poor Below Avg Avg Good Excellent

Lean Implementation Planning Poor Below Avg Avg Good Excellent

Change Management & Environment Circle One


People Mindset & Attitude Poor Below Avg Avg Good Excellent

Reward & Recognition (Programs ) Poor Below Avg Avg Good Excellent

Interview Schedule
Balanc ed Scorecard Poor Below Avg Avg Good Excellent

Safety (Programs) Poor Below Avg Avg Good Excellent

Foundation for Lean Implem entation Circle One Corporate Vision Now
Management Support for Lean Poor Below Avg Avg Good Excellent
5 3 yrs
Who How When Room Remark Lean Experience (as a company) Poor Below Avg Avg Good Excellent

Lean Network Poor Below Avg Avg Good Excellent 4


Pacific Demand Management TBD
Lean Philosophy in Place Circle One 3
Pacific Supply Management Sacha Kersten Telecon Week of Dec 3rd Telecon # Pull/Demand Replenishment/Kanban Poor Below Avg Avg Good Excellent
Communication of Lean 2
Pacific Warehouse & Distribution Chris Hudson
Vendor Managed Inventory & Point of Us e Poor Below Avg Avg Good Excellent
Supply Chain Integration
Material Flow & Manufacturing Layout Poor Below Avg Avg Good Excellent
Strategy 1
Kaizen/Continuous Improvement Poor Below Avg Avg Good Excellent
Operation Director Manus J. Sit in Dec 11th 1245pm 0115pm MJ Single-Piece/Small Batch Production Poor Below Avg Avg Good Excellent
0
Satish Patnaik Telecon Vendor Relationship Management Poor Below Avg Avg Good Excellent
APSC Planner Dec 11th 0130pm 0200pm SSN
Cassie Lee Sit in Heijunka/Leveling Poor Below Avg Avg Good Excellent

Panida J.
Supply Management Sit in Dec 11th 0215pm 0245pm SSN
Ratchata S. Lean Implementation Level Circle One
Jakrin S. 5S & Visual Factory Poor Below Avg Avg Good Excellent

Teeradej K.
Manufacturing UT Sit in Dec 11th 0300pm 0330pm SSN
Standardized Processes Poor Below Avg Avg Good Excellent

Pramorn K. Performance Measurement Poor Below Avg Avg Good Excellent

Dhanapol P. Lean Implementation Planning Lean Strategy


Siriluk C. Circle One
Warehouse Sit in Dec 12th 0345am 0415am SSN DHL Team Specialized Tools Utilized

Pornapa T.

Gemba Process Walk


Poka Yoke/Error Proofing Poor Below Avg Avg Good Excellent
Nuchanad T.
Procurement Sit in Dec 12th 0430am 0500am SSN Design for Assembly/Manufacturability (DFA) Poor Below Avg Avg Good Excellent
Kesara H.
SMED/Setup Reduction Poor Below Avg Avg Good Excellent

Oversea Supplier 1 TBD Telecon Week of Dec 3rd Procurment may join the telecon TPM/Productive Maintenance Poor Below Avg Avg Good Excellent

Oversea Supplier 2 TBD Telecon Week of Dec 3rd Procurment may join the telecon Presence of Problem Solving Tools Circle One
Fishbone Diagram & Root Cause Analysis Poor Below Avg Avg Good Excellent

Local Supplier 1 TCL Sit in Dec 12th 0845am 0915am SSN Procurment may join the telecon Pareto Chart Poor Below Avg Avg Good Excellent

Interviews
Check Sheet Poor Below Avg Avg Good Excellent
Local Supplier 2 TPN Sit in Dec 12th 0930am 1000am SSN Procurment may join the telecon Value Stream Mapping Poor Below Avg Avg Good Excellent

Remark:
- Base on Thailand Time
- Pacific Time + ? Hours

Schedule Interviews
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Three Objectives

 Understand the “Current State” of


manufacturing and supply chain environment
 Define high level view of the “Lean Future”
 Recommend “next step” in terms of projects
to launch or initiatives to focus
 Provide a framework for kaizen

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Evaluation Criteria

 The assessment tracks current and future performance of the company in 50 key areas,
expressed as spider charts (today vs 3 years view)
 They are rated as:
 5 – Excellent
 4 – Good
 3 – Average
 2 – Below Average
 1 – Poor NOTE: A rating of 0 means N/A, the category does not apply
 The validated areas include:
 Vision & Strategy
 Change Management & Environment
 Foundation & Support for Lean Implementation
 Lean Philosophy in Place
 Lean Implementation Level
 Specialized Lean Tools Utilized
 Presence of Problem Solving Tools & Knowledge
 The 50 metrics are “weighted” to ensure that final score (L.E.A.N. Score) represent an
accurate measure of the overall performance of the company with respect to lean
activities
 If the L.E.A.N. Score is at or higher than 3.0, the company receives a “Lean Certified”
designation, and will be given a LEAN Certificate

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Lean Assessment
Criteria NOW 3 YRS Comments
Vision & Strategy Now 3 yrs
Corporate Vision Now
Corporate Vision 5 3 yrs
Supply Chain Integration
4
Lean Manufacturing Strategy
Lean Implementation Planning 3
Communication of Strategy 2
Communication of Strategy Supply Chain Integration
1
Change Management & Environment Now 3 yrs 0
Management Mindset
Staff Attitude
Shopfloor Viewpoints
Culture
Reward & Recognition Lean Implementation Planning Lean Manufacturing Strategy
Roles & Responsibility
Balanced Scorecard Current
Future
Agility & Adaptability
Safety

Foundation for Lean Implementation Now 3 yrs


Management Support for Lean
Management Support for Now
Budget & Resources
Lean 3 yrs
Knowledge Lean
5
Experience Lean
Lean Network 4
Lean Training Access Budget & Resources
Best Practices Access 3
Lean Training Support
Lean Training Access
2
1
Lean Philosophy in Place Now 3 yrs Lean Training Support 0 Knowledge Lean
Pull/Demand Replenishment
Just-in-Time Supply
Material Flow & Manufacturing Layout
Kaizen/CITT Environment
Single-Piece/Small Batch Production Best Practices Access Experience Lean
Vendor Relationship Management
Cellular Manufacturing
Heijunka/Leveling Lean Network

Criteria Comments
Lean Implementation Level Now 3 yrs
5S
Visual Factory
5S
Standardized Processes
5 Now
Performance Measurement
Problem Solving Tools 4 3 yrs
Vendor Managed Inventory Visual Factory
Kanban 3
Current
Future

Point of Use 2
Vendor Managed Inventory
1
Specialized Tools Utilized Now 3 yrs Point of Use 0 Standardized Processes
Poka Yoke/Error Proofing
Design for Assembly/Manufacturability
Setup Reduction
TPM/Preventative Maintenance
Kanban Performance Measurement
Six Sigma
Theory of Constraint
Problem Solving Tools
Presence of Problem Solving Tools Now 3 yrs
Fishbone Diagram & Root Cause Analysis
Pareto Chart

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Current State – Foundation for Lean

Now
Management Support for Lean 3 yrs
5
4
Lean Training Access Budget & Resources
3
2
1
ean Training Support from Lean Knowledge (as a
0
Management company)

Lean Experience (as a


Best Practices Access
company)

Lean Network

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L.E.A.N Score stands for: Weighted Overall
Lean

Enterprise
L.E.A.N. Score
Assessment

Number

L.E.A.N SCORE

Current Score

Target Score
(in 3 years) Maximum Score

3.0
4.0 5.0

1=poor 2=below average 3=average 4=good 5=excellent


(compared against companies moving toward world-class through lean)

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Project Stages

 The assessment is managed through five stages:

 Stage One – Initial Interview Sessions with key members and


managers
 Stage Two – On-site assessment and operations review
 Stage Three – A High Level Assessment of the supply chain &
manufacturing environment
 Stage Four – Recommendation on “next steps” in terms of what
projects to launch and the basic approach
 Stage Five – Finalizing the material and Presentation of the
findings to the management

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Example of implementation Plan for one year

Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar
5S Shopfloor
Goal: Reduce setup time
by 25%
Setup Reduction Team TPM Team

Value Stream Team

Basic Performance Metric Project Advanced Performance Metric Project

Basic Lean Training – All Shopfloor

5S Office

Company-wide Value Stream


Goal: Reduce Lead
Bottleneck Value Stream Time by 50%

Legend Implement Gems/Quick Hits Implement mid-term solutions


Shopfloor Activities
Reward & Recognition Project
Office Activities
Basic Lean Training – All Staff
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 Supplier Evaluation & Analysis
Criteria SCORE Poor Below Average Average Good
Supplier Culture and Philosophy 1 2 3 4
Your suppliers believe in a culture of getting the quality right the first time No, not really Maybe Somewhat true Quite true
Your suppliers understand and practice "Lean Thinking" and "Lean Philosophy" No, not really Maybe Somewhat true Quite true
You share your company's philosophy with your suppliers No, not really Maybe Somewhat true Quite true

Supplier Performance Management 1 2 3 4


You manage supplier performance in a structured, formal manner No, not really Maybe Somewhat true Quite true
You have measuring systems to keep your suppliers in check No, not really Maybe Somewhat true Quite true
You educate your supplier to follow your company's policy and guidelines No, not really Maybe Somewhat true Quite true
You have clear expectations for supplier performance and development No, not really Maybe Somewhat true Quite true

Supplier Partnership 1 2 3 4
You are committed to working closely with your suppliers No, not really Maybe Somewhat true Quite true
Your suppliers provide input to improve your products No, not really Maybe Somewhat true Quite true
You partner with suppliers to solve problems pro-actively No, not really Maybe Somewhat true Quite true
Your suppliers develop and grow with you No, not really Maybe Somewhat true Quite true Criteria SCORE Poor Below Average Average Good
Supplier Lean 1 2 3 4
Supplier Culture and Philosophy 1 2 3 4
Your suppliers use the "pull" system to avoid overproduction No, not really Maybe Somewhat true Your suppliers believe
Quite true in a culture of getting the quality right the first time No, not really Maybe Somewhat true Quite true
Your suppliers standardize the tasks for continuous improvement No, not really Maybe Somewhat true Your suppliers understand
Quite true and practice "Lean Thinking" and "Lean Philosophy" No, not really Maybe Somewhat true Quite true
Your suppliers use visual control so no problems are hidden No, not really Maybe Somewhat true You share your
Quitecompany's
true philosophy with your suppliers No, not really Maybe Somewhat true Quite true

You practice "Genchi-genbutsu" and visit suppliers to study their operation and culture No, not really Maybe Somewhat true Supplier Performance
Quite true Management 1 2 3 4
You collaborate with your suppliers to eliminate any wastes in their process No, not really Maybe Somewhat true Quite true
You manage supplier performance in a structured, formal manner No, not really Maybe Somewhat true Quite true
Supplier Flow 1 2 3 4 systems to keep your suppliers in check
You have measuring No, not really Maybe Somewhat true Quite true

Your suppliers create continuous process flow to deliver value No, not really Maybe Somewhat true You educateQuite
yourtrue
supplier to follow your company's policy and guidelines No, not really Maybe Somewhat true Quite true

Your suppliers make every effort to shorten lead-time from order receiving to delivery No, not really Maybe Somewhat true You have clear
Quiteexpectations
true for supplier performance and development No, not really Maybe Somewhat true Quite true

There is an effort to reduce batch sizes and WIP in the system No, not really Maybe Somewhat true Supplier Partnership
Quite true 1 2 3 4
Your suppliers level out the workload (Heijunka) No, not really Maybe Somewhat true Quite true
You are committed to working closely with your suppliers No, not really Maybe Somewhat true Quite true

TOTALS 0 DIVIDE BY 20 = 0.0 Your suppliers


FINAL provide input to improve your products
SCOR No, not really Maybe Somewhat true Quite true
You partner with suppliers to solve problems pro-actively No, not really Maybe Somewhat true Quite true
Your suppliers develop and grow with you No, not really Maybe Somewhat true Quite true

Supplier Lean 1 2 3 4
Your suppliers use the "pull" system to avoid overproduction No, not really Maybe Somewhat true Quite true
Your suppliers standardize the tasks for continuous improvement No, not really Maybe Somewhat true Quite true
Your suppliers use visual control so no problems are hidden No, not really Maybe Somewhat true Quite true
You practice "Genchi-genbutsu" and visit suppliers to study their operation and culture No, not really Maybe Somewhat true Quite true
You collaborate with your suppliers to eliminate any wastes in their process No, not really Maybe Somewhat true Quite true

 Customer Evaluation & Analysis


Supplier Flow 1 2 3 4
Your suppliers create continuous process flow to deliver value No, not really Maybe Somewhat true Quite true
Your suppliers make every effort to shorten lead-time from order receiving to delivery No, not really Maybe Somewhat true Quite true
There is an effort to reduce batch sizes and WIP in the system No, not really Maybe Somewhat true Quite true
Your suppliers level out the workload (Heijunka) No, not really Maybe Somewhat true Quite true

TOTALS 0 DIVIDE BY 20 = 0.0 FINAL SCOR

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Strategy Market Canvas

Strategy Canvas of Short-Haul Airline Industry Strategy Canvas of Southwest Airlines

10 10
8 8

Offerings
Offerings

Southwest
6 6
other airlines Southwest
4 4
2 car 2
0 0
service

service
connectivity

connectivity
friendly
price

seating

speed

friendly
price

seating

speed
meals

departures
lounges

meals

lounges

departures
choice

choice
frequent

frequent
hub

hub
Factors of Competition Factors of Competition

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Putting everything together

5S
5 Now
4 3 yrs
Vendor Managed Inventory Visual Factory
3 5S
5 Now
5
5S
2 Vendor Managed Inventory
4
Visual Factory 3 yrs
Now 3
4
Vendor Managed Inventory
3
Visual Factory 3 yrs 1 2
1
2 Point of Use 0 Standardized Processes Point of Use 0 Standardized Processes
1
Point of Use 0 Standardized Processes

Kanban Performance Measurement


Kanban Performance Measurement
Kanban Performance Measurement Problem Solving Tools
Problem Solving T ools

Problem Solving Tools

Strategy Canvas of Short-Haul Airline Industry

10
8
Offerings

Southwest
6
other airlines
4
2 car
0
service
connectivity
friendly
price

seating

speed
meals

lounges

departures
choice

frequent
hub

Factors of Competition

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Contact Information

 Contact Information

David Koichi Chao, P.Eng.


President
Lean Sensei International
#101 – 1001 W. Broadway, Unit 364
Vancouver, BC, Canada V6H 4E4
TEL: 604-785-1800
FAX: 604-677-5211
Email: info@leansensei.com
Website: www.leansensei.com

Copyright Lean Sensei International