Division of Production Management

Faculty of Engineering
Lund University

Operational Excellence and Lean

Production at Haldex
Improving Haldex Way – The Value Stream Approach

Authors: Hjalmar Sventelius

Sara Öhrström

Supervisors: Johan Valett, Haldex

Bertil I Nilsson, Lund University, Faculty of Engineering
II
Preface
This Master Thesis is the final part of a five year master’s degree in Mechanical
Engineering, and Industrial Engineering and Management at Lund University,
Faculty of Engineering. The thesis was conducted during the spring of 2013 on
initiatives from Haldex.

It has been a true learning experience and a great opportunity to work at a global
company such as Haldex. The atmosphere have been very welcoming from the
beginning and given an immediate feeling of commitment and involvement, enabling
for open discussions at an early stage.

We have been truly amazed by all the support and encouragement that has been
given throughout the thesis, and would sincerely like thank everyone involved. A
special thanks goes to Johan Valett, supervisor at Haldex, for invaluable advices and
continuous support, and Bertil I Nilsson, supervisor at Lund University, Faculty of
Engineering, for very helpful guidance and sharing of expertise. We would also like
to thank our steering committee at Haldex, Peter Elisson, Julie Kochert, Mary
Murphy, Sarah Nelson and Anders Pålsson for all discussions, feedback and support.

Finally we would like to thank all people involved in the site visit at Haldex
Weyersheim, especially Maggie Barber facilitating all arrangements and supported
us throughout the visit.

Lund, June 2013

Hjalmar Sventelius

Sara Öhrström

III
IV
Abstract
Title: Operational Excellence and Lean Production at Haldex:
Improving Haldex Way – The Value Stream Approach

Authors: Hjalmar Sventelius and Sara Öhrström

Supervisors: Johan Valett, Vice President Haldex Way, Haldex

Bertil I Nilsson, Adjunct Assistant Professor, Department of

Industrial Management and Logistics, Faculty of
Engineering, Lund University

Steering Committee: Peter Elisson, Change Agent Haldex Way, Haldex

Julie Kochert, Manager, Quality Systems-Haldex Way, Haldex
Mary Murphy, Change Agent Haldex Way, Haldex
Sarah Nelson, Sr Change Agent, Haldex
Anders Pålsson, Manager Logistics, Haldex Landskrona

Background: The increasing demands on the vehicle market regarding

cost effectiveness, efficient production and innovative
solutions create an unforgiving environment for the
suppliers. Haldex has developed Haldex Way, a management
and improvement framework focused on lean production to
meet these demands. Although lean methodologies are
utilized at Haldex, Haldex Way has currently issues with
consistency and applicability in all areas of the organization.
To address these issues and stay on the cutting edge of the
market, further development of the Haldex Way concept
must be made.

Problem Definition: The identified problems with the currently existing Haldex
Way can be summarized as:

 Slow improvements of result.

 Low level of utilization and low general
buy in of Haldex Way.
 Lack of ownership and applicability of
Haldex Way in implementation.

Purpose: The purpose of this Master Thesis is to develop an improved

framework for Haldex Way and a specific approach for the
Value Stream processes. The approach should provide a
descriptive way of how to work towards excellence and is
specifically focused on improvements of Haldex´ strategic
KPI’s; inventory days and delivery performance.

V
Methodology: The thesis is built on a case study with a combination of an
exploratory, explanatory and descriptive approach, to
provide an in-depth understanding for the underlying
problems. A qualitative research method was used with
several interviews and observations at different sites as well
as thorough literature studies. Abduction was used as an
approach for linking the theoretical knowledge with the
results from the interviews and observations. The
development process followed a generic logic and loop
adopted from the EFQM business excellence model.

Result: The main results of the Master Thesis are:

 A redesigned Haldex Way framework with an

incorporated generic logic.
 A descriptive Value Stream Approach.
 A redesigned challenge template.

Conclusion: The development of an improved framework for Haldex

Way with a pervading generic logic has made the structure
much more coherent and consistent in every level. It has
incorporated all areas of the Haldex organization and
therefore also captured all the required applicability. The
approaches have made Haldex Way less generic in its
structure by linking the objectives closely with the
strategically important KPI´s. The ways within each
approach has also a more clearly defined content and scope.

Keywords: Lean, Haldex Way, EFQM, RADAR, Value Stream

VI
Glossary
Approach The approaches of the improved Haldex Way consist of
methods and procedures for how to improve specific
targets.

Challenge A term for Haldex audits, perceived as having a more

positive tone. A challenge is the assessment and evaluation
of the work and progress with Haldex Way.

Delivery performance A strategic KPI that measures the customer satisfaction and
the performance of the value stream processes. It is defined
as the ability to deliver products to customers without
deviations, when the customer wants it.

Deployment Realization of actions by a systematic implementation and

integration of the approaches.

EFQM European Foundation for Quality Management, a business

model to create a culture of continuous improvements with
performance in world-class.

Inventory days A strategic KPI affecting the inventory holding costs and the
performance of the value stream. Defined as the number of
days material remains in inventory before being sold.

KPI Key Performance Indicator is a measurement of the result

for a site. Used to secure progression and development of
areas concerning specific performance levels and targets.

LDMS Lean Daily Management System, meeting structure designed

to increase the speed of continuous improvement and
enhance the cross-functional team interaction.

RADAR The logic behind the EFQM model representing Results,

Approach, Deployment, and Assess and Refine. Formed in a
loop to evaluate and measure the performance and trigger
continuous improvements.

Value Stream The value stream consists of the activities that are required
for the design and production of products which creates a
value flow of material and information through the
organization.

VII
Table of Contents
1 Introduction ........................................................................................................................1
1.1 Context of the Thesis............................................................................................................ 1
1.2 Haldex ........................................................................................................................................ 1
1.3 Haldex Way .............................................................................................................................. 3
1.4 Problem Description ............................................................................................................ 4
1.5 Purpose and Objective ........................................................................................................ 4
1.6 Project Delimitations ........................................................................................................... 5
1.7 Target Audience ..................................................................................................................... 6
1.8 Project Outline ........................................................................................................................ 7
2 Methodology .......................................................................................................................9
2.1 Research Approach............................................................................................................... 9
2.2 Qualitative and Quantitative Research .......................................................................11
2.3 Research Designs.................................................................................................................12
2.4 Methods for Data Collection ...........................................................................................13
2.5 Credibility ...............................................................................................................................16
2.6 Research Process .................................................................................................................18
3 Frame of References ..................................................................................................... 20
3.1 Lean ...........................................................................................................................................20
3.2 Business Excellence............................................................................................................25
3.3 Change Management..........................................................................................................29
3.4 Theory for Supply Chain Improvements ...................................................................38
3.5 Haldex Way History............................................................................................................47
4 Empirics............................................................................................................................. 50
4.1 Haldex Way ............................................................................................................................50
4.2 Haldex Way Tier Model.....................................................................................................52
4.3 The Categories of the Tier Model ..................................................................................54
4.4 The Haldex Way Tier Level Challenge ........................................................................57
5 Analysis.............................................................................................................................. 59
5.1 Criteria for the Analysis ....................................................................................................59
5.2 Material of Interest for the Value Stream Approach.............................................59
5.3 Analysis of Gaps ...................................................................................................................61
5.4 Good Practices at Haldex..................................................................................................62
5.5 List of Requirements ..........................................................................................................64

VIII
6 Result: The Improved Haldex Way .......................................................................... 65
6.1 The Foundation for the Improved Haldex Way ......................................................65
6.2 The Haldex Way Logic .......................................................................................................65
6.3 The Improved Haldex Way House ................................................................................67
6.4 Defining the Approaches for the Operations Module ...........................................68
6.5 The Redesigned Tier Model ............................................................................................77
7 Conclusion ........................................................................................................................ 78
7.1 The Need for a Change ......................................................................................................78
7.2 The Improved Structure ...................................................................................................78
7.3 The Descriptive Path towards Excellence .................................................................80
7.4 Generic or Specific ..............................................................................................................81
7.5 Sequence or Not ...................................................................................................................82
7.6 Returning to the Theory ...................................................................................................82
8 Reflections and Future Work ..................................................................................... 84
8.1 Comments on Methodology and Credibility.............................................................84
8.2 Academic Contribution .....................................................................................................85
8.3 Future Recommendations ...............................................................................................86
8.4 Personal Reflections...........................................................................................................87
References ................................................................................................................................. 88
Books ......................................................................................................................................................88
Articles ...................................................................................................................................................89
Webpages ..............................................................................................................................................90
Haldex Internal Documents ...........................................................................................................90
Interviews .............................................................................................................................................91
Appendices ................................................................................................................................ 92
Appendix A, Haldex Dashboard ...................................................................................................92
Appendix B, the Flow Optimization Way .................................................................................93
Appendix C, The New Haldex Way Challenge Template ................................................. 102

IX
X
1 Introduction
This chapter will create an understanding for the purpose of the thesis. This is done by
giving an introduction to Haldex and Haldex Way, followed by a problem description
and purpose of the thesis. Furthermore are the project deliverables and delimitations
as well as the target audience presented. Finally an outline of the thesis is stated.

1.1 Context of the Thesis

Today the vehicle industry is very competitive with a high focus and pressure on
reducing costs. The competition is now globalized as a result from open borders,
efficient logistics systems and increased development within the area of information
technology. 1 With this rapidly changing environment the need of applying
appropriate and efficient performance measurements is of great importance. The
utilization of strategically aligned Key Performance Indicators (KPI) is one way of
addressing these issues.2

A larger share of the production and development activities is taken by the suppliers
in the vehicle industry which has increased the importance of the supplier
performance in the supply chain. The competition from low-cost countries and
increased demand from customers of on-time delivery require the suppliers to find
ways to reduce costs and improve the efficiency. Organizations are today actively
taking actions to decentralize their structure to come closer to the actual demand
from the customer. By shorten the distance to the customer the companies are able
to respond faster and deliver Just In Time (JIT), and therefore also improve the level
of satisfaction.3

Many companies in the vehicle industry have also implemented different production
systems and improvement philosophies such as Lean and Six Sigma. In this way
focus is put on the work with cost reductions and process efficiency, together
increasing the competitiveness of the company.4

1.2 Haldex
The origin of Haldex dates back to the foundation of the Swedish company Halda in
1887 with watches, typing machines and taxameters as main products.5 Since then
the product niche has changed with the development of innovative vehicle solutions
and various acquisitions. Until 2011 the Haldex Group consisted of three separate
divisions; Commercial Vehicle Systems, Hydraulic Systems and Traction Systems.

1
Liu, et al., 2011
2
Bititci, et al., 2012
3
Colovic & Mayrhofer, 2011
4 Tillväxtverket, 2013
5 Haldex Official Presentation, 2013

1
In 2011 Haldex Group performed a split and sold the hydraulic and traction
divisions which led to the current structure, with Haldex as a separate company
divided into two parts, Foundation Brake and Air Controls.6 This enabled an
opportunity to work with an undivided focus on brake and air suspension systems.
A reason for the split was stated by the former CEO, Ulf Ahlén:

“Clarity and credibility are important factors in a world filled

with an abundance of competing business offers.”7

Haldex headquarter is located in Landskrona, Sweden, but Haldex has global

presence with sales, development and production on four continents; Europe, North
America, South America and Asia. The sales are divided into three major regions, the
largest is North America with 56 %, Europe with 32 % and the Emerging Markets
combined with 12 %. The main customers are manufacturers of heavy trucks, buses
and trailers, together with aftermarket sales to truck operators and maintenance
companies. Looking at the market shares of the different segments, trucks and buses
stands for 30 %, trailers for 26 % and the aftermarket for 44 % of the sales. Haldex
has more than two thousand employees worldwide and the net sales were SEK 4
billion in 2011.8

To ensure profitability and reach the objectives in a competitive and changing

market Haldex has formulated a vision to target and strive for:

“The vision is to be the global commercial vehicle industry’s

preferred choice as an innovative solution provider with a
focus on brake and air suspension products. We will
contribute to our customers’ success and achieve profitable
growth by providing technology that improves vehicle
performance and facilitates ease of operation. This creates
value for both our customers and our shareholders.”9

A fundamental task for Haldex is to build a strong brand and create reliability
towards the stakeholders and shareholders. Sustainability, both from an
environmental and an economical perspective is essential for future success in the
vehicle industry. Another key factor is the social responsibility and therefore Haldex
stated their mission as:

“The mission is to develop and provide reliable and innovative

solutions that improve safety, vehicle dynamic, and
environmental sustainability in the global commercial vehicle
industry.”10

6 Haldex Official Presentation, 2013

7 Haldex Annual Report, 2011
8 Haldex Official Presentation, 2013
9 Haldex Annual Report, 2011
10 Ibid

2
1.3 Haldex Way
Haldex wants to create a learning organization where the commitment, initiative
and dedication of the employees ensure the success of the company.11 Haldex Way
is a framework and management philosophy originating from the lean philosophy
created by the Japanese car manufacturing industry. The purpose and objectives of
Haldex Way is stated as:

“Haldex Way is a system for establishing culture of continuous

improvements by progressing and refining daily activities,
with the objective of effectiveness and precision in Haldex
Processes and Value Streams.”12

Haldex Way is not the goal itself but a way to conduct and monitor the work in a
certain way and align the ambition levels by constant integration in the daily
activities throughout the organization.

1.3.1 Haldex Way Tier Model

The Haldex Way Tier model, visualized in figure 1.1, is a step wise progression
framework, consisting of five steps; Copper, Bronze, Silver, Gold and Platinum. In the
first four Tier levels there are thirteen categories consisting of different lean tools
and strategically important Key Performance Indicators (KPI). The KPI’s and
categories require various levels of implementation and need to reach certain
targets to enable for progression one level in the Tier model. In the final Tier,
Platinum, a generic business excellence model is incorporated since additional areas
are needed for further progression towards business excellence.13

Figure 1.1; The Haldex Way Tier Model

11 Haldex Annual Report, 2011

12 Haldex Way Introduction, 2013
13 Ibid

3
1.4 Problem Description
Lean production methodologies are currently utilized within the work and use of
Haldex Way, however for further improvements and enhanced results the Haldex
Way concept needs to be developed. The main problem with the current Haldex Way
is that the KPI targets for the different Tier levels are identical for every site and
therefore not aligned with the site strategy. This results in slow improvements of the
KPI’s, which is amplified because of the lack of follow up on causes and actions
linked to the KPI’s.

Although Haldex Way and the Tier model are implemented in almost every part of
the production and distribution sites, the general use and buy in of its possibilities
and effects are relatively low on an organizational level. A reason for this issue is the
content gap that currently exists in certain areas of the Tier model in combination
with a too exclusive focus on lean production. Another reason is that the Tier model
and different categories in some cases have evolved to become just a tool for
compliance, used to check off different work methods.

The third concern is the lack of ownership and management support for the
implementation and utilization of Haldex Way and the Tier model. A higher
integration and involvement of Haldex Way in strategies on all levels is necessary.
The issue with ownership also discourages the employees to take own initiatives to
better adjust the methods to the business strategy.

Summarizing the identified problems with the current Haldex Way, three issues can
be formulated:

 Slow improvements of the result.

 Low level of utilization and low general buy in.
 Lack of ownership and applicability in implementation
and utilization.

1.5 Purpose and Objective

The overall aim of the thesis is to assess the stated issues with the current Haldex
Way. The purpose is to align the improved Haldex Way with the business strategy
and increase the general level of buy in. It is also to create an improved management
framework with the means to establish Haldex as a cutting edge company of its
market segment.

A new structure and additional content should be incorporated to address these

issues. Descriptive ways of how to improve and develop the organization towards
business excellence should be created. In addition, there should be an increased
focus on the results and explanations of the reasons behind each suggested action.

The European Foundation for Quality Management (EFQM) excellence model will be
integrated to address and fill the gaps of the existing Tier model. By differentiating
the approaches for administrative and production operations the acceptance and
use will be increased in the organization.

4
The main objectives of the thesis can briefly be summarized as:

A. In-depth understanding of Haldex Way and the Haldex

Way Tier model.
B. Co-development of a new framework for Haldex Way
including and incorporating business excellence aspects.
C. Development of a descriptive Value Stream Approach
specifically focusing on improvements of the strategic
KPI´s inventory days and delivery performance.

1.5.1 Project Deliverables

The main deliverable for the thesis to Haldex are the Value Stream Approach,
presented in power point, and an executive summary of the thesis. The Master
Thesis report and a scientific article will build the foundation of the deliverables
towards the university. A presentation of the thesis will be performed at two
seminars, at Haldex and at the Faculty of Engineering, Lund University.

1.6 Project Delimitations

The decision to develop a Value Stream Approach was made previous to this Master
Thesis. It is based on Haldex’ own evaluations of the work with the two strategically
important value stream KPI´s, inventory days and delivery performance. To
specifically improve these KPI´s with more efficient and effective value stream
processes, an idea of a Value Stream Approach was created. The Value Stream
Approach was developed by the authors of this Master Thesis with guidance from
the supervisor at Haldex and Haldex change agent team. The development of the
improved Haldex Way framework was done in close collaboration with the previous
mentioned people, where ideas were discussed and joint decisions were taken. The
authors have jointly worked with all parts of the Value Stream Approach and
together determined the path of the development.

A delimitation of the Value Stream Approach is that the internal operations of the
customers and suppliers will not be involved. Instead, the focus will be put on
Haldex internal and inter-company operations to improve the efficiency and
effectiveness of Haldex’ processes, and secure that useful and appropriate data is
exchanged. In this way Haldex internal operations will be provided with the best
conditions for success.

The thesis is intended to describe and develop a way for the organization to work
towards business excellence and not to develop the tools of the Tier model. An
overview and development of the tools and methods will continuously be needed to
keep them relevant and updated, however this will not be included in the thesis.
Haldex has made a predetermined decision to integrate the EFQM business
excellence model into the improved Haldex Way. This choice has directed the work
with the Value Stream Approach and limited the options regarding the work with
business excellence during the development.

5
When making any organizational change it is important to understand the different
views and obtain a picture as complete as possible. The thesis is developed at Haldex
headquarter and production site in Landskrona combined with a study visit at the
distribution site in Weyersheim. Since Haldex is a global company with many
facilities it might not be sufficient for a complete picture. To address this issue the
change agents, operating at Haldex sites around the world, will help communicate
and provide different perspectives and experiences. However, it is important to
remember that a lot of the information is collected from secondary sources which
might, in some cases, give a biased view of the reality.

1.7 Target Audience

It is of great importance making the thesis in a susceptible way to everyone in the
Haldex organization, to create a positive attitude towards the changes. The primary
target of the thesis is therefore the organization in general and the management
groups in particular, which puts great demands on how the methods and structure
are communicated. The secondary target is the academic supervisors at the Faculty
of Engineering, Lund University, as well as students interested in the subject. A third
target group is the stakeholders interested in the company and the improvements
made.

6
1.8 Project Outline
The project outline, presented below, summarizes the chapters and explains the
objective and content of the specific sections.

 Chapter 1, Introduction, introduces Haldex and Haldex Way and

explains the purpose, problem and delimitations of the Master
Thesis.

 Chapter 2, Methodology, describes the different research strategies,

methods, approaches and techniques for data collection used in the
thesis. It also presents and visualizes the research process that has
been used as a foundation for the development of the improved
Haldex Way.

 Chapter 3, Frame of Reference, provides an explanation of the

underpinning theories for the Master Thesis. This includes theory of
lean, business excellence, change management as well as specific
theory linked to value stream improvements and the history of
Haldex Way.

 Chapter 4, Empirics, gives a presentation of the current Haldex Way,

the Tier Model and Tier Challenge. In this chapter the improvement
categories with the main content of Haldex Way is presented. It also
describes what a Haldex challenge is and how the challenge template
is used.

 Chapter 5, Analysis, forms the foundation for the Value Stream

Approach and is divided into four parts; improvement categories of
interest for the Value Stream Approach, the identification of gaps in
the Tier model, good practices at Haldex, and finally a summary in
form of a list of requirements for the Value Stream Approach.

 Chapter 6, Result: Improved Haldex Way, describes the Value Stream

Approach in specific. There will also be a general presentation of the
improved Haldex Way, with its underlying logic and different
modules. Finally, the redesigned Tier Model and challenge template
will be introduced.

 Chapter 7, Conclusion, includes an explanation and reasoning behind

the structure and content of the improved Haldex Way. The linkage
between the improved Haldex Way and the theory will as well be
presented.

7
 Chapter 8, Reflections and Future Work, consists of the final
comments on the thesis regarding methodology and credibility. The
academic contribution, future recommendations for continuous
improvements of Haldex Way and personal reflections will also be
discussed.

 References, sources used in the thesis including books, articles, web

pages, Haldex internal documents and the people interviewed.

 Appendices, attached current and improved challenge template as

well as parts of the Value Stream Approach.

8
2 Methodology
This chapter includes the methodology chosen for the thesis. Initially, the research and
theoretical approach is presented. This is followed by the research strategy and design,
as well as the methods for data collection. Finally the credibility is discussed together
with a presentation of the overall research process for the thesis.

2.1 Research Approach

Depending on the purpose of the research and definition of the problem, there are
several different research approaches that can be used. The most commonly used
are; exploratory, descriptive, explanatory, normative and improving studies.14

Exploratory studies are used to understand the extent of an identified problem and
to create an initial understanding of the problem. This type of studies is used to
visualize the current state and to explore the problem in an environment where the
information is limited and often inadequate.15 Descriptive studies have a describing
characteristic and answers the question what. This means that when the initial
understanding is created from the exploratory research, the focus of the descriptive
study is to describe the defined problem in detail.16 An explanatory study explains
the reason why certain situations, behaviors or problems occur. It also tries to find
the interrelationship between the causes and effects for the identified object of the
study.17 Normative studies can be compared to descriptive studies, but with the
focus on how the research desirably should be performed and what the ideal result
should be.18 Improving studies have a problem solving characteristic and the
purpose is to find a solution to an identified problem.19

The Research Approach for the Thesis

For the thesis both an exploratory, explanatory and a descriptive study are used.
The exploratory study is conducted to create an initial understanding of the current
Haldex Way whereas the descriptive study provides a more comprehensive and
detailed picture of the situation. This is used to analyze and capture the relevant
material needed for the development of the improved Haldex Way. Explanatory
research is used to some extent, to realize what causes the current problems and
what the effects are. Finally, improving studies are used to enable the development
of the Haldex Way framework and the Value Stream Approach.

14 Höst, et al., 2006

15 Ibid
16 Frankel, et al., 2005
17 Höst, et al., 2006
18 Wallén, 1996
19 Höst, et al., 2006

9
2.1.1 Induction, Deduction and Abduction
In the beginning of every research project a decision must be taken regarding what
framework the theoretical knowledge should build on. There are three different
ways describing how to receive the required knowledge on which the conclusions
can be drawn, these are deduction, induction and abduction.20

Deduction is visualized in figure 2.1 and has an initial focus on existing theoretical
framework, created in previous literature. This knowledge is then drawn into
theoretical conclusions that are tested. Finally conclusions are drawn based on the
theoretical conclusions and the test results.21

Induction is presented in figure 2.2 and is initiated by existing knowledge from prior
research. However, in comparison to deduction, an inductive research approach
uses this knowledge when performing real life observations and evaluates the
truthfulness. The result from these observations is then finalized in theoretical
conclusions.22

Abduction, visualized in figure 2.3, is the combined version of the two previous
theoretical research approaches. The process of abduction is initiated with the
theoretical knowledge and then transferred into observations of reality. In the next
steps the theory is matched with the result from the previous steps and a new
theory is suggested. Finally the conclusions are applied on the studied object.23

1. Theoretical framework 1. Prior theoretical

1. Existing theoretical
from prior literature knowledge
knowledge from prior
research
2. Deviating real-life
observations
2. Theoretical conclusions

2. Real-life observations 3. Theory matching

3. Testing of conclusions
4. Theory suggestion

3. (Final) theoretical
4. Final conclusions conclusions
5. Application of conclusions

Figure 2.1; Deduction Figure 2.2; Induction Figure 2.3; Abduction

20 Kovács & Spens, 2005

21 Ibid
22 Ibid
23 Ibid

10
Theoretical Research Approach for the Thesis
The theoretical research approach that will be used in the thesis is abduction. To
increase the understanding of the current state at Haldex and enable the
development of the Value Stream Approach, collaboration between the theoretical
framework and real-life observations will also be used, which all are typical
characteristics for the abductive approach.

2.2 Qualitative and Quantitative Research

The two research strategies, qualitative and quantitative research, differ
significantly from each other. When conducting a quantitative research the main
goal is to provide a strictly objective description of the studied object, whereas the
qualitative study gives a more subjective interpretation of the context and the
studied objects. Another distinction between qualitative and quantitative data can
be found in the characteristic of the collection of information. Qualitative data is
primarily retrieved through descriptions, documents and semi- or unstructured
interviews. Quantitative data consists of experiments, surveys and structured
interviews with emphasizes on the measureable numbers.24

The possibility to measure the result from a quantitative study simplifies the search
for causing factors and enables conjunction analysis. Another advantage is based on
the increased credibility of the research since the presentation of data can be in
form of effective and easy understandable tables and diagrams. However, a criticism
against this research strategy has been that not everything is measurable and by
trying to measure certain phenomena not measurable results in a simplified picture
of the reality. If not appropriate techniques for collecting data is used, the
extensiveness of the material can result in a too complex structure to evaluate.25

By using a qualitative research strategy with semi- or unstructured interviews, a

more in-depth understanding of the different views and opinions of the individuals
is created and can be achieved. Disadvantages with qualitative studies are the
difficulty of ensuring the accuracy of the information and to cover enough sources of
information to get a representative result. The quality of the result is also at risk,
depending on the lack of standardized statistical procedures for managing and
evaluating the data.26

Qualitative Research for the Thesis

The development of the improved Haldex Way requires many semi- and
unstructured interviews and observation which results in a lot of subjective input
regarding the current structure. In addition, data collection will not include any
measurable data and therefore a qualitative research strategy is suitable for the
thesis.

24 Runeson & Höst, 2009

25 Denscombe, 2009
26 Ibid

11
2.3 Research Designs
There are a number of research designs developed for different kinds of studies and
problems. The most prominent ones are case studies, desk studies, surveys,
longitudinal studies and action research.27

A case study is based on an existing environment and experiences from an

examination of a single case. It investigates a present phenomenon and highlights
unique features of a specific case. The case study is especially interesting to perform
when the boundaries are not clearly defined between the studied phenomenon and
the real-life.28 Archival data can be collected in a case study and refer to previous
documents, organizational charts or earlier gathered measurements from the
organization. The accuracy and validity of the archival data can often be confirmed
through interviews. It is especially important to ensure the relevance and
transferability of the retrieved data, to assure generalizability.29

Desk studies are a form of secondary research, which means that the collection and
processing of the data already is done and all the needed information is available,
even though it was gathered for another purpose.30 Surveys are conducted in form
of questionnaires and structured interviews and are used for execution of
comprehensive and detailed reviews and evaluations. This design is especially used
within the social science when the data is collected from a cross section. Surveys are
especially good when connection patterns should be identified.31

Longitudinal studies can be used to visualize changes and trends in the business. The
research design is based on historical data to complement information about the
current situation. Longitudinal studies are useful to understand developments in the
organization. Hidden mechanisms and processes can be visualized, and important
change patterns can be discovered. This creates an understanding for the decisions
taken historically and facilitates the ones to come. However, because of other
undocumented factors also having an impact on the change patterns it can be hard
to exclusively draw conclusions based on this kind of research design.32

The final research design is action research, where the observer has no limitations of
interaction, on the contrary active participation is encouraged. An action research
often involves changing processes in the organization and focus on the reality. In the
initial phase of action research the problem is identified, followed by
implementation and evaluation of the solution from an observed point of view.33

27 Frankel, et al., 2005

28 Ibid
29 Runeson & Höst, 2009
30 Kotzab, 2005
31 Denscombe, 2009
32 Bryman & Bell, 2011
33 Näslund, 2002

12
Research Design for the Thesis
The research design used in the thesis consists of a case study, desk research and
longitudinal study. Case study is used to visualize the current state of Haldex Way,
identify the problems and find the boundaries between the described theory and the
experienced real-life. Desk research will be used to understand the theory behind
Haldex Way and to investigate how decisions are made presently at Haldex.
Longitudinal studies will have the same purpose as the desk research, but with the
purpose of understanding historical decision points and development of support
documents.

2.4 Methods for Data Collection

2.4.1 Primary Data
In order to ensure the reliability of the gathered data it is important to focus on the
primary sources of information. Interviews and observations are two examples of
sources for primary data.

Interviews
Interviews is a usual and recurrent technique for gathering data. Depending on the
depth and degree of structure, interview can be of three different types;
unstructured interviews, semi-structured interviews and completely structured
interviews.

Unstructured interviews aim at creating a personal atmosphere to reveal and

understand unspoken reflections and thoughts.34 The unstructured interviews have
also a more explorative purpose. The exact opposite to unstructured interviews are
completely structured interviews used more for an explanatory purpose. 35
Completely structured interviews are characterized by specific questions and can be
seen as a survey that is completed verbally instead of in written form. The step
between the two kinds of interviews is the semi-structured version. Semi-structured
interviews contain both specific questions and questions open for discussions. The
comparability of the information obtained in these three types of interviews will
decrease from the completely structured interviews to the unstructured
interviews.36

34 Frankel, et al., 2005

35 Höst, et al., 2006
36 Frankel, et al., 2005

13
Interviews for the Thesis
In the thesis interviews will be used to collect data from different stakeholders in
the Haldex organization, to create an overall view and understanding of the current
situation. The interviews will mainly be semi-structured with an interview guide as
guidance together with a recording machine for follow up. The interview guide will
build on information gained on the content of the currently existing Haldex Way to
understand and enable analysis of what content to include in the Value Stream
Approach. There will also be some cases of unstructured interviews to more freely
have discussions and affect the direction of the interviews so new perspectives can
be found.

At the initial phase of the thesis interviews were held with employees at the Haldex
site in Landskrona. Managers at different levels and from different processes were
contacted and interviewed. The interviews with the managers enabled
understanding of the way of working at Haldex and with Haldex Way. A steering
committee was involved later on in the development phase with additional
interviews and discussions specifically focusing on comments and feedback of the
improved Haldex Way and the Value Stream Approach.

Selection of Study Group

The main selection of interviewees was chosen from Haldex organization.
Employees especially working with the value stream processes constituted the
sampling frame. The non-probability sampling method called ”purposive sampling”
was used. This implies that the result of the research is a biased sample and that it
cannot be generalized for other organizations or recognized as representative for
the whole Haldex organization.37 However, the interviewees were carefully judged
as relevant for the thesis and a probability sampling method was not an option for
obtaining information since this would not have provided the relevant information.

Observations
Another technique to collect data is to use observations, where a phenomenon is
studied. There are four different types of observations, depending on the degree of
interaction and the cognizance of being observed.38 The two extreme situations are
the complete observer and the complete participant. The complete observer has a
low interaction with the observed environment but the awareness of the attending
observer is high. The complete participant has both a low degree of interaction with
the observed situation, and the knowledge of existence within the observed
environment is small.39

37 Bryman & Bell, 2003

38 Höst, et al., 2006
39 Frankel, et al., 2005

14
Observations for the Thesis
Observations are made during the entire research process. Many of observations
will be related to how the current Haldex Way categories, tools and methods are
used in a real production environment, and what in the use seen as good
respectively bad, or not working so well.

At the initial part of the thesis internal education will be provided by Haldex in form
of an introduction day at Haldex as well as briefings of Haldex Way by the
supervisor at Haldex. The internal education is hard to categorize as either an
interview or observation, but is defined as an observation since only few questions
will be asked. Since the thesis will be located at Haldex in Landskrona the daily
interaction will also influence the thesis and be a part of the techniques used to
collect data, as a form of daily observation and interaction.

Feedback by Steering Committee

In addition to the interviews and observations several discussion took place with
the steering committee at Haldex. Since the supervisor where located at the same
site as the authors the discussions with him where on a more frequent basis
whereas the discussions with the other change agents where more of a scheduled
nature throughout the whole project. These discussions included both brain
storming and argumentation for specific ideas for the improved framework or Value
Stream Approach, as well as directions for the development. This provided a source
of information that was directly linked to the work with improvements within
Haldex entire organization and facilitated the decision making when issues and
problems where faced.

2.4.2 Secondary Data

Secondary source of information is important to establish appropriate and required
theoretical foundation to understand and address identified issues.40

Literature Review
A literature review is used to gather data from already existing theory, relevant to
the subject. The literature review focuses on specific topics and is used to analyze
the existing data with the purpose of identifying gaps.41 A literature review
constitutes the foundation and frame of reference, and enables the following parts to
be underpinned by recognized views and statements. Because of the large quantity
of available information, prioritization of available literature in the topic is
necessary. This is facilitated when the problem and objective is clearly defined.42

40 Höst, et al., 2006

41 Ibid
42 Bryman & Bell, 2011

15
Literature Review for the Thesis
A literature review has been conducted throughout the thesis with research made in
several academic areas. Several books have been found and studied by searching the
Lund University library catalog Lovisa, and the main search engines for academic
journals and articles has been the LibHub and the LUBsearch (Lund University
library search). Examples of search topics and key search words are lean, business
excellence, change management, value stream, supply chain improvements, EFQM,
performance measurements and key performance indicators. Interesting articles has
provided good reference lists that have been further examined. The literature
review has acted as the foundation on which the development of the Value Stream
Approach lies upon.

Additional Secondary Data for the Thesis

Since the thesis is located at Haldex production site in Landskrona, Haldex intranet
will be available for data collection. Documents such as the current challenge
template with information on requirements to improve in the Tier model will be
used throughout the thesis. This information will facilitate the understanding of the
current state and specifically for the categories of Haldex Way with content relevant
to the value stream processes. Standards and guidelines for some of the Haldex Way
tools will also be available on the intranet and used during the development work of
the improved Haldex Way and the Value Stream Approach.

2.5 Credibility
2.5.1 Reliability
There are different approaches to secure the accuracy and quality of a research
study. Reliability is one commonly used approach to secure the quality of the
collected data and the analysis. The concept of reliability also refers to aligned
measurements without dependence of time or measurements equipment. High
reliability indicates small variations and consequent measurements or
questionnaires. A high degree of consequence is preferred when for example
conducting interviews to ensure the trustworthiness of the answers.43

Reliability of the Thesis

Accuracy is an important part of the thesis and will be secured by having a reliable
approach towards the development of the framework and the Value Stream
Approach. It is preferred to conduct a thesis with high degree of reliability and this
will to some extent be achieved by the established interview guide and the focus on
a qualitative research, enabling reconnection to absent parts.

43 Denscombe, 2009

16
2.5.2 Validity
Validity is an approach to secure true data and methods, reflecting the existing
environment and covering important areas identified. Validity is important to
ensure exact and correct information, to increase the credibility of the research and
the conclusions reached. To ensure the validity in interviews some controls can be
done, but it is often hard and perhaps even impossible to secure the information
during and after interviews because of the personal emotions and experiences
affecting the outcome. Some methods applicable to validate the information from
interviews are to compare the obtained information with other sources. The
interviewed person can be given access to written material from the interview to
confirm both the participation and the information. Another way is to use
reasonable thinking, to conclude whether the interviewee possesses the desired
information or not.44

Validity of the Thesis

The validity of the thesis will especially be secured during the interviews. The
approach is to apply validity to ensure that the questions are asked in a way that
makes it possible to retrieve the valid answers, not as a structured interview, rather
to secure understanding between the questions asked and the answers obtained.
This lies within the framework of conducting a well-structured interview guide with
elaborated questions. Even though the interviews will be of unstructured or semi-
structured characteristics the predetermined guideline of questions need to be
thought through to secure the validity of the thesis. The validity of the literature
review will also be examined, whether the authors of the books and articles and the
content are trustworthy, authentic and representative for the subject.

2.5.3 Transferability
Transferability refers to the ability of applying the result on other situations. The
main purpose of transferability is to adopt the result on similar activities from a
general basis, rather than finding a unique result for the given and specific situation.
Transferability demands a representative result adaptable to other environments
and situations, a result possible to generalize.45

Transferability of the thesis

Transferability is essential for the thesis. The development of the improved Haldex
Way and the Value Stream Approach needs to be structured in a way so that it
constitutes a foundation for the development of the remaining parts of the improved
concept. The implementation will gradually take place at all the production sites at
Haldex, why the developed framework and the Value Stream Approach need to be
adaptable and transferable, for all Haldex sites worldwide.

44 Denscombe, 2009
45 Ibid

17
2.6 Research Process
The research process, visualized in figure 2.4, displays all important parts of the
thesis, within the overall time frame. To be able to achieve the desired outcome, the
initial step is to define and understand the problem and objective. This will enable
formulation of delimitations for the thesis. A literature review will be initiated early
to increase the understanding of the activities at Haldex and link this with the
knowledge gained from theory. To continuously document the work and even out
the work load of the thesis over time the content of the report for the thesis has
been produced throughout the entire research process.

Figure 2.4; The Research Activities of the Thesis Process

Interviews and observations will be an important part of the research process,

focusing on the existing Haldex Way as well as advantages and disadvantages
currently experienced. Already at an early stage ideas and issues regarding value
stream processes will be evaluated and examined in the empirical research process,
described in more detail in the following section. Since the main deliverable to
Haldex is the Value Stream Approach a lot of time will be spent on the development
of the improved Haldex Way and the Value Stream Approach, where the framework
needs to be established before fully focusing on the development of the Value
Stream Approach. A steering committee, consisting of Haldex´ change agent team,
will be involved and consulted during the development of the framework and the
Value Stream Approach to obtain valuable comments and feedback on the
progression and development.

18
2.6.1 The Empirical Research and Analysis Process
The main objective of the thesis can be divided into two parts; the redesign of the
Haldex way framework and the development of a Value Stream Approach to guide
towards value stream result improvements. The empirical study and analysis of the
current Haldex Way has been conducted through a four-step process, shown in
figure 2.5.

Figure 2.5; The Empirical Research and Analysis Process

Step one consists of two parallel processes, including research of the overall Haldex
Way framework and Tier model, as well as identification of everyday work
procedures related to the value stream processes. The following steps are together
forming the analysis. In the analysis the material of interest for the Value Stream
Approach and gaps in the current Tier model are identified. The information
gathered through the first three steps then creates a list of requirements for the
Value Stream Approach.

19
3 Frame of References
In this chapter the theory of lean will be presented, since it is the origin of Haldex Way.
Further on business excellence will be described because of the incorporation and
usage as a logic behind the improved Haldex Way. Change management will be
examined due to the redesign of the current structure and for the ability to face a
continuously changing market. To ensure the level of quality and reliability of the
Value Stream Approach, theory specifically linked to value stream improvements are
also introduced. Finally, the history of Haldex Way is described to give an
understanding of the ongoing journey of improvements.

3.1 Lean
Lean originates from the Toyota Production System, TPS, which is a production
philosophy that emerged after the Second World War. At that time, Ford was a
successful car manufacturer with the development of mass production. However,
because of the scarcity of resources in combination with small production volumes
and many different models, mass production did not seem appropriate for Japanese
manufacturers such as Toyota. When Toyota sent managers to the United States to
study Ford and the mass production system they did not return impressed by the
results. The mass production system led to overproduction and several defects both
in machines and products, which were hidden because of the large quantity of
material and the uneven flow in the production and inventory. Ford had at that time
a large capital and an international market which made the waste in the production
not as critical as for Toyota, facing the opposite conditions with little capital in a
small market. Toyota therefore decided to incorporate the continuous material flow
from the Ford production system, but instead of using the usual mass production
introduce a single-piece flow to eliminate waste, continuously improve the
processes and meet the demands of the customers. This was the foundation for the
Toyota Production System and since it proved to be very successful for Toyota many
western companies have tried to imitate and implement the same system and
philosophy.46

The expression lean was first introduced by Krafcik in 1988 to describe the Toyota
Production System and had its breakthrough in 1990s when Womack, Jones and
Roos released the book The machine that changed the world. Six years later Womack
and Jones published Lean thinking, which proceeded with the examining of lean as a
production philosophy with principles and tools. It also provided implementation
guidelines on how to introduce lean as a mindset in the organization and how to
become a lean enterprise.47

46 Liker, 2009
47 Shah & Ward, 2007

20
Womack and Jones identified five principles of how to think and work with lean,
summarized in the following points:

 Specify the value of the product to the customer.

 Visualize the value stream for each product.
 Create a flow of the value without interruptions.
 Let the customer pull and initiate the production.
 Compete against and towards perfection.

If these five lean principles are understood and linked together they will facilitate
the implementation and maintenance of lean as a production philosophy.48

3.1.1 Creating Value to the Customer

Within the lean concept one of the focus areas for improvements is waste reduction
or muda, which is the Japanese word for waste and a commonly used lean term.
Muda can be identified as providing the wrong product or service to a customer, or
as everything that does not add value for the customer. Therefore tracking and
tracing the operational activities and what value they are creating is essential.49

The activities can be divided into three different categories; value-adding, non-value
adding but necessary activities also called Type One muda, and finally non-value
adding and unnecessary activities also called Type Two muda. In lean, reduction of
non-value adding activities is an important part to reduce the waste, improve the
overall efficiency and focus on producing what the customers want and when they
want it.50

The value-adding activities are visualized by understanding what deliverables the

customer desires from the process, which also defines the value created to the
customer. The non-value adding activities can be divided into seven types of waste
which are presented below.

1. Overproduction: products produced even though they are not

demanded, will create waste through excess inventory, inventory
costs and transportation.
2. Waiting: an operator monitoring an automated machine, waiting for
the following step in the process, or being out of work tasks because
of material shortage, production delays or bottlenecks in the
processing.
3. Unnecessary transport: transportation of work in process or material,
inefficient transportation or transportation in and out of inventory or
between processes.
4. Over processing: activities performed not add value to the final
product, inefficient processing due to poor tools creating both

48 Womack & Jones, 2003

49 Ibid
50 Ibid

21
 unnecessary activities and defects, or products developed with
higher quality than demanded.
5. Excess inventory: unnecessary amount of raw materials, work in
process or finished goods, impedes visualization problems in
production scheduling, delays from suppliers, defects and long set-up
times.
6. Unnecessary movement: all types of movement during the process,
such as searching and reaching for the right tools and components
but also walking between the processes.
7. Defects: products with defects or demanding adjustments or
reparation, all type of reparation, recast, replacement production and
control are waste of handling, time and energy.

Overproduction is often seen as the worst type of waste since it triggers the other
types. According to lean a large inventory is most commonly resulting in shortage of
the actually required product. Lean is therefore focusing on producing what the
customers demand at the right time.51

3.1.2 Visualization of the Value Stream

Another focus area of the lean concept is the value stream. The objective is to
visualize the complete value stream for each product or product family and identify
the waste in every work activity to enable further improvements.52 Womack and
Jones define the value stream as:

“We apply the term “value stream” to the entire set of

activities running from raw material to finished product for a
specific product and we seek to optimize the whole from the
standpoint of the final customer (the ultimate customer of the
good or service).” 53

The definition indicates a need of visualizing the entire flow of products from
supplier to customer, and demands an overall understanding of the whole
organization and the flow of products in particular.

Standardization of the work activities is a lean technique used to improve the value
stream and create stability in the processes. By standardizing the work the
responsibilities for the employees will be clarified and the processes within the
value stream will be more efficient and effective.54

Visual control is another lean technique used to improve the visibility in the value
stream, and refers to the visualization of different types of information. This could
be done by using white boards or microbus displays showing the current state and
need. The visualization of different work activities and processes provides the

51 Liker, 2009
52 Womack & Jones, 2003
53 Ibid
54 Spear & Bowen, 1999

22
employees with direct feedback in form of real-time updated information on the
current situation. It also functions as an encouraging incentive for performance
improvements as well as creating a working environment of involvement and
creativeness.55

3.1.3 Creating a Flow

There are three steps that need to be taken into consideration when improving and
creating an even flow. The first step is to focus on one product in the value stream
and follow the path through the entire value stream process. The second step is to
change and rethink the organizational structure from the functional way of thinking
into a more process-oriented way of thinking. The third step involves more specific
tasks and tools required to implement to reduce and eliminate backflows and
wastes of all types.56

Takt time is a lean technique often used to improve the flow.57 The concept is
equivalent to the pace of the production and is built on synchronization of the
production rate and the sales rate towards customers. For a given production line
the takt time is calculated as the effective working time available per shift divided by
the customer demand per shift. The takt time will then give an indication of what
pace to keep in the production to smooth the operations and avoid over- and
underproduction by producing according to the takt time calculations and the actual
demand.58

Another important lean technique used to improve the flow is reduction of the
changeover times. By minimizing the changeover time the possibility of having a
large product variety will improve. There will be a reduced need of different
machines for different products when the changeover times are decreased and
different products can be produced in the same machine. With a good operations
planning and efficient changeovers considerable savings can be made and the
possibilities of satisfying varying customer demands will increase.59

3.1.4 Using the Pull Concept

In lean, the customer is in focus and the overall objective is to provide value to the
customer by only produce what is requested. This is the reason for the fourth lean
principle, pull, which is based on the idea of the operations to be triggered by
internal and external customers before any work is initiated. The flow can be
improved by daily ordering based on firm orders from customers instead of monthly
or weekly ordering on forecasts. This is typical for pull systems and a principle in
lean thinking.

A pull system has many advantages; one of them is reduction of the amount of work
in progress (WIP) and the cycle time by introducing limitations in the operations

55 Womack & Jones, 1996

56 Womack & Jones, 2003
57 Ibid
58 Hopp & Spearman, 2008
59 Holweg, 2007

23
with kanban cards, where the amount of kanban cards represents the number of
WIP. The production flow can be smoothened by controlling the number of kanban
cards and only producing when the customer demands a product. A properly
managed pull system can also result in improved quality and reduced costs due to
improvement work performed closer to the customer with continuous feedback on
the product quality, and also contributed to by the focus on demand and not
forecasts, which enables lower inventory levels.60

3.1.5 Believing in Perfection

The final lean principle is about striving towards perfection and never being
satisfied. It is important to not see lean as a project but as a way of living and
breathing, a philosophy without an end. There is always something that can be done
better.

Continuous improvement is one important part of the lean philosophy and to be able
to implement lean within an organization an awareness of the further work must be
established. This is also linked to the important success factor of an implementation
not becoming just a project but a philosophy and a way of thinking and working.
Womack and Jones describe continuous improvement in a thoughtful way:

“Perfection is like infinity. Trying to envision it (and to get

there) is actually impossible, but the effort to do so provides
inspiration and direction essential to making progress along
the path.”61

Hopp and Spearman have identified three factors as keys to success in any
improvement project and can be summarized as:62

 Measurement alignment.
 Integration of information into existing ERP system.
 Training of employees.

Measurement alignment refers to alignment of strategic KPI’s and understanding of

process KPI’s impact on the strategic KPI’s. Alignment also need to be achieved on
how to perform and conduct the measuring process as well as establishing
standardized procedures and calculations to ensure consistency of the results
obtained. Standardization is an important factor to ensure measurement alignment
and by having a standardized foundation it will enable for continuous
improvements. Applied specifically to the value stream, measurement alignment
refers to inventory days and delivery performance as strategic KPI’s having
appropriate process KPI’s defined, but also securing the numbers being measured in
the same way and calculated with the same numbers and parameters.63

60 Hopp & Spearman, 2004

61 Womack & Jones, 2003
62 Hopp & Spearman, 2008
63 Ibid

24
Integration of information into existing ERP system refers to as a large extent as
possible integrate all information automatically into the ERP system to facilitate the
handling of information and avoid human errors. The KPI’s need to be updated in
the ERP system to be accurate and add any value by providing precise and correct
information. For the value stream results it refers to integration of the strategic
KPI’s inventory days and delivery performance and the respectively process KPI’s
affecting the value stream and possible to include in the ERP system.64

The third factor regards training of the employees and will facilitate continuous
improvements by securing the knowledge and competence within the company and
the team. People responsible for different tasks in the value stream should apply the
train the trainer perspective to increase and secure the own knowledge and
teaching skills. The internal competence will also be developed and help during
improvement works.65

3.2 Business Excellence

In the beginning of the 1940s, Deming and Juran established quality as a concept
and a way of evaluating, assuring and improving the performance of the business.
The mindset and way of working with quality and continuous improvements were
first adopted by the Japanese manufacturers and it took several decades before
western companies responded to the enhanced level of quality and performance of
the Japanese competitors.66

It was not until the eighties, when the quality movement emerged in the west
through the understanding of quality as a strategic differentiator, the real
competition began. The first Total Quality Management (TQM) approaches and
models were then created.67 These models focused on improving the efficiency and
effectiveness of the company´s processes by developing and improving the skills and
competencies of the people. In addition they addressed important issues such as
customer satisfaction, benchmarking, continuous improvement, learning and
teamwork.68

64 Hopp & Spearman, 2008

65 Ibid
66 Adebanjo & Mann, 2007
67 Porter & Tanner, 2004
68 Ibid

25
Because of the extensiveness and the absence of guiding theory for the TQM models
many organizational implementations were unsuccessful. There was a great need
for a better structure and increased level of usability.69 To meet this need and
increasing the demand for the stakeholders and shareholders, the first business
excellence model (BEM) and quality award were developed.70 Adebanjo defines
business excellence as:

“Excellence in strategies, business practices, and stakeholder-

related performance results that have been validated by
assessments using proven business excellence models.” 71

The main purpose and objective with the BEMs is to utilize well-known and
successful business principles combined with implementing a systems thinking and
align multiple organizational improvement activities to achieve world-class
performance.72 Most of the BEMs can trace the roots to the early TQM models.
However, some of the main differences between the TQM models and the BEMs are
that the BEMs are more holistic in the approach and the improvement activities can
be completely integrated in the organization’s processes. The TQM models are
developed more as ´bolt-on´ quality programs, whereas the BEMs instead try to
create a behavior and a standardized way of working.73

There are several BEMs currently existing on the market, however, since the
European Foundation for Quality Management´s (EFQM) excellence model has been
used for guidance and inspiration during the development of the improved Haldex
Way, a more detailed description of this will follow.

3.2.1 The EFQM Excellence Model

The EFQM history began in 1988 when fourteen CEOs joined forces to develop a
management tool for improving the competitiveness of the European organizations
and close the performance gap towards the American and Japanese markets.74
The idea with the EFQM model is the applicability for every type and size of an
organization, and it is irrelevant whether it is in the public, private or voluntary
sector.75

There are three integrated components, together forming a coherent system and the
overall EFQM concept; the underlying principles of excellence, the framework of the
model and the RADAR logic.76

69 Chiles & Choi, 2000

70 Porter & Tanner, 2004
71 Mohammad, et al., 2011
72 Ibid
73 Porter & Tanner, 2004
74 EFQM, 2013
75 Adebanjo & Mann, 2007
76 EFQM, 2010

26
The Underlying Principles of Excellence
The underlying principles of EFQM form the essential foundation for achieving
lasting organizational excellence and can be seen as a common language for the
senior management or the attributes describing an excellent culture. A brief
explanation of the meaning of these principles is adopted from EFQM and presented
below:77

 Adding Value for Customers: Excellent organizations consistently add

value for customers by understanding, anticipating and fulfilling
needs, expectations and opportunities.
 Creating a Sustainable Future: Excellent organizations have a positive
impact on the world around them by enhancing their performance
whilst simultaneously advancing the economic, environmental and
social conditions within the communities they touch.
 Developing Organizational Capability: Excellent organizations
enhance their capabilities by effectively managing change within and
beyond the organizational boundaries.
 Harnessing Creativity & Innovation: Excellent organizations generate
increased value and levels of performance through continual
improvement and systematic innovation by harnessing the creativity
of their stakeholders.
 Leading with Vision, Inspiration & Integrity: Excellent organizations
have leaders who shape the future and make it happen, acting as role
models for its values and ethics.
 Managing with Agility: Excellent organizations are widely recognized
for their ability to identify and respond effectively and efficiently to
opportunities and threats.
 Succeeding through the Talent of People: Excellent organizations
value their people and create a culture of empowerment for the
achievement of both organizational and personal goals.
 Sustaining Outstanding Results: Excellent organizations achieve
sustained outstanding results that meet both the short and long term
needs of all their stakeholders, within the context of their operating
environment.

Both the principles adding value for customers and succeeding through the talent of
people have clear links to two of Haldex Way’s core values, customer first and
respect for the individual. The remaining six principles are to some extent fitted in
the third core value, passion for excellence.

77 EFQM, 2010

27
The Framework of the EFQM Model
The framework of the EFQM excellence model, visualized in figure 3.1, is based on
nine different criteria, grouped into two categories, enablers and results. There are
five enablers including leadership, people, strategy, partnership and resources, and
processes, products and services. The remaining four result criteria are people results,
customer results, society results and key results (or business results). 78

Figure 3.1; THE EFQM Excellence Model

The enablers are related to the processes, structure and means of the company,
whereas the results are linked to the performance aspects. The general idea behind
the EFQM model is for the results to drive and be directed by the enablers.79

The RADAR Logic

The RADAR logic is presented in figure 3.2 and provides a structured framework
used for recognition and assessment of both procedures and performance. The
intention with the never-ending loop is to encourage the organization to
continuously improve the operations and processes.80

Figure 3.2; The RADAR Logic

78 EFQM, 2010
79 Asif, et al., 2011
80 EFQM, 2010

28
The logic is built on four different steps; results, approaches, deployment, and assess
and refine. Initially the required results need to be determined to create a coherent
view of what the objectives of the business are. The second step is to define the
tactic course of action by developing a set of sound and integrated approaches to
achieve the required results. The third step is the realization of actions and the
systematic deployment of the planned approaches to achieve successfully
implementation throughout the organization. Finally assessments considering the
efficiency and effectiveness of the approaches and the deployment are done
combined with refinements and adjustments for continuous improvements.81

3.3 Change Management

Creating an agile and competitive approach enables the company to adapt when the
context, opportunities and challenges change, generating a high-performing and
successful business.82 The continuous work with improvements and adaptations
requires a corporate awareness of the importance of change management and how
to incorporate it in the daily activities. To understand change management the
concept change must be further discussed and explained.

3.3.1 Understanding Change

Understanding and defining change is a difficult task since there are numerous and
varying definitions of the concept. It is important to realize that it is an
interdisciplinary theory without clearly defined boundaries. A way of explaining the
difficulty with defining change was stated by Dawson as:

“There can never be a universal theory of organizational

change, as change involves a movement to some future state
that comprises a context and time that remain unknown.”83

Many have argued for a classification of the change will clarify the purpose and
improve the result of the change efforts.84 A classification framework, described by
Hughes (2006)85, which enables a structured way of defining the change is based on
a number of questions; what, why, who and how.

Some of the main benefits that have been recognized when making a classification of
the change is that clearer communication between the people involved is achieved,
dominant paradigms in groups or organizations are discovered, strategic issues are
more easily dealt with and finally change agents are provided with a structured tool
for reflection.86

81 EFQM, 2010
82 Mohrman & Lawler, 2012
83 Hughes, 2006
84 Ibid
85 Ibid
86 Ibid

29
Drivers for Change
Another important part to understand is how the external and internal
organizational environment affects the organization and drives the change. It is
these contextual changes forcing and pushing companies to change. The external
contextual factors stretch from a general perspective, such as changes in the
economy, politics, legislation or socio-cultural changes, to more immediate factors,
such as changes in competitors strategies, increased level of competition and
supplier quality. Internal factors driving change are human resources, the
administrative structure, the products or services, the technology and the history
and culture.87

3.3.2 Three Approaches to Change Management

There are three major theoretical foundations on which the change management
concept lies upon; the Individual Perspective school, the Group Dynamics school and
the Open Systems school. 88 All of these perspectives; the individuals, the groups and
the organization play a part in the process of change but it is the leaders having the
onerous task of achieving the objectives and making everything happen.89 To do
this, it is important to understand all of these perspectives and how they interact
with each other.

The Individual Perspective School

To successfully implement a change in an organization it is important to realize the
central role of the individuals. Without the support and motivation on the individual
level, change efforts are likely to fail. Choi (2011) states that far too many leaders
underestimate the importance of understanding the individual change process
leading to unsuccessful implementations.90

There are four approaches to individual change; the behavioral, the cognitive, the
psychodynamic and the humanistic approach, all shown in figure 3.3.91

Figure 3.3; The Four Approaches to Individual Change

87 Hughes, 2006
88 Burnes, 2009
89 Cameron & Green, 2009
90 Choi, 2011
91 Cameron & Green, 2009

30
The Behavioral approach originates from how individuals interact with the
environment and how rewards and punishments can affect and change the behavior
of an individual. There are many examples showing that if a behavior is rewarded it
is also likely to be repeated, but if it is ignored or punished it tends not to.92

The Cognitive approach is based on the behaviorist theory, but with the belief that
individuals are acting in a certain manner depending on how they are experiencing
and thinking in a situation and not how they are responding to an external stimuli. If
the internal thought processes of an individual are changed the reaction and
response to a situation will differ.93

The Psychodynamic approach is based on the idea of humans experiencing different

internal psychological stages when going through a change. This is especially
important for managers to understand when outlining different kinds of change
projects. The origin of the idea came from a research study made on terminally ill
patients who faced a very difficult message. However, even though the context and
level of seriousness is very different, the individuals facing changes within an
organization will go through the same change process of five stages; Denial, Anger,
Bargaining, Depression and Acceptance.94

The Humanistic approach combines parts from the three previous approaches but at
the same time develops an additional mindset. Both the fundamental human needs
and path to personal growth are addressed in this approach. The needs are
described by Maslow´s pyramid, stating the hierarchy of needs to be satisfied as;
physiological, safety, love and belonging, self-esteem and self-actualization. The path
to personal growth is about understanding the journey a person goes through life.95

The Group Dynamics School

To make changes in organizations it is crucial to understand how people are affected
by others and how they interact in teams. To further describe this interaction the
term team must be defined. Hughes (2006) defines team as:

“A team consists of a distinguishable set of people (1) who

interact with each other dynamically, interdependently, and
adaptively, (2) who work toward a common and valued goal,
and (3) who each have specific roles or functions to
perform.”96

The group dynamic school highlights the forces, tensions and symbolic interactions
forming a group or team. The behavior of the individual is seen as a result of the
continuous adaptation needed to function within the boundaries of the team. The

92 Burnes, 2009
93 Cameron & Green, 2009
94 Ibid
95 Ibid
96
Hughes, 2006

31
main focus should instead be put on influencing and changing the group´s norms,
roles and values.97

Norms can be both implicit and explicit, where the former is the informal and
unwritten rules of a team everyone might not be consciously aware of. These norms
define the atmosphere, establish specific behavioral expectations on the people
within the group and in some way give a hint on how other people in the group will
behave. The explicit norms are the written and formal norms which everyone knows
about. However, it is the implicit norms often playing the vital part of the group
dynamic and actions.98

The roles of the individuals within a team can be described as how the team or the
different individuals are expected to behave and interact with each other and the
environment. Roles can have many titles and are formally defined by work
descriptions and performance targets. If the roles are not clearly defined, the team
will be lacking in structure and coherence, which in the end will lead to bad
performance and uncertainty of achievement of the required results.99

Values are the third important factor when influencing a group behavior. It is the
values of a group determining what is right and wrong. The values are harder to
determine than the previous factors since they almost always exist without a
conscious awareness among the group members. Even though they cannot be
formulated it is very important to be aware of them when changes in patterns and
behaviors of a group are being made.100

The Open Systems School

By adopting the perspective of the open systems school the main focus is changes in
the entire organization. This perspective is basically a process oriented view of
seeing things. The supporting processes are systematically described and evaluated,
to understand and determine how to improve the performance and the functioning
of the organization. The meaning of the systems being open is that they are affected
by both the external environment as well as the internal factors of the system,
therefore if changes are made on one of the sub-systems or supporting processes it
will result in a chain reaction traveling to the other parts, which in extension also
will affect the external environment. The main objective and purpose with this
approach is to create an overall synergy and focus on the overall performance of all
the processes of the organization. This is achieved by establishing a good
coordinated structure with clearly defined interdependencies, together striving
towards a common goal.101

97 Burnes, 2009
98 Hughes, 2006
99 Burnes, 2009
100 Ibid
101 Ibid

32
3.3.3 Planned and Emergent Change
There are two different ways describing how changes appear, in a planned or
emergent manner. The difference between the two approaches is that the planned
approach advocates a sequential perspective where change is conducted in loops
through projects with a start and finish line, while for the emergent approach the
main objective is to build an organization continuously adapting and changing. By
looking at change from these perspectives different approaches on how to make
successful changes has been developed. 102

Theories on the Planned Approach

One of the most prominent and used theory of the planned change approach is the
one created by Lewin, based on a three-step model of change. The model, presented
in figure 3.4, is based on the concept of organizations tending to remain or return to
the initial steady stage when change measures are faced. This means that a shift
from one steady stage to another requires actions to be made intentionally and
motivationally combined with embedding the new and ending stage within every
level of the organization.103

Figure 3.4; The Three Step Model of Change

However, to understand and work with the three-step model Lewin´s concept of the
force field within an organization must be described, see figure 3.5. The force field
analysis is a way of recognizing the driving and restraining forces towards change
which gives a holistic view of the initial picture. The basic idea is to be able to
successfully make changes the driving forces must be greater than the restraining
forces. There are two ways to go about; either try to add to or strengthen the driving
forces or reduce the restraining ones.104

Figure 3.5; The Force Field Analysis

102 Burnes, 2009

103 Ibid
104 Cameron & Green, 2009

33
The force field analysis is a part and a prerequisite for step one, unfreezing, in the
three-step model. This step aims at defining the current state, bring the driving and
resisting factors to the surface and visualizing the desired end state. The second
step, moving, concerns the actions needed to move towards a more desired
behavior. This requires both involvement and participation from everyone in the
organization. The third and final step is refreezing, focusing on establishment of new
routines and ways of behaving together with rewarding the successful results.105

Another approach on how to make successful changes, in a planned and sequential

fashion, is presented in an eight step process by Kotter, see figure 3.6. These steps
are presented from a managerial perspective and the main recurring factors for an
efficient and successful leader is the ability to communicate and develop visions to
inspire others.106

The first four steps concern creating a positive attitude and behavior towards the
change, encouraging questioning of the present conditions. The following two steps,
step five and six, are established ways to reach the objectives and the final steps, the
seventh and eighth step, are anchoring the changes in the corporate culture. Several
steps can be worked on at the same time but it is crucial to progress through all of
the eight steps to create a solid foundation for the work and finally consolidate the
changes.107

105 Cameron & Green, 2009

106 Kotter, 1998
107 Ibid

34
 Establishing a Sense of Urgency
 Examining market and competitive realities
 Identifying and discussing crises, potential crises, or major opportunities

 Forming a Powerful Guiding Coalition

 Examining market and competitive realities
 Identifying and discussing crises, potential crises, or major opportunities

 Creating a Vision
 Creating a vision to help direct the change effort
 Developing strategies for achieving that vision

 Communicating the Vision

 Using every vehicle possible to communicate the new vision and strategies
 Teaching new behaviors by the example of the guiding coalition

 Empowering Others to Act on the Vision

 Getting rid of obstacles to change
 Changing systems or structures that seriously undermine the vision
 Encouraging risk taking and nontraditional ideas, activities, and actions

 Planning for and Creating Short-Term Wins

 Planning for visible performance improvements
 Creating those improvements
 Recognizing and rewarding employees involved in the improvements

 Consolidating Improvements and Producing Still More Change

 Using increased credibility to change systems, structures, and policies that don’t fit the vision
 Hiring, promoting, and developing employees who can implement the vision
 Reinvigorating the process with new projects, themes, and change agents

 Institutionalizing New Approaches

 Articulating the connections between the new behaviors and corporate success
 Developing the means to ensure leadership development and succession

Figure 3.6. Kotter´s Eight Step Process for Successful Change

35
The Emergent Approach
The advocates of the emergent theory are many but the views on what emergent
change is and how to approach changes vary. The major similarity between the
proponents is the strong rejection of the planned approach. One definition of change
is:
“Change is as a continuous, dynamic and contested process
that emerges in an unpredictable and unplanned fashion.”108

Even though these theorists argue about the definition and the absence for a
universal and general way of how to approach change, Burnes (2009) mentions five
main factors consistently mentioned in the literature and presented in figure 3.7.109

Organizational
Structure

Organizational Organizational
Learning Culture

Successful
Change

Managerial Power and

Behavior Politics

Figure 3.7; The Determinants of Successful Change

The Organizational Structure describes the overall hierarchy; who is in charge, how
people relate to each other and if it is a rigid or flexible organizational structure.
These factors will determine where the main driving forces will be and if the
structure will ease or complicate the facilitation for change. The preferred and main
view is that a flat and flexible structure is more responsive and adaptable to change
and will more efficiently tackle difficulties in the process.110

Organizational Culture is one of the fundamental parts in organizations and is vital

to create an understanding for the culture to make changes. The culture is deeply
imbedded in the organization and to make changes differing from traditions and

108 Burnes, 2009

109 Ibid
110 Ibid

36
unwritten rules are hard. A way to avoid this problem is to establish a culture of
change within the organization, meaning that change is imbedded in the daily work
and way of doing things.111

Power and Politics focus on the need for support on every level in the organization
and the importance of a common language and vision, attracting a broad audience.
These two will build a consensus about what needs to be done and establish a
feeling of urgency driving the change forward.112

The Managerial Behavior and the role of managers are seen from a different
perspective when adopting the emergent approach. Instead of the traditional view
of managers who direct and control, the main role is to involve, participate and
facilitate the change by coaching and gathering cross functional teams, identifying
the possibilities for improvements and needs for change.113

Organizational Learning is the final factor, crucial to understand to learn from

mistakes and achieve successful changes. The idea is to encourage commitment on
the individual level to analyze, evaluate and draw conclusions from the experiences
and knowledge which then can be transferred and translated into organizational
learning. It is important to distinguish organizational learning from the learning
organization. The connection between the concepts can be described as:

“Organizational Learning describes attempts by

organizations to become learning organizations by
promoting learning in a conscious, systematic and synergistic
fashion that involves everyone in the organization. A learning
organization is the highest state of organizational learning, in
which an organization has achieved the ability to transform
itself continuously through the development and involvement
of all its members.”114

Learning can be achieved in many ways. Two commonly mentioned ways are the
single and double loop learning. The single loop learning is about identifying and
detecting errors and mistakes, and then learning by correcting them. This type of
learning is the easiest and often the most common practice in companies because it
does not require any further investigation about the root-causes.115

The double loop learning however, is about questioning the procedures and
structure of how things are done to create a deeper understanding, and encouraging
and implementing new, more effective behaviors.116

111 Burnes, 2009

112 Ibid
113 Ibid
114 Ibid
115 Argyris & Schön, 1995
116 Ibid

37
3.4 Theory for Supply Chain Improvements
This part is specifically focused on theory applicable for improvements of the supply
chain and value stream performance, as well as reference material for the
development of the Value Stream Approach.

3.4.1 Process Management

In today’s heavily pressured and rapidly changing environment of the vehicle
industry, the need for companies to be flexible and adaptable is greater than ever. 117
The evolvement and unpredictability of the global economy combined with
increased utilizing of information technologies and larger corporate network
structures has created a complexity demanding a multicultural environment with
both cross-functional knowledge and thinking. Therefore a process orientated
organization with management of the business processes is an essential factor for
success.118

Process Visualization
To create an understanding for the processes within the organization visualization is
important. The most commonly used tool for the visualization of processes, is the
process map. A process map is used to provide an easily understood explanation of
the interrelations between and within the departments of the organization and
shows how the processes create value for the customer. By determining and
visualizing which processes actually exists forms a common view of how the
organization works. Process maps have several applications and can be used for
various reasons, both as a tool to create understanding of the process as well as a
basis for improvement and redesign of the current state.119

Process mapping can be conducted in several ways with different levels of detail. To
be able to develop a process map it is important to understand the fundamental
components of the process, seen in figure 3.8.120

Figure 3.8; The Fundamental Components of the Process

117 Mohrman & Lawler, 2012

118 Becker, et al., 2003
119 Ibid
120 Ibid

38
The object in is the trigger, initiating the process, without an object in the process
will not start. The activity is the operations processing and refining the object in or
additional input. Resources are the means necessary to perform the activity.
Information in respectively out is what supports or directs the process. Finally the
object out is the result of the transformation and is equal to the object in for the
following process.

To facilitate the development and structure of the processes a classification is made.

There are several names on the different levels of processes but the most common
ones are core processes, support or sub processes and management processes. In
figure 3.9, the different levels of the process are visualized. By identifying the
different types of processes the focus of improvement activities can be delegated
more appropriately to the needs.121

Figure 3.9; Process and Sub-process

Core processes are directly contributing to the creation of value for the customer.
They are often cross-functional and involve several departments. Core processes are
only initiated at specific events, such as initiation of production when a customer
order is received.122

Support processes do not add value, instead the main purpose is to facilitate and
enhance the performance of the core processes. These processes can be both event
and plan initiated, which means that the maintenance of production can be initiated
either when brake-downs occurs or on a regularly scheduled basis.123

Management processes are often plan initiated and has an indirect effect on the value
added to the customer. An example of a management process is the development of
strategies for the organization.124

121 Harmon, 2007

122 Jonsson & Mattsson, 2005
123 Ibid
124 Ibid

39
Ljungberg and Larsson have suggested an eight-step approach for the development
of a process map. Before the initiating the actual mapping an important success
factor has been stated to be gathering of a cross-functional team, representing every
part of the process. In this way no perspectives will be missed.

1. Define the purpose of the mapping to be able to set the right scope
with appropriate start and end points. A clear understanding of the
process´ purpose and objective before the mapping starts will
facilitate and improve the result.
2. Conduct a brainstorming session where all possible activities are
found. These could then be written on post-it notes or similar to
build a puzzle of the process.
3. Arrange the activities in an order everyone agrees upon.
4. Merge the activities representing and describing the same thing or
add activities that are missing.
5. Define an object in and out for every activity to link them together
into a process. This step is often skipped which results in maps with a
lot of activities stacked on top of each other without a defined input
and output. By defining the object in and out a greater understanding
is created combined with an assurance of the logic of the map.
6. Assure that all activities fit together by looking at the objects of the
different activities. In this way missing activities can be identified.
7. Determine a general level of detail, control that all activities are on the
same level and define suitable names for each activity. The level of
detail is often hard to decide upon, but by considering the purpose of
the process mapping an easier decision can be taken.
8. Refine the map until a satisfying description of the process has been
obtained. Final adjustments of the map are important to make an
accurate description of the process.

3.4.2 Sales and Operations Planning

The main objective for Sales and Operation Planning (S&OP) is to optimally match
and balance the supply and demand from a planning perspective. It is a cross-
functional process involving and aligning managers from both the demand and
supply side, including; sales, marketing, customer service, manufacturing,
operations, logistics, supply chain and procurement.125 In good times capacity
limits turn demand forecasts into constrained forecasts, whereas in bad times the
capacities are adjusted to meet the variations in the demand. One of the commonly
mentioned problems, stated by Goodfellow, is that the sales are planned in dollars
and the production is planned in units. The overall budget reflects what the CEO
wants to see, and to really close the loop all these plans should be agreed upon.126

125 Lapide, 2007

126 Goodfellow, 2012

40
In figure 3.10 the relationship between the S&OP, the business plan and other types
of plans is visualized.127

Figure 3.10; Relationship between the Different Levels of Plans

A business plan is a financial assessment of the future for an organization and is

compiled with the combined expectations of the firm´s operations, finance sales and
marketing managers. It is also the framework for the sales and operations plan,
which is the aggregated plan for all production and human resources. From the sales
and operations plan the next level of planning is the resource planning. In this level
appropriate workforce schedules are developed as well as determination of material
requirements. The final level is scheduling, addressing day-to-day issues, such as
specific schedules for employees and customers.128

Since the S&OP is a cross-functional process, almost every part of the organization is
involved. Figure 3.11 shows a detailed description of the required input to the S&OP
process.129

127 Krajewski, et al., 2012

128 Ibid
129 Ibid

41
 Figure 3.11; Input to the S&OP

All inputs must be explained and motivated, to ensure the reliability and feasibility
of the plan. This coordination will also help and facilitate the synchronization of the
flow of material and information through the organization.130

The S&OP process can be described in five steps, shown in figure 3.12; portfolio
planning, demand planning phase, supply and resource planning phase, integration,
reconciliation and finance, and executive S&OP meeting.131

Portfolio
Planning

Executive
Demand
S&OP
Planning Phase
Meeting

Integration
Supply &
Reconciliation
Resource
Finance
Planning Phase
Pre-S&OP

Figure 3.12. The Five Step S&OP Process

130 Krajewski, et al., 2012

131 Goodfellow, 2012

42
The first step is the portfolio planning, this step can either be very prominent and
time consuming or it can play a minor role in the process. It considers the
introduction of new products as well as the replacement phase and spare demand
for outdated products. A typical time to complete this step is at the end of the month
so that the sales and marketing have the necessary information for the following
step.132

Demand planning phase is the second step with the main objective of creating an
aligned demand plan, unconstrained and agreed upon. An unconstrained demand
means that it is not the sales and marketing people´s job to ensure the required
capacity to exist; this question must be answered by the supply side of the
organization. It is essential for this plan to be based on the actual demand, since
forecasting otherwise will be completely useless for the supply side. By the end of
each succeeding month the history of demands or sophisticated forecasting software
can be used to generate a forecast for the future demand. Although it is important to
remember that this will be a rough estimation since the environment most probably
will not look exactly the same in the future.133

Supply and resource planning phase refers to manufacturing processes, being the
suppliers in the organization and required to deliver the requested demand always
on time. The created supply plans have always followed three strategies; chase, level
and compromise. Chase is when the manufacturer tries to follow the demand plan as
close as possible, level is when the production is evened out to an average demand
for a certain number of months, and compromise is a compromise between the two
previous. The main objective is to create a balance between the supply and demand,
which depends on which strategy that is used. There is always a possibility that the
demand plan is not achievable. In that case adjustments to the resources, such as
overtime or additional personnel, have to be considered.134

The fourth step is integration, reconciliation and finance and is a meeting where all
managers from the whole organization reconcile the differences from the previous
steps and develop an approved presented as a recommendation to the senior
management. The main objective in this step is to look at the balance of the supply
and demand for every product family.135

The final step for the S&OP process is the executive S&OP meeting. This is the step
where decisions are taken. The financial numbers must be reviewed and unresolved
conflicts need to be solved. All recommendations are considered, then translated
into agreed actions.136

132 Goodfellow, 2012

133 Ibid
134 Ibid
135 Ibid
136 Ibid

43
3.4.3 Supplier and Customer Communication
Introducing the concept of bullwhip effect will clarify why information sharing with
the suppliers and customers are of importance. The bullwhip effect can be defined
as the effect occurring when changes in customer demand causes companies in the
supply chain to increase the orders to meet the new demand. The effect will usually
flow upstream and leads to tremendous inefficiencies in form of excessive
inventories, poor customer service and capacity plans, as well as missed production
schedules. The bullwhip effect can be pictured as in figure 3.13 and visualizes how
the information errors gradually escalate.137

Figure 3.13; The Bullwhip Effect

There are different causes for the bullwhip effect and especially four have been
identified to be138:

 Demand forecast updating.

 Order batching.
 Price fluctuations.
 Shortage gaming.

As well as four primary causes have been found for the bullwhip effect, one initiative
linked to each of the causes have been identified to eliminate the bullwhip-inducing
behavior; information sharing, channel alignment, price stabilization, and
discouragement of shortage gaming.139

Information sharing is especially used as an initiative for the demand forecast

updating cause. Point-of-sales (POS) data is initially involved as the foundation for
information sharing and will be used to forecast the demand. Different techniques
can be used to share information but the most commonly used system is EDI
(electronic data interchange), requiring all involved parties to have an interface in
place enabling for communication with the different ERP or MRP systems.
Information sharing is becoming more and more common and the trend is pointing
at a future with direct linkage to the sources of the POS data.140

137 Nahmias, 2009

138 Ibid
139 Ibid
140 Ibid

44
Channel alignment refers to coordination of different efforts and can be done by
pricing, transportation, inventory planning, or ownership with suppliers and
customers. Channel alignment is used to avoid order batching and instead involve
evaluation of optimal order quantities. Pricing is one way of coordinating efforts to
align channels and avoid order batching. Pricing is usually affecting the order
batching, by having fixed costs motivating order batching. Reduction of the fixed
costs will therefore enable for smaller and calculated optimal order sizes. Fixed cost
is to a large extent dependent on the paperwork in the ordering process and by
introducing technologies such as EDI, the fixed costs can be reduced and the total
cost structure and order quantity can be revealed and analyzed. Transportation is
another factor affecting the order batching and refers to the economies of scale
perceived with order batching since it is cheaper to order a full truckload than a
partial one on a per-unit basis. To reduce the motivation of order batching
transportation consolidation from multiple suppliers and outsourcing of the
logistics processes can be used as initiatives to reduce the bullwhip-inducing
behavior.141

Price stabilization can be used as an initiative to eliminate price fluctuations and

refers to avoidance of price promotions motivating buying in large batches and
storing items for future use. By agreeing on stable pricing with suppliers and
customers, the sales pattern will have less variation and the risk of bullwhip-
inducing behavior will reduce.142

Discouragement of shortage gaming is an initiative to reduce the shortage gaming

occurring when huge demand is expected and more is ordered from the supplier. If
the expected demand is not there, then all products will end up as inventory and no
more orders will be put because of the built-up inventory. To avoid shortage gaming
and minimizing excessive orders, allocation can to some extent be done on past sales
records rather than on orders to reduce the tendency of customers exaggerating
orders.143

141 Nahmias, 2009

142 Ibid
143 Ibid

45
3.4.4 ABC Inventory Classification
ABC classification is one way of maintaining and controlling the inventory by
ranking the articles, most commonly with the measurement of annual dollar volume
of sales. Ranking and ordering the articles based on this measurement and graphing
the cumulative dollar volume will give an exponentially increasing curve visualized
in figure 3.14, usually called the Pareto curve.144

Figure 3.14; ABC Pareto Illustration Curve

The Pareto principle is also called the 80-20 rule, where 20 percent of the articles
often represent 80 percent of the volume value or the turnover and these 20 percent
of the articles are therefore called A items. A items have the highest resource
attention with often reviewed inventory levels and carrying a high service level. B
items are typically the following 30 percent of the articles and accounts for the next
15 percent of the volume value, with moderate resource attention and not such close
scrutiny. Finally C items are the remaining 50 percent of the articles and account for
the final 5 percent of the volume value, with low resource attention, resulting in
infrequent large order quantities. Classifying the articles according to the ABC
classification will facilitate the managing of material and the ordering process, since
different articles will be given different amount of attention.145

144 Hopp & Spearman, 2008

145 Nahmias, 2009

46
3.5 Haldex Way History
Haldex Way originates from the lean philosophy with a strong focus on customer
satisfaction and world-class production and distribution. The history of Haldex Way,
displayed in figure 3.15, begins with the development and release of the first Haldex
Way booklet just after the millennium change.146

Figure 3.15. Haldex Way History

The following years were both site KPI´s and Gap analysis introduced as a start to
align the measurements and identify weaknesses. Between 2004 and 2010 the
Haldex Way Tier model and challenge were presented as a tool for step wise
progression and assessment. In 2010 a revision of the Tier levels and the challenge
template were conducted through a master thesis. Later the same year, the split of
Haldex was confirmed, dissolving the change agent team and holding back further
developments of the Haldex Way concept. In 2012 the change agent team was
reinstalled and the ideas of an improved Haldex Way began to evolve.147

146 Haldex Way Introduction, 2013

147 Ibid

47
3.5.1 Previous Improvements of Haldex Way
The Haldex Way Tier model were first developed with four levels; Copper, Bronze,
Silver and Gold. All steps in the Tier model were added gradually, to enable the sites
to evolve further, face new challenges and achieve improved results. However, this
way of developing the Tier levels resulted in different performance levels, tools and
principles being included as progression through the levels were made. A
consequence to this was therefore a lack of consistency between the steps making it
hard for the employees to see the entire picture. To resolve the problems, improve
the structure of the model, meet the demands from the sites and progressing from
the existing final gold level, a Master Thesis were conducted. The purpose of Master
Thesis were to review the existing Haldex Way, redesign an improved and
consistent Tier model and further develop a fifth step, the Platinum Level.148

The Master Thesis resulted in an improved Tier model currently used throughout
the organization. The improved model gathered and reduced the number of
categories with similar content in the different levels from a total of 33 categories,
with 11 in the Copper level, 14 in the Bronze level, 19 in the Silver level and 15 in
the Gold level, to 13 categories consistent in the entire model, shown in table 3.1.
This created a coherent platform, clearer guidelines and an improved understanding
of Haldex Way. It also enabled faster progression through the levels of the Tier
model, because of the transparency between the Tier levels.149

Table 3.1; The Current Haldex Way Tier Level Structure

148 Eckersten & Hörberg, 2010

149 Ibid

48
When the master thesis was initiated the Platinum level had recently been added to
the Tier model, but the content of the level was not totally in line with the rest of the
Tier model. Adding the Platinum level meant a need to improve the business even
further than in the Gold level. Therefore a Business Excellence model was integrated
as the way of working in the Platinum level. An additional objective for the previous
Master Thesis was therefore also to integrate Business Excellence into a new Haldex
Way Tier model, shown in figure 3.16.150

Figure 3.16; The Current Haldex Way Tier Model

150 Eckersten & Hörberg, 2010

49
4 Empirics
This chapter represents the empirical research, which is the first step in the empirical
research and analysis process. It is divided into two main parts; the research of Haldex
Way framework and Tier model as well as research of work methods related to the
value stream processes.

4.1 Haldex Way

The foundation for Haldex´ success lies in the ability to satisfy the customer needs,
gain advantages with the knowledge and expertise of the employees as well as
continuously trying to exceed the shareholders´ expectations. These cornerstones
and beliefs of Haldex´ organization are formed into the three core values:151

 Customer First
 Respect for the Individual
 Passion for Excellence

The core values of Haldex pervade the entire organization and are the foundation for
all work and improvement activities. In figure 4.1 the Haldex Way house is
presented, illustrating how the core values and standardized work methods
combined with teamwork, consumption controlled processes and the quality
assurance concept “right from me” intends to lead to continuous improvements.152

Figure 4.1; The Haldex Way House

151 Haldex Official Presentation, 2013

152 Haldex Way Introduction, 2013

50
Haldex Way is the means and not a target in itself with structures, tools and methods
of how to improve the performance. By incorporate and focus on the core values a
strong, adaptable and competitive brand is built. The management and
improvement system aim at:153

 Improving cost-efficiency and increasing productivity.

 Business & Operational Excellence through the entire value stream.
 World class production, supported by Leadership Excellence
 A culture of continuous improvements.

In addition to the core values there are currently ten principles included in Haldex
Way, together describing how Haldex will achieve world-class performance:154

Standardization is the foundation for improvement activities. The best procedure

for every work task is identified, standardized and then used every time it is
performed.

Takt time reflects Haldex sales and current market situation and provides a pulse to
the organization. The takt time is defined as the available time divided by the
customer demand. Takt time is the control of the daily output at each local site.

Leveled flow is used to create an efficient flow by dividing the products equal during
the available time.

Balanced flow creates an even flow through the processes by an equal allocation of
activities.

Consumption control is a pull method, which means that the production is not
initiated until a customer demand is received. The processes are linked without any
delays with different kinds of signal systems and visual buffer stocks.

Visualization is a tool to provide all employees with easy displayed information

regarding the current status and other important topics linked to the work place.

Right from me considers control methods ensuring no errors are passed on further
down in the value stream. In addition this principle is about the assurance that the
tools, methods and instructions are adequate for the work tasks.

Real-time updates are important to minimize delays in the processes. If deviations

are identified at an early stage there is increased chance finding the cause and taking
the appropriate actions.

Go and see refers to a committing and participating leadership. By continuously

involving the managers in the processes a greater understanding for the people and
the problems are created.

153 Haldex Way Introduction, 2013

154 Dantoft, et al., 2006

51
Continuous improvements are essential for every successful organization. When
the standardized normal state is established the working methods will continuously
be challenged.

4.2 Haldex Way Tier Model

The Haldex Way Tier model is a framework for business improvements,
assessments and deployment as well as a tool for step wise progression towards
excellence. There are currently five steps in the Tier model; copper, bronze, silver,
gold and platinum. Each of the four first steps includes thirteen categories.

The Tier model is used to establish common ambition levels and provide guidance
for change from a prescriptive deployment of lean, in the first four steps, to a generic
excellence model in the final step. By dividing the deployment into a step wise
implementation enables the level of improvement work to vary across the different
parts and sites of the organization. However, an alignment of the objectives and
targets is created since these are fixed for each step in the model.

To progress from one Tier level to another a challenge must be successfully

undertaken. In order to do so the specific requirements for the step must be
achieved. A challenge is the Haldex term for audit but with a more inspiring and
positive tone to it. The decision about when a challenge should be done is
determined by the management at the local site together with the change agent
team conducting the challenge. In table 4.1 a general description of the focus and
what is required for the different Tier levels are presented.155

155 Haldex Way Introduction 2013

52
Table 4.1. The Tier Level Requirements and Challenge Structure

53
Table 4.1 shows how the focus of the content and requirements for the first four Tier
levels change and evolve from a generic to a more specific level. However, in the last
step, Platinum, the introduction of a business excellence model makes the objectives
more generic again. The result of the previous redesign aligned the different Tier
levels to a much more consistent structure and made this change not as prominent
as before, which is visualized as the dashed line in figure 4.2. 156

Figure 4.2. The Generic/Specific Split of the Current Haldex Way

This change was made to create more applicability in other areas than the
production. By making the criteria and evidence in the challenges more generic the
possibility of integrating the model into other areas, such as the administrative and
R&D, was improved. However, the figure is in some sense a bit misleading. There is
still an issue with applicability in other areas than production and distribution sites.
It is also a quite large gap between some of the steps in the Tier model and the
change from Gold Tier to business excellence requires a large effort. This issue must
be addressed in the improved Haldex Way.

4.3 The Categories of the Tier Model

The 13 categories in the Haldex Way Tier model include guidelines, tools, methods,
procedures and values for improving the performance of the organization. As
progression through the levels of the Tier model the more comprehensive the
categories get. Following is a brief description of the content of the categories
presented, without splitting them between the Tier levels. This is done mainly
because of two reasons; the first being that the improved Haldex Way will not be
designed in the same way as the current one. Secondly, since the number of
categories is equal for every Tier levels the largest difference between them are the
increased level of detail and amount of tools and methods included. All information
has been gained through Haldex intranet or during the interviews and observations
conducted throughout the Master Thesis. An important notice is that the 6 sigma
category introduced with the last redesign of Haldex Way has been replaced with a
problem solving category.

156 Eckersten & Hörberg, 2010

54
 KPI’s: Includes guidelines on how to report and use strategic and
process KPI´s. The chosen process KPI´s should be suitable and
relevant for the purpose, and linked to both the site specific and the
overall organizational strategy. They should be visualized and
reviewed regularly in meetings. Causes for positive and negative
trends in performance are analyzed with appropriate actions as a
result.
 Haldex Way Values: Involves Haldex Employee Engagement Survey
(HEES), employee development plans and training matrix. Training
of tools methods and values and principles are scheduled regularly.
The management should regularly communicate, inform, follow up
and link KPI trends and results to the strategy.
 Teamwork: Introduces cross-functional teams to enhance
understanding and communication across functions. Haldex Lean
Daily Management System (LDMS) with standard agenda, status and
action list is used for daily meetings. The gap analysis is used to
identify and close existing gaps and training are conducted with
focus on application to improve the processes and tool utilization.
 Visualization: Includes LDMS with meeting minutes for every
meeting and communication boards for visualizing and
communicating the results and track progression in specific tools
such as 5S and TPM. It also introduces the visualization of work
instructions and Haldex Floor Marking Standard to visualize the
structure of each facility.
 Standardization: Focuses on standardizing the format of working
procedures and templates such as, agenda for teams, improvement
tools such as 5s and Gap analysis, and process and value stream
maps. In addition the core competencies and critical process features
are identified and documented for each area of the business to
always ensure a high performance level. Advanced Product Quality
Planning (APQP) is used as the project management model for new
products and processes as well as the development of these.
 Takt & Balanced Flow: Introduces the concepts Takt time and
Balanced flow and ensures that everyone is aware of the meaning
with them. The Takt time is calculated accordingly to customer
requirements and visualized on real time updated displays. The
production lines are balanced with the use of Haldex way tools such
as value stream mapping and process mapping.
 Consumption Control: Includes information and guidelines about
different pull methods such as; Kanban, min/max levels or two-bin
systems which signals when to initiate production. These methods
are used to minimize the waste and improve the flow through the
supply chain.
 5S: Presents the Haldex 5S standard for improving the structure,
order and cleanliness. Improvement plans are developed and

55
 regularly followed up on and audited. Safety issues are also
incorporated in this category to minimize the accidents and enhance
the overall safety.
 TPM: Consists of the procedures, standards and tools necessary for
Total Productive Maintenance (TPM). The Overall Equipment
Effectiveness (OEE) is calculated with updated constants such as;
cycle and set up time, and trends over 6 and 12 months are tracked
and visualized. TPM progress is also tracked and visualized. Haldex
Process Stability standard with pareto analysis is used to minimize
the losses in the operations. Cause and action lists are developed and
followed up on.
 Mapping: Introduces process mapping and value stream mapping as
a tool for continuous process improvement and optimization, and
visualization of a future desired state. The maps are regularly
updated and linked with improvement plans.
 Set-up & Change Over: Systematic analysis of the set up and change
over’s, and when to use the Single-Minute Exchange of Die (SMED)
methodology. Process KPI´s for set up and change over’s are used to
measure, control and track the time and actions spent during the
activity. Documentation of the improvements is compiled.
 Error-proofing: Focuses on pro-active identification of opportunities
for poka yoke. It involves the development and implementation of
error-proofing tools and methods to eliminate deviations and link
certain customer concerns with specific errors. Contingency plans
and corrective actions are developed and taken for all customer
concerns.
 Problem Solving: Includes problem solving teams with use of tools
such as; tracking charts, pareto charts, fishbone diagrams and
process maps with value add vs. non-value add identified. Corrective
actions are analyzed and tracked and sent to the Quality council to
assure the elimination of reoccurrence. In order to foresee quality
issues and problems there are existing procedures for the
development and update of control plans and work instructions for
the; Design Failure Modes and Effects Analysis (DFMEA), and the;
Production Failure Modes and Effects Analysis (PFMEA).

56
4.3.1 The Prescriptive Level of Haldex Way
In the current Haldex Way categories the way of communicating the content changes
as progression through the Tier levels is made. The copper level is prescriptive in its
way of presenting the tools and methods to create an initial direction and a
consistent way of working with Haldex Way. The later steps however, are fairly non-
prescriptive since it is important, when a knowledge base already exists, to let the
people working with the processes choose where the efforts are needed. This has
been the case in all versions of Haldex Way and was not change when the latest
redesign was made. In the Master Thesis by Eckersten and Hörberg a description of
the prescriptive and non-prescriptive split was easily presented as in figure 4.3
below.

Figure 4.3; The Prescriptive and Non-Prescriptive Ways of the Current Haldex Way

How prescriptive or non-prescriptive the categories are in the different levels is

determined by the criteria and depending on the evidence needed in the challenge
documents for the change agent team to complete a challenge.

4.4 The Haldex Way Tier Level Challenge

In the currently existing Haldex Way Tier level challenge the strategic KPI’s are
calculated and inserted into an excel spread sheet visualized in table 4.2. Depending
on whether the KPI targets for the specific challenge are met or not the different
boxes will be filled in, for being above or below the requirements. The KPI’s will be
evaluated on a six months rolling average for the five best months and will give an
indication if the KPI targets are met.

Table 4.1; Haldex Way Tier Level Challenge KPI Measurements

57
When the KPI measurements have been evaluated the result is transferred into the
dashboard for the specific Tier level challenge. The Gold Tier challenge dashboard is
displayed in appendix A. The dashboard indicates the development and level of
performance for each of the 13 categories with the differently colored bars in the
bottom of the dashboard. They can either be red, yellow or green depending on what
they have reached and what is required to improve in order to progress a level in
the Tier model.

No category is allowed to be in the red area in order to progress. However,

progression can be made even though two of the categories are in the yellow area, if
the remaining eleven are green. In the top section of the dashboard there is a
number of checkboxes controlling the fulfillment of the KPI and ISO requirements.
All these, with no exception, must be achieved according to the Tier level target in
order to progress one level in the Tier model.

58
5 Analysis
The previous chapter presented the current structure and content of the Haldex Way
Tier model and challenge. To enable development of the Value Stream Approach an
analysis of the current model is needed. The analysis is divided into two parts, analysis
of improvement categories of interest for the Value Stream Approach and analysis of
good practices at Haldex summarizing in a list of requirements for the Value Stream
Approach.

5.1 Criteria for the Analysis

The main purpose of the analysis has been to determine what to include in the Value
Stream Approach and not to focus on the current weaknesses. This depends on two
reasons; the first being that the issues with the current Haldex Way structure and
content are already identified by Haldex, such as lack of ownership, applicability and
utilization of Haldex Way, which therefore will not need any further analysis. The
second reason is that the Value Stream Approach, and the improved Haldex Way in
general, will be based on a totally new structure.

To enable definition of the scope for the Value Stream Approach and decide what to
include and what not, a number of criteria were set up. This was made by using the
simplified picture of a process, visualized in figure 3.9. From this picture two
conclusions were drawn; every process must have clearly defined inputs in order to be
effective and provide the required outputs, and the sub-processes must be efficiently
managed and controlled to generate the required outcome. By applying these
statements into the context of the value stream, more specified criteria could be
defined and established:

 The processes providing the input to the value stream

 The processes managing and controlling the material
flow through the organization
 The communication and information sharing processes

The criteria were used as a basis for comparison and evaluation during the
interviews with the employees and observations of the operations and processes
within the organization. The interviews provided information of how the current
work procedures looked like, which was compared to the improvement categories
and requirements in the challenge templates.

5.2 Material of Interest for the Value Stream Approach

The identification of material from the current Haldex Way applicable and
appropriate to include in the improved Haldex Way has been important for the
development of the Value Stream Approach. By including already existing material
into the improved version provides a sense of recognition and takes advantage of
the current knowledge within the organization and existing material on the intranet.
All the identified categories relate to the criteria and have clear connections to the
improvement of the strategic KPI´s for the value stream processes; delivery
performance and inventory days.

59
5.2.1 KPI´s
The KPI category is a part of every process of the organization as the most
prominent tool for measurement, improvement and recognition. It is crucial to
understand how to measure the performance and work with the results to make the
appropriate and necessary improvements. By using suitable KPI´s in combination
with cause and action lists the linkage to the organizational and site specific
strategies and performance levels can be clarified. This will be an important
category for all processes within the Value Stream Approach.

5.2.2 Haldex Way Values

The Haldex Way core values represent the foundation for the organization and will
therefore also be important for the development of the improved Haldex Way. To
link the operations and work procedures to each core value together with Haldex´
mission and vision is an essential factor for the understanding of the bigger picture.
Furthermore, the core values will be closely linked to the results and KPI´s of the
Value Stream Approach, creating an understanding for interrelation between the
work procedures and the achieved results.

5.2.3 Mapping
To create an overview and control of the complete value stream ranging from
supplier to customer the Mapping category is used. Mapping is used to bring
transparency to the processes and visualize the material and information flow
through the organization. By mapping the processes ownership can be determined
and waste and non-value adding activities can be eliminated, increasing the
efficiency. The visualization of the material and information flow will also clarify,
simplify and improve the communication within and across functions. Therefore
tools and methods of the mapping category will be essential for the Value Stream
Approach.

5.2.4 Consumption Control

In order to have smoothened and streamlined value stream processes the flow must
be controlled. By managing the flow in and out of the production and distribution
sites efficient and high performing value stream processes are obtained with
consumption control methods such as kanban, min/max levels and two-bin systems.

5.2.5 Visualization
The most prominent method in the visualization category is Haldex´ Lean Daily
Management System (LDMS). It provides guidelines for regularly scheduled
meetings on a daily, weekly and monthly basis to continuously track and
communicate the status and progression of the business. The category includes
visualization of both high-level and detailed process and organizational charts with
clearly defined ownerships, crucial for understanding and improving the flow
through the organization. Furthermore is visualization a concept essential for
aligning and sharing information between and across different functions and
processes, important to improve the value stream processes.

60
5.2.6 Takt and Balanced Flow
Both takt time and balanced flow has obvious links to the creation of an efficient and
accurate operations flow. Takt time is introduced to pace the output of the facility
and line balancing is used to even the work load between the different cells or
stations and enable a flow of products according to the takt time. If the production
flow does not meet the customer demand the customers will soon be lost. By
visualizing the takt time with microbus displays or similar real time updates about
the production status the conditions are provided.

5.2.7 Standardization
The standardization category is important to ensure process stability and enable
high speed production processes with reliable performance at the lowest possible
cost. Furthermore the development of work instructions for every process enables
all operations to have a high and equal level of performance every day.

5.2.8 Remaining Categories in Haldex Way

Since the improved Haldex Way will include more approaches than only the Value
Stream Approach, the remaining six categories in the current Haldex Way has been
identified as not specifically important for the value stream processes. The TPM, set-
up and changeover, 5S, and error proofing categories are typically more related to
the production area. Team work and problem solving categories have a more
generic applicability. Team work will to some extent be involved in all approaches
but specifically in an approach addressing the development and performance of
Haldex employees. Problem solving will be introduced as a methods and tool to
assurance the overall quality in the organization.

5.3 Analysis of Gaps

During the interviews and discussions a number of tools and methods that lacked
support in the current Haldex Way categories or needed development, were
identified. The tools and methods were specifically linked to the work with
improving the value stream processes and since Haldex Way should represent the
way of working at Haldex, it is important to include the tools and methods in the
Value Stream Approach.157

5.3.1 Value Stream Related Activities

Stock taking, ABC classification, definition of minimum order quantity (MOQ) and
methods for managing material are all important parts of the inventory processes.
Guidelines and instructions for tools and methods linked to the inventory processes
are currently not included in Haldex Way which creates a lack of consistency
between the Haldex sites. These tools and methods are essential for the
improvements of the strategic KPI inventory days and needs therefore to be
incorporated in the improved Haldex Way and specifically in the Value Stream
Approach.

157 Dantoft, et al., 2006

61
Mapping in general and mapping the inter-company processes within the value
stream in specific is another part that needs to be addressed and developed further.
This is especially important because it will create an understanding for the different
needs as well as improve the performance for Haldex to Haldex sites, being each
other’s suppliers and customers.

There is currently no guidelines and instructions on how to work with the material
and operations planning, and sales and operations planning within Haldex Way. A
coherent structure and standardized work methods as well as procedures for what,
how and who to communicate with is important to enable efficient and effective
operations within and between the sites.

5.3.2 Work and Communication Procedures

Although standardization and communication are included in the current Haldex
Way, there is a great need for improving the work and communication procedures
throughout the organization. In the current Haldex Way there is no evident support
for the supplier and customer interaction except the Supply Chain Improvement
Program (SCIP). The interaction with both the customer and supplier requires
clearly defined communication and work procedures to understand the customer
forecasts and volumes, and improve the accuracy and reliability of the information.

5.4 Good Practices at Haldex

To increase the level of buy-in and include new areas into the improved Haldex Way
a research of good practices at Haldex were conducted parallel and combined with
the interviews and observations. This part of the research has had a close
connection to the descriptions and statements in the EFQM business excellence
model, of how an excellent organization works and operates. What is described as
good practices in the EFQM model was used for comparison and evaluation of a
number of practices at Haldex. The ones that fitted well the descriptions and
explanations in the EFQM model were documented to be included in the Value
Stream Approach. By incorporate these practices with the already existing relevant
parts of the current Haldex Way, the improved Haldex Way and the Value Stream
Approach will be more comprehensive and perfected in its content.

A supportive management is recognized as a key success factor for all processes

within Haldex. In some departments and areas at Haldex the management support is
evident and particularly strong, mainly because of a successful spread of an
encouraging and empowering mindset created within the management team. There
is both a close and open communication, which is essential to understand the needs
of the employees and to be able to provide continuous guidance and follow up. The
fact that the success of a company lies in the hands of its people is another aspect
especially realized within certain processes of the organization.158

158 EFQM, 2010

62
To match the pace of a changing and increasingly demanding market a strategy for
every process and department must be developed and continuously improved.159
This has also been identified to have clear linkage to how the management performs
and currently works. With management communicating the strategy and
understanding both the needs and expectations of the stakeholders and customers,
as well as understanding the internal performance and capabilities, will enable to
create clearly defined strategies addressing all relevant issues.

Another important factor is the importance of close and sustainable relationships

with suppliers, partners and customers.160 Currently this is only the case for a
fraction of the suppliers and customers within Haldex. However, learning´s from
these relationships is crucial to be able to both receive what is asked for and meet
the demands. The currently well working relationships are all based on three critical
components; mutual trust, respect and openness towards each other. All these
components together facilitate an understanding for the other partners´ processes
and needs which both parties will benefit from. It is also of great importance trying
to create a win-win situation when agreements are set, since this creates a positive
attitude towards the development of the partnership.

A good practice used within Haldex which is linked to the performance of the
supplier, but not included in Haldex Way, is the SCIP. This is essential for the work
with the suppliers and needs to be incorporated into the Value Stream Approach.
The SCIP consists of a scorecard evaluating the supplier performance based on four
different and fractioned criteria. Quality stands for 36 percent of the fraction,
supplier delivery performance with right quantity on right time accounts for 31
percent, value improvement or cost stands for 20 percent and finally support or also
called compliance add up with the remaining 13 percent of the fraction. For each of
the criteria the supplier is rated on a scale from 0 to 5 and an average is calculated
for the overall supplier performance resulting in an A, B, or C status. When the
suppliers are ranked, all will be informed of their position and action plans are
required from C suppliers to improve and if no progression is possible, change of
supplier is evaluated.

159 EFQM, 2010

160 Ibid

63
5.5 List of Requirements
The previous sections in this chapter have presented important parts for the
development of the Value Stream Approach. In order to link it closer to the criteria
and create a more structured and clear foundation for the Value Stream Approach a
list of requirements was compiled.

Four areas have been identified to meet the criteria and requirements for the
development of the Value Stream Approach. These relate to the interaction with
suppliers and customers, the planning of the material supply and operations, the
optimization of material flow through the organization and the control and
management of the inventory. Each area includes a number of different tools,
methods and procedures related to the work with the value stream processes and
improvements.

The inter-company value streams and customer and supplier relations are a current
issue for Haldex and therefore appropriate work procedures must be established as
well as improvements of forecasting and firm orders. The purpose of improving the
interaction with the suppliers and customers and including it into Haldex Way is to
improve the delivery performance and customer satisfaction as well as to optimize
the inventory days in partnerships with the suppliers.

To ensure that the current and future customer needs is satisfied; forecasts of the
demand must be received or calculated. However, to produce what is requested the
demand forecast needs to be translated into supply forecasts. The planning is an
important factor when creating an efficient flow, and if the input into the process is
incorrect or badly estimated every part of the organization will suffer. Therefore, by
improving the material and operations planning process will ensure both a higher
accuracy of the delivery performance and reduce the inventory days.

It is essential to balance the flow and pace the output of the production processes
according to the customer requirements. Therefore controlling and optimizing the
flow of material and operations is required for the improved Haldex Way. If the
planning process has determined what needs to be produced and the takt of the
production pace is the determined, output according to this plan is a hundred
percent accuracy towards the customers. By creating an efficient flow the time
needed to produce the requested items will be less which also will reduce the
inventory days.

Finally the control and management of the inventory focuses on the structure,
methods and tools for improving the efficiency of the inventory processes.
Management of the inventory is a fundamental factor for reducing the inventory
days, but it will also lead to improved delivery performance towards the customers
since the inventory accuracy will be high and enable for on-time delivery of the
desired products.

64
6 Result: The Improved Haldex Way
In this chapter focus will be put on the presentation of the Value Stream Approach.
However, to create an overall understanding of the improved Haldex Way the new
framework with its modules and approaches and incorporated logic is also visualized
and described. In addition, the redesigned Tier Model and new challenge template is
presented.

6.1 The Foundation for the Improved Haldex Way

The improved Haldex Way is a complete redesign of the current Haldex Way
structure. The core values are still the foundation of Haldex Way and pervade all
processes. However, in comparison to the previous Haldex Way the principles are
now excluded and instead incorporated in the daily operations and way of working
at Haldex. The main changes and improvements made can be summarized as:

 Introduction and incorporation of a new generic logic.

 Redesign of the Haldex Way house and framework.
 Development of modules and approaches.
 Restructuring of the Tier model.

A new generic logic is introduced to provide a uniform and coherent way of

performing work procedures and improvement activities. The house will still
represent the overall framework for Haldex Way and sets the scope and objectives.
Instead of categories, the new Haldex Way will consist of four modules with a
number of approaches, applicable for different parts of the organization. The
restructured Tier model is used for assessment of the performance and strategic
results, achievements and recognition.

6.2 The Haldex Way Logic

To create a coherent and consistent framework and structure for the improved
Haldex Way in general and the approaches and ways in specific, a generic Haldex
Way logic needed to be adapted and incorporated. The intention with the logic is to
apply it for the overall structure and let it pervade all tools, methods and practices.

The RADAR logic of the EFQM Excellence Model, presented and visualized in Figure
6.1, was chosen as a base and foundation for the Haldex Way logic. The choice of this
logic was made after discussions with both the supervisor and steering committee at
Haldex. The decision was taken due to on several reasons; the main one being how it
is structured. Each way of the different approaches is radarized, which means that
they are entered into the RADAR loop. This creates an underpinning vertical
structure, aligning every part of the improved Haldex Way. It also facilitates the
understanding for the horizontal structure since every tool and method linked to the
improvements of a strategic KPI is gathered in the same approach.

65
 Figure 6.1; The Haldex Way Logic

6.2.1 Applying the Haldex Way Logic to the Value Stream Approach
Initially for each part of the approach the required result is presented, i.e. the results
expected to be achieved when focusing on the specific part of the approach.
Introducing the required results will facilitate the understanding and clarify the
purpose of the part of the approach. It will also provide an opportunity to decide
which improvement activities appropriate focusing more or less on.

The second step is the development of an approach of how to achieve and deliver
the stated results. This part works as a table of content for the following step,
presenting what is needed in terms of key factors required to be in place and well-
functioning to ensure accurate and successful results in the desired area.

When the approach is developed, the third step is the deployment of the approach,
also representing the main content. The deployment is the comprehensive and
descriptive part of the improved Haldex Way and will provide guidance on a
detailed level of how to work and improve the specific parts of the approach.

The final step is the assessment and refinement which is incorporated in the end of
each part of the approach with tools and methods to achieve refinements within the
specified area. Finally an overall assessment template applicable for the entire
approach will be presented.

66
6.3 The Improved Haldex Way House
The improved Haldex Way house, visualized in Figure 6.2, is the result of the
redesign of the structure and layout of Haldex Way. The house consists of four
modules; the Business module, the Preparations module, the Operations module and
the Results module.

Each of the four modules contains appropriate approaches developed to address

issues and provide tools and methods for improving the specific area. The initial
development of the improved Haldex Way focuses on developing approaches within
the Operations module.

Figure 6.2; The Improved Haldex Way House

6.3.1 The Business Module

The Business module is developed to support the high level management processes.
It includes an approach with guidelines on how to work with resource development
and how to improve the efficiency and effectiveness of the corporate strategy to
achieve superior organizational performance.

6.3.2 The Preparations Module

The Preparations module is developed and suitable for global business processes
such as; Sales, Marketing, R&D, Sourcing, Quality and HR. The module contains an
approach with the objective to support all operative processes and effectively
complete and deliver world class business enablers.

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6.3.3 The Operations Module
The Operations module is the heart of all the operative work processes within the
organization. It focuses on providing approaches for efficient and effective
production and distribution processes with high quality results. This will also be the
module where most of the content from the current Haldex Way will be included.

6.3.4 The Results Module

The Results module is applicable for all areas of the organization but addresses
issues on a corporate level. The objective is to align results of the different processes
and parts of the organization by developing and improving the work with KPI´s. The
shape as an arrow symbolizes where Haldex is heading and the placement relates to
the need of including the content of the module into every area of the organization.

6.4 Defining the Approaches for the Operations Module

The development of the approaches for the Operations module required compilation
and selection of all relevant material from the current categories in the Tier model
as well as additional areas appropriate for the improved Haldex Way. The developed
module consists of five approaches; the Results, People, Productivity, Quality and
Value Stream Approach. Each of the approaches is divided into a number of ways,
describing the content in detail and functions as enablers for the results. The tools
and methods of the different ways are overlapping to some extent, mainly because
of two reasons;

 There is a need for linkage between the ways to facilitate

the recognition of tools and methods, and to create a
holistic understanding of the structure.
 There are many different applications for the tools and
methods.

As previously mentioned, the focus for the thesis has been the development of the
Value Stream Approach, whereas the content of the People, Productivity and Quality
Approach were discussed and developed together with the Haldex Change Agent
Team. At this point only an overall view of the other approaches, except the Value
Stream Approach, is presented since the development of the approaches was
initiated at a later stage and the involvement has been limited and focus has been
put on the Value Stream Approach.

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Each approach is linked to one or a few strategically important KPI’s to reach the
KPI targets set by the corporate management, and align the objectives of the
approaches with both the corporate and site specific strategy. An overview of which
KPI´s are linked to the respectively approaches is shown in figure 6.3.

Results Approach •All KPI's for the Operations Module

•Haldex Employee Engagement Survey

People Approach (HEES)

•Overall Equipment Efficiency (OEE)

Productivity Approach
•Value Added Ratio (VAR)

•First Time Pass Rate (FTPR)

•0-km Claims
Quality Approach
•Delivery Error Rate (DER)
•Distribution Center Service Quality (DCSQ)

Value Stream •Inventory Days

Approach •Delivery Performance

Figure 6.3; Approaches of the Operations Module and their Strategic KPI’s

6.4.1 The Results Approach

The Results Approach, seen in figure 6.4, is specifically developed to provide
guidelines and methods of how to achieve the desired outcome and addresses issues
regarding the results for the Operations module. It is during the development phase
divided into three descriptive ways; Key Results, Strategy and Budget.

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 Figure 6.4; The Results Approach

Key results involve all KPI standards and guidelines in combination with instructions
of how to visualize and communicate the results. The Strategy includes guidelines
for developing, implementing, communicating and measuring a strategy. To involve
a financial aspect budget is introduced, including the same parts as the Strategy.

6.4.2 The People Approach

The People Approach, shown in figure 6.5, relates to all employees within Haldex
organization and especially to the core value of respect for the individual. It
addresses important issues regarding the human resource and organizational
development by introducing five descriptive ways; People Results, Leadership and
Competence Development, Communication and Recognition, Environment and
Organization.

Figure 6.5; The People Approach

The People Results includes Haldex Employee Engagement Survey (HEES) for the
measurement of the employee satisfaction regarding the work environment. A
competence gap analysis is introduced for the assessment of the current
competence and future need. It also introduces a development plan ratio and a

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retention ratio as means for assessing the development work and the company’s
level of attractiveness.

The main content of the Leadership and Competence Development is a leadership

model containing both managerial and employee specific guidelines, techniques and
methods for performance appraisals, 360 degree review, and development plans.

In the Communication and Recognition, Haldex vision, mission and values are
included in combination with benchmarking procedures and guidelines for the Lean
Daily Management System (LDMS) and Voice Of the Customer (VOC).

The Environment concerns both internal health and safety issues regarding the work
place, people and products, and external Corporate Social Responsibility (CSR)
issues such as the interaction with the society.

Within the Organization guidelines regarding the structure, teamwork, roles and
responsibilities, recruitment and retention is included to improve the efficiency of
the processes and not get stuck in old routines.

6.4.3 The Productivity Approach

To involve and preserve the core of the current Haldex Way the Productivity
Approach, visualized in figure 6.6, is introduced. The approach relates to every
producing and distributing process of the organization and includes seven
descriptive ways; Productivity Results, Clean, Environmental Care, Process
Improvement, Maintenance Management, and TPM Operator and Specialist
Maintenance.

Figure 6.6; The Productivity Approach

In Productivity Results there are two main measurements, OEE and VAR. These are
used for evaluating the efficiency of the processes, providing data for root cause
analysis, and optimizing the work distribution and utilization of resources.

Clean includes guidelines for 5S, involves safety to minimize risks and introduces
visualization as a tool to provide control and clarity.

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To encompass and address the environmental aspects Environmental Care is
developed. Recycling and impact identification are two important parts of this way.

The Process Improvement involves the concept of Kaizen and guidelines on how to
map the processes and value streams. It also includes methods and techniques
describing how to balance lines and flow, and how to work with set-up and change
over’s.

Maintenance is a crucial factor for all production processes and therefore the three
remaining ways addresses issues linked to this. Maintenance Management includes
guidelines on how to implement the seven-step Total Productive Maintenance
(TPM) process together with techniques for process stability and planning methods
to improve the Overall Equipment Effectiveness (OEE). The TPM Operator
Maintenance and the TPM Specialist Maintenance encompasses complete guidelines
of how to work with TPM for both operators and specialists.

6.4.4 The Quality Approach

Quality is an essential factor of every producing company. Haldex core value passion
for excellence is directly linked to the quality of products and therefore the Quality
Approach, shown in figure 6.7, is introduced. The Quality Approach consists of six
descriptive ways; Quality Results, Supplier Performance, Process Performance,
Product Management, Customer Performance and Problem Solving.

Figure 6.7; The Quality Approach

Quality Results is measured with three KPI´s, the first one determining the first time
pass rate which is a calculation of how many of the products that are produced right
the first time without any deviations or need for corrective actions. The second is 0-
KM which is used as a measure for the number of returns, and the third one is the
cost of warranty claims.

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The main content of the Supplier Performance is Haldex Supply Chain Improvement
Program (SCIP), used to improve the quality and reliability of the incoming
products.

The Process Performance is about understanding and controlling the variations of

the processes to create stability. It also concerns the capability of the processes and
the cost of producing products with poor quality.

Within Product Management quality assurance methods such as Failure Modes and
Effects Analysis (FMEA) and Production Part Approval Process (PPAP) are included.

To ensure the right quality it is important to be aware of what the customer

requires. Therefore Customer Performance includes guidelines for managing the
customer requirements and managing of non-conformances.

Finally Problem Solving introduces techniques and methods of how to systematically

address and resolve problems. This will be an important part of the Quality
Approach for every area within the organization.

6.4.5 The Value Stream Approach

The development of the Value Stream Approach was the main objective of this
Master Thesis and the idea was initiated by Haldex to align strategic objectives, as
stated in section 1.5 and 1.6. The Value Stream Approach is currently the only
approach that has been completed on a detailed level (spring 2013). Efficient and
effective value stream processes all the way from the supplier to the end customer
are essential to create an organization that can meet or exceed all of its customers´
expectations.

The Value Stream Approach, depicted in figure 6.8, relates to every process linked to
the value stream but emphasizes on the ones directly linked to the flow of
information and material such as those handled by the logistic operations.

Figure 6.8; The Value Stream Approach

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6.4.5.1 Introducing the Five Ways of the Value Stream Approach
From the identified requirements, presented in section 5.5, five descriptive ways of
improving the value stream results inventory days and delivery performance have
been developed during the thesis, together forming the essential components of the
Value Stream Approach. The ways, visualized in figure 5.8, are Value Stream Results,
Supplier and Customer Interaction, Material and Operations Planning, Inventory
Management and Flow Optimization.

The Value Stream Approach follows the structure of the RADAR logic for each way
with an initial introduction of the results, then the approaches of how to reach the
desired results, the deployment of the approach and finally the assessment and
refinement of the tools and methods.

In appendix B an example of an entire way, in form of the Flow Optimization Way, is

displayed to visualize the structure and content.

Figure 6.9; Haldex Ways of Improving The Value Stream Results

Figure 6.9 displays the main content of the Value Stream Approach which also is the
deployment part of each way. The deployment contains detailed descriptions,
explanations and guidelines for how to work with the tools and methods. A
consistent theme throughout the Value Stream Approach is to define the roles and
responsibilities and provide the means necessary to limiting the variations within
the processes.

Since the deployment is built on the required result and approach of each way, these
parts will be presented in more detail below.

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Value Stream Results
The aim for the Value Stream Results way is to establish and present the overall
objectives for the Value Stream Approach and to provide guidance on what factors
being important to successfully reach and sustain the value stream results. The two
main measurements for the performance within the Value Steam Approach are the
strategic KPI´s inventory days and delivery performance. These KPI’s are used to
measure the number of days the material remains in inventory before being sold
and determine the ability to deliver products to the customers on time and without
deviations.

In order to achieve the required result an approach is developed within the way. The
main idea is to involve the management for support in every process. A site specific
strategy needs to be developed with clear links to the desired result and strategic
KPI´s. Appropriate measurements, such as process KPI´s, must be established and
utilized.

Supplier and Customer Interaction

The Supplier and Customer Interaction way is divided into two parts, focusing
respectively on supplier interaction and customer interaction.

The required results from the interaction with the suppliers are both an improved
level of supplier delivery performance and integration of supplier processes, as well
as increased level of reliability, control of incoming flow of material and improved
communication and information exchange. The required results for the development
of customer interaction are to increase the understanding for the customer needs
and improve the information sharing. Another desired outcome is to improve the
delivery performance and increase the overall level of satisfaction.

To achieve these results two approaches consisting of a number of key success

factors has been developed. Summarizing these briefly the main factors are to
establish clear and structured roles and responsibilities for the supplier and
customer interaction. Ensure well-functioning supplier and customer
communication and willingness of information sharing regarding forecasts and firm
orders. Implement the Supply Chain Improvement Program (SCIP) to improve
supplier delivery performance. Utilize appropriate measurement for evaluation of
customer satisfaction.

Material and Operations Planning

The main result required for the Material and Operations Planning way is to create a
smoother and more streamlined organization with increased interaction and
improved understanding for the material and operations planning processes.

In order to achieve these results a number of important factors must be established,

worked with and continuously improved. There must be clearly defined and
structured roles and responsibilities for material and operations planning processes.
Accurate and structured communication and calculation of forecasts and firm orders
is essential for effective planning. The inventory control parameters must be

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appropriately and correctly calculated for efficient management of the inventory.
Shortage lists must be developed and used throughout the organization for
visualization of the need and interrelation between the processes.

Inventory Management
When focusing on the Inventory Management way the required results are
improved inventory control, increased material and product knowledge, and
increased inventory accuracy. All these aspects contribute to improvements of the
number of inventory days. A number of key factors form the approach for the way
and must be established and implemented in order to reach the targeted objectives.

It is of important to establish roles and responsibilities for the inventory

management. A categorization of material according to ABC classification will
facilitate the prioritizing on the right products and make the inventory processes
more efficient. By establishing appropriate procedures for the handling of obsolete
material the inventory holding costs will decrease and the space availability will
increase. A final factor is to develop standardized methods for cycle counting to
accurately keep track of the inventory in stock.

Flow Optimization
The main results required when working with the Flow Optimization way are to
reduce the amount of inventory on hand, amount of work in progress, improve the
delivery performance and increase the available space. The approach of the way
consists of a number of factors identified as critical for achieving the desired result,
which are briefly explained.

A fundamental understanding of the value stream and the material and information
flow is essential for efficient and effective management of the flow. The concept Takt
must be understood, integrated and visualized in order to accurately manage the
capacity and meet the demands of the customers. Consumption control mechanisms
must be understood, evaluated to create a smooth and even flow.

Assess and Refinements of the Ways

All the tools and methods within the ways must be continuously assessed and
refined to establish an effective and lasting work with improvements. By adding the
assess and refinement part to each way, the employees are encouraged and
empowered to challenge their work methods and result. In this way linkage between
the tools or methods and the overall business strategy and challenge template for
the Value Stream Approach will be established. Typical tools and methods for the
assess and refinement are the utilization of appropriate process KPI´s, visualization
of the processes by conducting value stream mapping and introduction and usage of
improvement journals.

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6.5 The Redesigned Tier Model
As seen in figure 6.10 the Haldex Way Tier model is very similar to the current one;
in fact the only differences are that the platinum level is taken away since business
excellence is incorporated into the improved Haldex Way, and the added arrow,
replacing the platinum level and that can be seen as the journey towards excellence.

Figure 6.10; The Improved Haldex Way Tier Model

6.5.1 The New Way of Challenge

A new challenge will be introduced in the improved Haldex Way. It will not be based
on Tier level progression in the same way as the previous one. Instead, an
assessment template, based on the EFQM assessment template, has been developed
for identical challenges for all Tier levels.

There are two types of assessment templates for each Haldex Way approach, shown
in Appendix C. The first one focuses on the results, KPI performance, and relevance
and usability of the KPI´s. The other one focuses on enablers of the results, including
the approach, deployment, and assessment and refinement of the different ways of
the Value Stream Approach. In the enabler template the approach and assess and
refinement sections are generic for all Haldex Way approaches, whereas the
deployment part includes questions relating specifically to the content of the ways
for the different Haldex Way approaches.

The overall scoring of the templates for all Haldex Way approaches results in a mean
value representing the final score for the local site. All the Tier levels are linked to a
certain level of performance and scoring in the challenge will enable each sites´
performance to be presented both as a Tier level status and in Haldex excellence
points.

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7 Conclusion
In the previous chapter the overall content of the improved Haldex Way was presented.
To create an understanding for the improvements with the new concept and tie the
different parts of the thesis together a discussion is developed. The discussion includes
explanation and reasoning behind the improved structure and how the content should
be communicated. In addition, the linkage between the improved Haldex Way and the
theory initially presented is given.

7.1 The Need for a Change

The development of the improved Haldex Way was initiated due to several reasons;
one of them being that Haldex Way is currently not integrated and utilized the way it
is supposed to. A major issue in some areas is that Haldex Way has become a tool
box, required to use, but without clear links to the strategic KPI´s, actual working
methods and Haldex’ overall strategy. Another issue is that Haldex Way is seen as
applicable only for certain processes and areas of the organization. These issues
have, as stated in section 1.4, together created an absence of ownership and low
general level of buy-in of the current model, as well as slow improvements of the
result.

The main purpose and objective of the improved Haldex Way concept has been to
address these issues and create a framework for improvements changing the
mindset and involving all employees within the Haldex organization in order to
achieve superior results.

7.2 The Improved Structure

The improved Haldex Way will result in a paradigm change for Haldex organization,
see figure 7.1. To address the issue with applicability in all parts of the organization
the framework has been completely redesigned with the introduction of interlinked
modules and approaches. The approaches have incorporated both tools and
methods from the current Haldex Way categories as well as areas from the EFQM
business excellence model. The framework will facilitate the visualization of how the
different parts and processes depend on each other and how they together form the
means to achieve the required result.

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 Figure 7.1. Haldex Way comparison

A difference between the current Haldex Way and the improved Haldex Way is that
the Tier model is not incorporated to the same extent as before. The Tier level will
be kept as an incentive and a good tool for recognition, although since the challenges
will look the same every time the focus on progression through the specific Tier
levels will be reduced. The intention with conducting the challenges this way is to
keep the momentum of the improvement work continuously and not only before a
scheduled challenge. It will also provide a more flexible challenge structure since it
is not required in the same way to only challenge a site when they are ready for
progression in the Tier level.

7.2.1 Aligning the Structure

The introduction of the new generic RADAR logic has made the improved Haldex
Way structure more consistent. By aligning the structure in every plane, the links
between the core values and the objectives will be clarified.

The vertical structure is very evident in the improved Haldex Way. Although the
logic is visualized in every parts of the structure, there are no requirements on
learning it as a specific method. Instead, the idea is to build everything in an easy
comprehensible way to provide the users with an immediate insight of how the
improved Haldex Way is structured. A positive side effect with this underpinning
logic is that the continuous work with it will provide the employees with an
approach applicable for every problem and situation.

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All relevant tools and methods identified in the Empirics and Requirements Analysis
chapter are now included in the different ways in the Value Stream Approach. They
have clear connections between each other and the desired outcome, such as the KPI
results. This provides a greater understanding and a far more intuitive feeling for
the value of each suggested action. Even though the improved Haldex Way will
include a lot more content than the current version, the grouping of the tools and
methods into approaches which pursue improvements of specific strategically
important KPI´s, forms more applicable structure. When developing the Value
Stream approach, as much as possible of the definitions and standards for the
already existing tools and methods have been kept. By preserving and keeping as
much as possible the level of buy-in for the new improved Haldex Way structure will
increase as well the support for the already existing standards and definitions. This
will also help minimizing the confusion of the new concept.

7.3 The Descriptive Path towards Excellence

At the initial stage of development of the improved Haldex Way there were many
thorough discussions about how the content in the best way should be
communicated. The current Haldex Way categories range from fairly prescriptive to
non-prescriptive as progression from the copper to gold level is achieved. The
reasoning behind this is fundamentally not wrong, however, the improved Haldex
Way has taken a different approach to this issue by developing and adding a
descriptive part into the concept. It might seem complicated to develop a descriptive
path towards excellence without being very prescriptive. In some sense the
deployment of the ways can be seen as rather prescriptive since they include
recommendation for how the performance can be improved. However, they are also
to a large extent descriptive though they are explaining and motivating the
suggested path. In the improved Haldex Way the purpose of every action is of great
importance. There should always be an underlying thought related to the well-being
of the employees, value to the customer or improvement of efficiency and
effectiveness in the processes. From a pure result oriented view this could instead
be stated as; the improvement activities clearly relating to the performance of the
strategic KPI´s fundamental for the future success of Haldex organization.

As presented in the chapter of Empirics and Requirements Analysis, the current

Haldex Way put a large focus on implementing the tools and methods by providing
guidelines and standard documents supporting the implementation and answering
the question about how the actions should be performed. However, an aspect
missed in the current Haldex Way is the explanations of the context and reasoning
behind the use. By addressing this aspect a more aligned structure within each way
is created.

In order to solve this problem three questions were continuously asked and
answered during the development of each part of the ways. The questions, displayed
in figure 7.2, are why, what and how.

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 Figure 7.1. The Structural Questions for Each Tool or Method

The answers to these questions create an understanding, reasoning and guideline

for each tool and method, together explaining how they are linked to the result. By
adding the double-headed arrows, the mutual need and interdependence between
all of them is visualized. All questions play an equal importance for the
understanding but the order in the figure can be seen as a good way of approaching
them to gain the entire picture.

What makes the improved concept even more interesting and less prescriptive is the
ability to choose from the content what is relevant to the process the local site is
working with. Each approach and way consists of explanations and
recommendations for how to improve a specific number of strategically important
KPI´s. If some of the approaches or ways are not applicable to a specific process, the
employees are not required to work with these. As long as perfectly reasonable and
sound motivations for the choices exist, it will not affect the result and challenge
negatively. On the contrary, good motivations only show that the specific way, tool
or method has been considered and evaluated, and then removed because it did not
create value to the process.

7.4 Generic or Specific

One of the main outcomes from the last redesign of Haldex Way in 2010 were the
change to a more generic design of the criteria and evidence in the challenge
documents, with reduced and aligned numbers of criteria in the tier levels. In the
efforts to try to make the Tier model more applicable for other areas than the
production and distribution sites there were losses in form of clear statements of
what actually was required. The improved Haldex Way will change the direction into
a more specific approach.

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By developing approaches with the focused objective of improving Haldex strategic
KPI´s have made Haldex Way more specific. This will also be reflected in the design
of the challenge templates for the approaches. There will be a specific template for
each approach and the main content of the deployment parts of each way will be
addressed in detail. The generic aspect of the improved Haldex Way lies in how the
tools and methods are used. Since the tools and methods can be used for several
purposes it has been an aim to incorporate them in several ways. In this way a sense
of recognition and alignment between the ways and approaches is created.

7.5 Sequence or Not

Another important topic managed during the development was whether there
should be any kind of sequence in the approaches and the ways. This is closely
linked to the issue with introducing the different tools and methods in the
appropriate Tier level, which was discussed in the previous Master Thesis161. This
has been a very sensitive topic when developing the improved Haldex Way since the
introduction of a sequence will add the prescriptive feeling and inevitably limit the
ability to choose for the employees. However, in some cases there must be a
sequence when introducing tools and methods to create an understanding for the
purpose and objective, but also to get some value out of the use.

These factors make the issue a bit complicated. However, to solve it, a decision was
taken not to make each way more prescriptive by adding a fixed sequence
determining how to work. In those areas where certain tools and methods must be
established sequentially the deployment part should be built in a way making this
appearing naturally. This could be made both with a creative layout and by linking
the explanations of the tools and methods in a way directing the utilization.

7.6 Returning to the Theory

The improved Haldex Way is still a management framework for improvements
heavily influenced by the lean concept. Three of Womack and Jones five lean
principles, see section 3.1 about Lean, highlights the objective with the thesis; the
efficient and effective value stream, a customer initiated production flow, free from
interruptions. All the main lean tools and principles will be incorporated in the
improved Haldex Way, but unlike the current Haldex Way this will not be the only
parts involved. The EFQM business excellence model has provided a lot of guidance
and inspiration for new areas as well as provided the fundamental logic, on which
the entire improved concept is based upon.

If the continuously changing environment and market of the vehicle industry is

taken into consideration the need of change management is increasingly important.
A suggested approach to change is a combination of both the planned and emergent
theory. It is important to plan a change like the introduction of the improved Haldex
Way very carefully. Both Lewin´s model (section 3.3.3 about Planned and Emerged
Change), describing the move from one state to another and the identification of

161 Eckersten & Hörberg, 2010

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driving versus restraining forces, and Kotter´s eight step process (same section) for
successful changes, are very useful tools when implementing new concepts. To face
the future and successfully adapt the organization to the market requirements the
emergent perspective is important to be aware of and have in mind. An active work
with the five factors described in section 3.3.3 about Planned and Emerged Change,
increases the competitiveness of the organization.

The specific theory linked to value stream improvements, displayed in section 3.4
Theory for Supply Chain Improvements, has been particularly useful for the
development of the Value Stream Approach. By combining the theory with real life
experiences have created the opportunity of adjusting and adapting the content in
the Value Stream Approach to a good blend of best practice theory and real life
pessimism.

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8 Reflections and Future Work
This chapter includes the final comments on the thesis, and will discuss the credibility
and chosen methodology. The academic contribution is stated and future
recommendations for continuous improvements of Haldex Way are discussed. Finally
some personal reflections of the thesis will sum up the thesis work and the
development of the framework and Value Stream Approach at Haldex in Landskrona.

8.1 Comments on Methodology and Credibility

8.1.1 Methodologies of the Thesis
The methodology has followed the developed research process presented in section
2.6 about the Research Process. During the initial weeks of the thesis a lot of effort
was spent on formulating the problem description and understanding the objective
to enable the development of the framework and the Value Stream Approach.
Looking back at this part of the research, the start-up phase could have been done
more efficiently by starting the interviews at an earlier stage. However, it is always
easy to diminish difficulties afterwards. If the authors had not had enough
understanding of the issues and which parts to focus on, the interviews would have
been pointless.

Longitudinal studies were not possible to perform during the research process
because of the lack of documentation supporting historical decisions. Instead the
documents found closest to longitudinal studies were improvement journals
frequently used in Landskrona as a meeting- and follow-up tool. Even though it
might had been useful to conduct longitudinal studies to better understand how the
improvement work developed over time the intranet combined with interviews and
observation proved to be a really effective way of gathering the requested
information. This combination of material gathering formed the foundation for the
development of the Value Stream Approach.

8.1.2 Reliability of the Thesis

It is important to ensure the reliability of the developed framework and Value
Stream Approach since the final product must be reliable to create a positive
mindset about the forthcoming change. To secure the reliability views from all parts
and areas of the organization have been captured, and people in various positions
have been involved. In-depth interviews, discussions and collaborations have been
conducted with a number of the employees and continuously with the Change Agent
Team at Haldex. They have provided invaluable knowledge about Haldex value
stream in general and feedback on the development of the improved Haldex Way in
specific. The knowledge and experiences within the Change Agent Team have also
improved and shaped the language and expressions used in the in the Value Stream
Approach, to ensure recognition within the Haldex organization.

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The possibility of applying, transferring and generalizing the developed Value
Stream Approach has been essential during the development process. The study
visit at Weyersheim, France, created an understanding for how a Haldex distribution
site operates and how they are working with Haldex Way. This expanded the
knowledge and experiences outside the production which were very helpful when
developing the applicability for the Value Stream Approach. In addition to the study
visit a lot of additional perspectives were captured through the change agents that
have knowledge and experience from the organization world-wide.

8.1.3 Validity of the Thesis

Validity has been secured by establishing good contact and communication with the
interviewees. Enabling a climate open for questions and reconnection have
facilitated the assurance of validity. The areas of concern have been discussed in
collaboration with the employees responsible for specific work tasks to understand
the interviewees’ contribution to and impact on the value stream. The validity has
also been investigated through the steering committee to ensure that the obtained
information has been trustworthy and established within the organization.

8.1.4 Transferability of the Thesis

Transferability of the thesis can be connected to the applicability of the improved
Haldex Way for other companies. Lean is today a very common trend in industries
world-wide and especially in the automotive industry, the improvements of Haldex
Way can be applied to other companies as well since the connection to strategic
objectives and results is a way to facilitate the understanding and usage of
production philosophies such as lean and Haldex Way. The thesis have been limited
to Haldex and therefore transferability of the improved Haldex Way to other
companies have not been an initial purpose or objective.

8.2 Academic Contribution

The increased competition in the vehicle industry has put pressure and focus on cost
reduction and efficiency improvements. One way of reducing costs and improve
efficiency is to focus on the improvement of the strategic KPI’s inventory days and
delivery performance. The main deliverable of this thesis is a Value Stream
Approach aimed at continuously improving two of strategically important KPI’s.

The majority of the excellence models are built in a prescriptive manner. By

developing a concept, that in a descriptive manner shows the path towards
organizational excellence, a new approach to the improvement arena has been
introduced. It is the authors´ belief that a cleverly designed descriptive way without
too much prescriptive limits creates an efficient path towards excellence.

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8.3 Future Recommendations
During the development of the framework and the Value Stream Approach other
areas to investigate and examine have been visualized. The content for the other
approaches within the Operations module have been discussed and aligned during
meetings with the Change Agent Team and will be the next step in the development
of the improved Haldex Way. The Operations module has a clear focus on the
production and distribution sites and therefore these are most appropriate to
develop and roll out first.

The other modules are applicable for global business process and focuses on the
corporate strategy and resource development. These modules and approaches will
therefore demand a completely new perspective and substance. Especially the
Preparations module, which will be applicable for the global business processes and
administrative processes, have been an interesting topic during the development of
the improved framework. The importance of incorporating these areas and
processes into Haldex Way has been more and more evident as time passed. Since
the development of the entire Haldex Way will take a lot of time it is also important
to continuously improve and update the Value Stream approach.

Even though the plan is for the entire Operations module to be completed in the end
of 2013, the momentum of the currently existing Haldex Way needs to be
maintained. This means that Tier level challenges must be conducted accordingly to
schedule and that all sites must commit to improving their operations.

8.3.1 Implementation plan

An implementation of the improved Haldex Way should be conducted gradually and
initially start with a few sites in order to align, adapt and ensure applicability of new
concept.

Releasing the improved Haldex Way demands a well-structured implementation

plan that defined how to communicate the new improved concept. The authors´
have during the interviews with the employees and discussions with the supervisor
at Haldex recognized three key success factors for the implementation of the
improved concept:

 Recognition from the currently existing Haldex Way.

 An aligned perception about applicability of the improved
Haldex Way.
 The communication of the more pragmatic approach in
the improved Haldex Way – what value is the processes
creating and what result are we seeking.

86
The other parts of the improved Haldex Way, including all modules and within the
closest time frame the approaches within the Operations module will be developed
and are during development by the Change Agent Team at Haldex. The Change
Agents have been a part of the steering committee and will also be the owners of the
improved Haldex Way. It is therefore important to anchor the framework and
structure of the improved Haldex Way to ensure continuity by the Change Agent
Team.

A perception that was discovered during the interviews and observation were that
people referred to having scheduled specified Haldex Way time. Since Haldex Way
should be the way of working at Haldex it is important that the improved Haldex
Way change this mindset. The work of involving all employees within Haldex Way is
a great challenge and demands that all parts of Haldex is incorporated and
continuously reviewed in the improved Haldex Way.

8.4 Personal Reflections

A lot of experiences have been gained through the possibility to conduct this Master
Thesis at Haldex in Landskrona. Being a part of the development of the work with
continuous improvements has been very interesting and motivating. It has been a
great opportunity to be located in the production site in Landskrona and daily feel
the pulse of the production.

During the study visit in Weyersheim the atmosphere and the reception was very
welcoming. The greatest experience from the study visit was the realization that the
similarities are larger than the differences between Haldex distribution and
production sites. Even though a lot seems different at a first glance, the similarities
in the different working areas and processes are limited.

We appreciate all the help and support received during the thesis from all involved,
and a special thanks to our supervisors at Haldex and the Faculty of Engineering,
Lund University.

87
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Interviews
Jonas Asp, Category Manager Strategic Sourcing, Landskrona, 22 May 2013

Maggie Barber, Haldex Way & Continuous Improvement Manager, Weyersheim,

several occasions

Stéphane Felden, Logistics Manager, Weyersheim, several occasions

Janet Frej, Haldex Way Coordinator, Landskrona, 20 March 2013

Peter Elisson, Change Agent Haldex Way, Landskrona, several occasions

Enes Hasic, Manager Internal Logistics, Landskrona, 25 March 2013

Pia Hellgren-Johnsson, Dispatch, Landskrona,4 April 2013

Patrick Imhoff, Purchasing Coordinator, Weyersheim, 24 April 2013

Kent Jörgensen, Plant Manager, Landskrona, 28 Feb 2013

Julie Kochert, Manager, Quality Systems – Haldex Way, several occasions

Roger Lorentszon, Dispatch, Landskrona, 4 April 2013

Cecilia Mårtensson, Material Planning, Landskrona, 9 April 2013

Mara Mikic, Dispatch, Landskrona, 4 April 2013

Sarah Nelson, Sr Change Agent, several occasions

Christoffer Olkvist, Manager Assembly, Landskrona, 5 April 2013

Karin Persson, Material/Production Planning, Landskrona, 4 April 2013

Anders Pålsson, Manager Logistics, Landskrona, several occasions

Marie Saxne, Logistic Development, Landskrona, 21 March 2013

Martin Tegnér, Manager Customer Service/Logistics, Landskrona, 21 March 2013

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Jonas Österberg, Manager Machining, Landskrona, 19 March 2013

91
Appendices

Appendix A, Haldex Dashboard

92
Appendix B, the Flow Optimization Way

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 Appendix C, The New Haldex Way Challenge Template

Approach: 0% 25% 50% 75% 100%

Sound:
- Prioritization and selection of appropriate value stream ways. No evidence or anecdotal Some evidence Evidence Clear evidence Comprehensive evidence
- Definition of stakeholders.
- Refinements have been embedded in the approach over time.

Integrated:
- Appropriate links to other ways and approaches. No evidence or anecdotal Some evidence Evidence Clear evidence Comprehensive evidence
- Choice of approach and ways is motivated and supports strategy.

Write 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
TOTAL for Approach
score

Deployment of Haldex way for Supplier & Customer Interaction: 0% 25% 50% 75% 100%
Implemented:
- Clear and structured roles and responsibilities for supplier and
customer interaction, established through process mapping with
swim lanes or other appropriate tool.
- Well established supplier and customer communication about
Implemented in 1/4 of Implemented in 2/4 of Implemented in 3/4 of
forecasts and firm orders, and willingness of information sharing. No evidence or anecdotal Implemented in all relevant areas
relevant areas relevant areas relevant areas
- Deployment of Supply Chain Improvement Program (SCIP) to
improve supplier delivery performance.
- Measurement and evaluation of customer satisfaction by survey,
dialogue, customer classification of Haldex as a supplier or other
tools.
Systematic:
- the way is deployed in a timely and structured manner with
No evidence or anecdotal Some evidence Evidence Clear evidence Comprehensive evidence
the ability to make appropriate adaptations to environmental and
performance related issues

Write 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
TOTAL for Deployment
score

102
Deployment of Haldex way for Material & Operations Planning: 0% 25% 50% 75% 100%

Implemented:
- Clear and structured roles and responsibilities for material and
operations planning, established through process mapping with
swim lanes or other appropriate tool.
- Accurate and structured communication about forecasts and Implemented in 1/4 of Implemented in 2/4 of Implemented in 3/4 of Implemented in all relevant
No evidence or anecdotal
firm orders for effective planning processes relevant areas relevant areas relevant areas areas
Appropriate and correctly calculated inventory control
parameters for efficient management of the inventory
Development and usage of shortage lists for visualization of the
need and interrelation between the processes

Systematic: No evidence or anecdotal Some evidence Evidence Clear evidence Comprehensive evidence
- the way is deployed in a timely and structured manner with the
ability to make appropriate adaptations to environmental and
performance related issues

Write 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
TOTAL for Deployment
score

Deployment of Haldex way for Inventory Management: 0% 25% 50% 75% 100%

Implemented:
- Clear and structured roles and responsibilities for inventory
management, established through process mapping with swim
lanes or other appropriate tool. Implemented in 1/4 of Implemented in 2/4 of Implemented in 3/4 of Implemented in all relevant
No evidence or anecdotal
- Categorization of material according to ABC classification for relevant areas relevant areas relevant areas areas
efficient inventory processes
- Appropriate procedures for handling obsolete material
- Accurate and standardized methods for cycle count
Systematic:
- the way is deployed in a timely and structured manner with
No evidence or anecdotal Some evidence Evidence Clear evidence Comprehensive evidence
the ability to make appropriate adaptations to environmental and
performance related issues

Write 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
TOTAL for Deployment
score

103
Deployment of Haldex way for Flow Optimization: 0% 25% 50% 75% 100%
Implemented:
- Clear and structured roles and responsibilities for flow
optimization, established through process mapping with swim
lanes or other appropriate tool.
- Understanding the value stream and the material and
information flow for efficient and effective management of the Implemented in 1/4 of Implemented in 2/4 of Implemented in 3/4 of Implemented in all relevant
No evidence or anecdotal
flow relevant areas relevant areas relevant areas areas
- Understanding, implementing, integrating and visualizing Takt
time to accurate manage the capacity and meet the
expectations of the customers.
- Understanding and evaluation consumption control mechanisms
for a streamlined and smooth flow
Systematic:
- the way is deployed in a timely and structured manner with the No evidence or anecdotal Some evidence Evidence Clear evidence Comprehensive evidence
ability to make appropriate adaptations to environmental and
performance related issues

Write 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
TOTAL for Deployment
score

Assessment and Refinement: 0% 25% 50% 75% 100%

Measurement:
- Use of appropriate process KPI's.
- Use of Haldex strategic KPI's. No evidence or anecdotal Some evidence Evidence Clear evidence Comprehensive evidence
- Measurements are conducted on a regular basis.
- Clear and structured ways on measuring planning performance.
Learning and Creativity:
- Learning is gained from internal and external good practices and
No evidence or anecdotal Some evidence Evidence Clear evidence Comprehensive evidence
used to identify improvement opportunities.
- Creativity is used to challenge and improve procedures.
Improvement and Innovation:
- Output from measurement and learning is used in improvement
journals to identify, prioritize, plan and implement
improvements.
- Output from creativity is evaluated, prioritized and used.

Write 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
TOTAL for Assessment and Refinement
score

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
OVERALL TOTAL #######
### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ## ####

104