Marc Onetto: Lean and Six Sigma at Amazon.com

Here is a video of Mark Onetto, Senior Vice President of Worldwide Operations and Customer Service at Amazon.com; in this video he explains the role of Lean Manufacturing and Six Sigma at Amazon, shares some examples, and tells a few really great stories. This video is really good, so please take the time to watch it.

Here is his Bio:

Marc A. Onetto
Senior Vice President, Worldwide Operations

Mr. Onetto has served as Senior Vice President, Worldwide Operations, since joining Amazon.com in December 2006. Prior to joining Amazon.com, Mr. Onetto was Executive Vice President, Worldwide Operations, at Solectron Corporation, an electronics manufacturing and technology company, from June 2003 to June 2006, and, prior to Solectron, he held various positions at GE, including Vice President, European Operations, GE Europe, from September 2002 to June 2003.

And below is an imperfect transcript of the video above of Marc Onetto:

• 7:28 Secret Sauce of Amazon is successful because it’s built around Customer Centricity; Many companies say it, but Amazon tries really hard.
  • Example: Jeff opened Marketplace to the chagrin of Wall Street analysts on the street said he was crazy. Bezos wanted to create the world’s best marketplace for goods which is good for the customer.
  • Customer Centricity is Part of who we are and part of business model also.
• 13:30 Nothing is more difficult than gaining the trust of customers.
  • Losing trust is the easiest thing to do.
  • So, must be perfect in Operations.
• 14:30 customer centric metric
  • Amazon Customer Excellence System
    • Lean Methods with Customer Centricity and merge three things:
      • Connecting Lean methods with customer centricity
      • Driving excellence in every act for the customer
      • Engaging associates at every level
      • Great Leader
• 18:47 Lean Transformation at Amazon
  • Develop a Vision..backed by customer needs, passion, and energy
  • Leadership is the fundamental building block
  • Strong people, partners, and operating mechanism are vital
  • Excellence in Operations
  • Perfection is a journey there are milestones but no arrival line
• 21:30 Lean Thinking
  • Define Value who is paying you? That person defines value.
  • Map your Value Chain difference with Lean is that value chain is mapped in the Gemba (the shop floor) do it where the action is because what happens on the shop floor is never what they tell you
  • The higher you are in the company, the less you know.
  • Then, looking at the map, measure is this value or is this waste?
  • Largest form of waste is producing something that nobody wants
    • Cisco wrote off $2.1 Billion dollars of telecommunication equipment that nobody wanted.
  • The way to eliminate this form of waste is to pull only make it when a customer wants it.
  • At amazon, Manufacture on Demand. We only print the book when the customer orders it. That’s pull.
  • Interesting statistic: 35% of books printed are not bought but sent back to be recycled. Printing industry huge form of waste.
  • Now since the customer wants it, move your bum to provide it.
  • Accept the concept the concept of improvement by Kaizen improve step by step. Narrow but proven way to improve, done on the shop floor.
  • Bezos’ led a Kaizen last year on was “small package receive.”
  • Bottoms up improvement is necessary.
    • Don’t do what Boeing did: don’t move your headquarters away from your plants.
• 30:44 first time did lean at GE Medical System saw that 92% of process was waste.
  • Initial reactions:
    • Feeling of shame.
    • Then Feeling of fear.
  • GM started Lean and and went through those two feelings and stopped there.
  • Instead, accept truth and see it as opportunity. Others focus on the 5% and remain satisfied.
  • On the 95%, attack it slowly, one thing at a time and invention that takes into account what is learned on the shop floor, which means don’t ever make a machine with long changeovers > long lead times > no flow > no pull > therefore forecast > overproduction = waste.
• Examples of kaizen:
  • Bill of Lading in Receiving Matching improve ASN match from 51.9% to 65.3% > save 1 day of cycle time is a big deal.
  • Japanese consultants insultants very harsh and rough, but are great mentors and samurai’s.
  • Kaizen no money, no people, no space
• 39:10 Some key metrics and aspirations:
  • From organized paths to shopping center (picker go shopping for the customer)
  • From large inbound variability to level demand
  • From purchase order by forecast to customer pull
  • From stowing equals dumping to presenting
  • From picking where the heck is it? to shopping for the customer
  • From boxing equals stuffing to enveloping
  • Over communication of message is a necessary evil
  • Repeat because it takes a while for people to believe you
• 42:30 another goal is wasteless consumption
• 43:20 release items before they are available to see demand based on customer pull not based on forecasting or marketing imagination