Start your Lean Office journey now, and eliminate the unnecessary weight before your competitors do and prevent losing business to them.
So how does Lean apply to the office environment? It applies to order processing, engineering, accounting, purchasing, new product development (art to part) and many other areas.
Simply put, Lean in the office means taking materials, data or information (your inputs) and processing them into final products or services (your outputs). It also means processing your information and orders error-free, in the least amount of time as possible, at the pull of the downstream customer, all in pursuit of perfection. In terms of muda (Japanese word for “waste”), the land of opportunity exists in office operations.
How many companies do you know that measure and track first pass yield, on-time delivery between sales and order entry, capacity, cycle time – all the same things measured on the floor – in the office? In a Lean office, lead times are often the driving measurement used to track office operational improvement. In many cases, office lead-time represents 80% of the total production lead-time, leaving manufacturing just 20% of the lead time to make and ship the product. And, in most manufacturers, 80% or more of the value (i.e., what the customer is willing to pay for), occurs on the shop floor. Doesn’t that seem a little out of whack?
A culture shift in the office that promises great rewards
As on the factory floor, implementing Lean in the office successfully takes commitment. It can take four times more effort to implement Lean in the office than on the plant floor because a Lean environment can be a major culture shift for individuals whose career identity is closely tied to the way things have been done. You’re dealing with many highly degreed engineers and managers, financial and accounting experts, sales and marketing gurus and more. There is also a mind-set that lean manufacturing is something they do out on the shop floor, but not something from which the office employees can benefit.
But the rewards can be great. This is what we teach our clients at TechSolve, a Cincinnati-based manufacturing productivity organization that performs lean consulting, implementation and training. One TechSolve client began its Lean Office journey after experiencing great success with Lean on the manufacturing floor.
- $1.1 million annual savings by standardizing engineering processes and components
By streamlining administrative processes, they achieved:
- 30 percent reduction in lead time
- 10 percent higher annual profits (think bonuses!)
- 30 percent reduction of in-process inventory
- Better quality and happier customers that led to more business
- A discovery that its products were easier to service in the field.
So many opportunities…where do we begin?
Value Stream Mapping – a good place to start
Just as the above-mentioned TechSolve client did, your company should start on its Lean Office journey by creating a Value Stream Map of the entire enterprise – whether it be manufacturers, service providers, government agencies, etc. It is important to map all of the office processes – Product Design processes (from initial concept to product launch), Order processes (from request for quote to order release and from order release to delivery of the product or service) and Cash Management processes (from payment for raw materials to receiving payment for the product or service).
You will want to work with an experienced person trained in Lean Office to observe, measure, map and analyze the office’s processes like sales quote and order handling, design/engineering processes, approvals, financial accounting and material procurement. This process can be done in a few days or up to a week.
Most will be shocked by the day-to-day inefficiencies that are discovered just in information flow. These inefficiencies significantly impact the total product lead-time and the company’s ability to create and deliver its “value-added” product or service to the customer on time, at a lower cost and with high quality.
Value Stream Mapping (VSM) helps everyone to see the flow and take a hard, objective look at what it is they do every day that impacts the value stream – both negatively and positively. It also forces people to look at how they manage their gaps and handoff information.
We recommend starting with a pencil and paper (or a white-board) VSM, and then moving to a VSM software program to dynamically digitize, perform calculations and track progress (eVSM). Once the current and future state maps are drawn, the next steps are to create a prioritized implementation plan, a value stream management storyboard and a metrics tracking methodology. From there we begin the continuous improvement process, teaching and showing people how to make improvements on an on-going, sustainable basis.
Get “stuck” to an order
One hands-on exercise to really understand the inefficiencies in the office is to virtually “attach” yourself to an order. As you trace the activities that the order goes through, from beginning to end, you are typically handled, moved, and inspected. You sit WAITING to be processed, re-worked, etc., much more often than you are actually being processed. By performing this exercise, we typically find that from a lead-time perspective, non value added activities make up 95% of the time that paperwork spends in the office!
In one company where we performed this exercise, we found that the total lead-time to generate and ship an order was 18 weeks, with just two of the weeks in manufacturing. Where do you think the other 16 weeks were? The office! But where is most of the value-added? On the floor, fulfilling the order!
We also discover with this exercise that in most cases, there is a misalignment of daily key performance measures (if they exist) with those that foster a continuous improvement environment. How many of you measure, track and post your first pass yield or on-time delivery of quotes to clients, between sales reps and order entry, between engineering and the scheduling? How about cycle time for month end accounting or expense reimbursement? How many use existing metrics to make improvements to the value stream?
DOWNTIME – identifying the eight most common NVAs
Some common non-value added (NVA) steps that a current state map will uncover are inefficient transfer of information, no flow of information, lack of sensitivity to customer needs, redundancies, poor quality, inability to respond effectively to errors or missing information and long lead times for numerous steps.
An acronym for our method to help you define eight common wastes, or NVAs, in your office is “DOWNTIME”. Notice the first letter of each item. These areas often harbor many NVAs and they look strikingly familiar to those found on the shop floor.
- Not Utilizing Employees (knowledge, skills, abilities)
- Excess Processing
- Defects are a big one. They can occur due to improper lighting, inconsistent work processes, paperwork that does not match, entering information without a form, lack of checklists and software incompatibility. First pass yield is typically less than 50% in many office operations.
Orders where customers changes the specs, orders where sales didn’t supply enough information to complete the order, orders that couldn’t be built as specified are all examples of poor quality in the office. Software incompatibility may be solved by an enterprise system solution, but before you leap into expensive software solutions, be sure to simplify underlying processes first, or your employees may end up using extra “workaround” solutions to solve some of the original problems. These underlying processes may include improving processes for approvals, eliminating redundant or duplicate information entering, real-time and complete information handoff, elimination of paper in favor of shared electronic job folders, standardizing of engineering processes and implementing a “5S” clean up and organization program.
- Overproduction often means you make more, earlier and faster than is required by the next process. Common occurrences include printing documents earlier in batches due to long changeover time, processing documents twice “just in case,” multiple bosses and multiple jobs causing the wrong order of jobs, memos to everyone and even e-mail.
- Then there is Waiting – idle time that can be caused by an unbalanced workload, redundant approvals, unreliable equipment, and improperly coordinated department, a batch and queue mindset and long equipment setup (e.g. printers and copiers). How often have you wasted time waiting for the printer to warm up, or the mail to be delivered, email to download, computer to turn on or re-boot, for signatures or for meeting attendees who aren’t on time?
- Not utilizing people’s knowledge, skills and abilities is another major culprit of NVA in the typical office. The waste of not using peoples’ abilities – mental, creative, physical – can be caused by incompatible hiring practices, politics, corporate culture, improperly trained employees and “old-guard” thinking.
- Transportation waste – transporting forms and information around the office -- is a common NVA culprit that often remains hidden. It can be caused by poor location of the office to other areas, file storage areas that are too large, poor document flow scheduling, a lack of signs and labels, or defects and rework.
- Poor procurement practices can lead to Inventory Waste. This can be any supply in excess of one-piece flow through your office. Causes of excess inventory can include: purchasing too much supply material, unbalanced workloads, existence of irrelevant data, reward systems, inconsistent work speed and instances of “just-in-case” logic. Buying supplies like extra toner cartridges “just-in-case” is often done to receive bulk discounts.
- Motion Waste, like transportation waste, is very common, but often goes unnoticed in the daily routine. It is any movement of people or equipment that does not add value to the service. For example, keeping forms far from the reach of an employee means movement is frequently wasted.
- Finally, there is Excess Processing Waste – effort that adds no value to the service from the customers’ viewpoint (after all, it is the customer we’re aiming to make happy in the end, right?). Causes can be lack of communication or information, redundant approval or inspection, undefined true requirements, nonstandard business processes, re-entering data, and again, “just-in-case” logic.
Can you relate to any of these? It can be the sum of day-to-day improvements in these eight areas of non-value added waste, that when consistently and continually addressed, that can add up to big improvements to your company’s bottom line.
Sustain, sustain, sustain
A few key points to help sustain Lean in the office include:
- Changing the workflow and creating office work cells by product teams (flow orders by process vs. function).
- Empowering people by creating a visual way to manage their day and calling for help when they need it to meet their TAKT time goals. Yes, TAKT time does apply to the office. (TAKT time equals rate of customer demand, for both external and internal customers).
- Develop a one-piece flow mentality to reduce intellectual setups. Setting up systems to allow people to “just say no!” while still providing value to internal and external suppliers and customers.
- Tying performance metrics to individual and team-based incentive pay.
- Training people on Lean concepts and finding benchmarks, and sharing improvement ideas.
Creating a Lean Office is fertile ground for vast improvements. We guarantee it will be an eye-opening experience. You can expect barriers and some resistance to change, but once everyone can see the big picture in your VSM, and employees are empowered and motivated, it is easier to begin making those changes successfully.
Don’t miss out on this next frontier for creating a more agile and productive office. You’ll be glad you did when you’re leaner and running swifter, winning more races against your competitors. That’s what Lean Office is all about.
ABOUT THE AUTHORS
Trent Wall is a Lean Facilitator at TechSolve, Inc., a manufacturing and machining productivity improvement consulting organization based in Cincinnati, Ohio. He works with TechSolve clients to perform Lean assessments, value stream mapping and Lean implementation programs. Trent has used his expertise to help nearly 150 small-to-medium sized manufacturers with process improvement. He helped develop TechSolve’s overview course for manufacturers on Lean Office and he leads the course both on-site for companies and in public classes. As a former business owner and entrepreneur, and a manager of new product development, sales, marketing, quality control and customer service in the specialty chemical industry, he has personal experience in many facets of process and productivity improvement. Trent earned his B.S. from Purdue University in West Lafayette, Indiana and his M.B.A from the University of Cincinnati. Contact Trent by email at email@example.com, or toll free at 800-345-4482.
Dave Levine is a Process Improvement Specialist with TechSolve, Inc. He works with TechSolve’s clients to assess and implement enterprise-wide improvement opportunities in the areas of Lean, Six Sigma and Supplier Development. The average savings to his client companies has been $150,000 per project. Dave’s work as a “change agent” includes hands-on implementation and training of company personnel from upper-level management to supervisors and shop floor employees on implemented Lean and Six Sigma projects such as 5S, work cells, setup reduction, streamlining administrative processes, scrap reduction, capability improvements and more. He earned his B.S. in industrial engineering from Purdue University and his M.B.A. from Xavier University in Cincinnati, Ohio. Reach him by email at Levine@techsolve.org, or toll free at 800-345-4482.
TechSolve (an NWLEAN sponsor) helps companies improve process, productivity and profit by offering Lean Manufacturing, Lean Office and Lean Machining consulting, training and implementation by a team of highly educated and experienced independent experts. TechSolve is designated as a NIST MEP center and an Ohio Edison center. Visit TechSolve on the Web at http://www.techsolve.org/.