A Lean Office could beef up your ability to surpass the competition
With diets all the rage, why not think about a diet for your office? A Lean Office is a healthier office, and a manufacturing organization that implements Lean in both the office and on the production floor has an even greater chance for a healthy future.
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 errorfree, 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 leadtime 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. One 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% reduction in lead time
• 10% higher annual profits (think bonuses!)
• 30% 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
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.
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 leadtime 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.
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 ontime 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 NVA's
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 NVA’s, in your office is “DOWNTIME”. Notice the first letter of each item. These areas often harbor many NVA’s and they look strikingly familiar to those found on the shop floor.
Defects, Overproduction, Waiting, Not Utilizing Employees (knowledge, skills,abilities), Transportation, Inventory, Motion, Excess Processing