Advanced Lean Strategies for Office & Service Environments

Company

LOGO

Lean Webinar Series:

Advanced Lean for Office &

Service

November 9, 2010

© 2010 Karen Martin & Associates

Webinar Content

How and when to use takt time to balance work.

How to approach the need for load leveling.

How cross-training and co-location is an essential

step in a transformation.

The vital role and responsibilities for process

owners.

How to achieve value stream alignment.

How to translate operational metrics into financial

terms.

2


Creating a Lean Enterprise

Initial Lean focus Eliminate muda – Waste

Advanced Lean Eliminate muri – Overburden (people or

equipment)

Eliminate mura – Uneveness

3


Your Instructor

Early career as a scientist; migrated to

quality & operations design and

management in the mid-80’s.

Launched Karen Martin & Associates in

1993.

Specialize in Lean transformations in non-

manufacturing environments.

Co-author of The Kaizen Event Planner;

co-developer of Metrics-Based Process

Mapping: An Excel-Based Solution.

Instructor in University of California, San

Diego’s Lean Enterprise program.

4

Karen Martin,

Principal

Karen Martin &

Associates


Webinar Participants’ Experience

0

10

20

30

40

50

60

True Beginner BasicUnderstanding

Skilled Highly Skilled

3%

39%

49%

9%

5


Value Stream Mapping Proficiency

0

10

20

30

40

50

60

Never created one Just learning Skilled Highly skilled

5%

48%

35%

12%

6


Most Advanced Lean Tool(s)

None

Visual management

A3

Value stream mapping

5S

Kaizen events

Kanban

Layout/cells

Root cause analysis

Metrics-based process

mapping

Takt time

Critical-to-Quality Tree

PDCA and DMAIC

7

Building a Lean Enterprise

Process

Stabilization

Tools


Flow-

Enhancing

Tools

Multi-Functional Workers /

Cross-Training

Eases scheduling / more flexibility

Improves employee value to organization

Greater job satisfaction

Better problem-solving and decision-making

Required for one-piece flow or a pull system to

function properly

If work is segmented, rotate frequently enough

to keep skills and satisfaction up

Based on work volume and complexity

11

Problems with Poor Layout

Internal suppliers and customers are not connected

Difficult to solve problems

Difficulty innovating / sharing best practices

Difficult to find work and track progress

13

Sales

Purchasing Scheduling

Design

Engineer Estimating

Materials

Office Cell

14

Out

Forms

In

Cross-functional

One piece flow

Balanced -- waste removed

Cross-trained team

Standard work

Staffed to meet demand

Shared files

More efficient communication

Single point scheduling

Linking people and processes into the most efficient

combination to maximize value-added content while

minimizing waste.

Account Executive

(AE)

Account Manager

(AM)

Set-Up (SU)

AE

AM

1

2

3 4

4

UW

FD

Under-writer (UW)

Funder (FD)

AM

AE

5

5

1

1

2 2 4 4

6

6

Elevators & Restrooms

Loan Processing Flow (Before)

Legend

Work-In-Process (WIP)

Sequence Number

Loan Processing Flow (After)

Elevators & Restrooms

AE AM Set-Up

UW FD

AM

FD

AE

UW

1 2 1 2 3

Set-Up

3 4 4 5 5 Cu

sto

me

r

Cu

sto

me

r

AE AE

1 1 2 2

AM AM

Customer Customer Shared

Resource

Mortgage Application Process

Improvement Results

17

Metric Before After

Time to process a loan 5 Days 1.5 Days

Customer complaints 4/Loan 1/Loan

WIP 60 Loans 25 Loans

Pull Systems

A method of controlling the flow of work and/or material by replenishing work/material only as it is consumed

Types One-Piece Flow

FIFO lanes (first-in-first-out) Visual system authorizing supplier to send next “order”

Note: FIFO in and of itself is not a pull system

Kanban Visual card system authorizing supplier to replenish

stock/supplies/parts

If flow stops at a single point (no consumption), everything upstream stops as well (no replenishment)

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Complete

Quote Completed

Quote RFQ Enter info.

in QEF log Customer

Verify

quote per

QEF

Pull System Flow Diagram

WIP Locations

Document Flow

Information Request

Customer

In

Box

In

Box

Closed loop


Pull Systems Concepts

If a bottleneck occurs, everything

upstream must stop!

Resource re-allocation must occur.

Cross-trained workers are essential.

Highlights problems and makes corrective

action mandatory.


Pull System in Admin Processes

Color coded folders or cards quick status of WIP at each process step

Maximum number of visual indicators between each process full queue indicates resources must be re-diverted

Monitor WIP at first process to estimate current throughput time

Step A Step D Step C Step B Step E

Single Bin Kanban System

(1)

Appropriate

Sized Bin

(kanban

quantity fits

into one bin)

(2)

Draw Line Inside

Pan at Order

Point Level

(3)

Insert Cardboard

Divider to Create

Physical Barrier

Kanban

Card

Place card on top of

parts immediately

under divider

Cardboard

Divider

Two-Bin Color-coded System

Tape Kanban

Do not replenish Replenish

26

Before / After

Excessive inventory;

Unclear who is responsible for

management/replenishment

Controlled inventory;

Color-coding identifies who is

responsible for

management/replenishment


Eliminate muda – Waste

Eliminate muri – Overburden (people or

equipment)


28

29

0

2

4

6

8

10

12

14

16

18

20

Pro

cess

Cyc

le T

ime

Order Entry Sales Review Design Estimating

Unbalanced Work

Takt Time

= 15 Min.

Takt Time Application

German word being “pace” or “drumbeat”

Used for balancing work and reducing bottlenecks (especially for high volume work)

Best when workers are dedicated to one type of activity (even if for only a portion of the day) Tough to use when workers are multi-tasked

Will vary based on heavier or lower demand periods

30

Takt Time Example:

Continuous Production

31

Available work time Takt time = Customer demand

480 minutes/day Takt time = = 10.6 mins 45 new accounts

Each process step must have a process time of 10 minutes or less to avoid development of a backlog – OR more people to perform the task.

“Touch down”

Balanced Work

32

0

5

10

15

20

Pro

cess

Cyc

le T

ime

Order Entry &

Review

Standard

Design

Complex

Design

Estimating

Takt Time

= 15 Min.

Work Balancing Considerations

Avoid creating excessively narrow scopes of

responsibility.

“Production line” vs. one-stop-shop

Assess “between work item” mental setup (switching) required –

if redundant mental setup, consider one-stop-shop

Assess “within work item” mental setup (switching) required – if

too much, consider production line

Assess skill requirements – can one person easily do it all?

Who’s job is it?

Be willing to challenge paradigms

Segment the work when necessary

© 2010 Karen Martin & Associates 33

Use Work Segmentation in High

Variation Environments

Segment work based on process time needed to

complete the tasks (e.g. degree of complexity).

Cross-train workers to do all levels of

complexity.

Rotate staff from team to team frequently to

keep interest and skill level high.

Creates organizational flexibility


Task-level FTE Requirements

35

Process Time # FTEs Required = Takt Time

20 mins # FTEs = = 10 mins

2 FTEs required to

meet customer demand


Eliminate muda – Waste

Eliminate muri – Overburden (people or

equipment)


36

37

Load Leveling

Three product types: A, B, C

Weekly customer demand: 12 A’s, 9 B’s, 3 C’s

Traditional Production Model

AAAAAAAAAAAA—BBBBBBBBB—CCC

Better

AAAA-BBB-C-AAAA-BBB-C-AAAA-BBB-C

Best

ACABABAB ACABABAB ACABABAB



Production Smoothing

(Heijunka)

Leveling of:

Volume of production

The same quantity is produced each “interval”

for each product family

Variety of production (product mix)

Every (high-volume) model is produced every

“interval”

Load Leveling Tips

First seek the root cause!

When external customers are creating unlevel incoming

load

We have much more influence over external customer behavior

than we think.

Incentives:

Information – e.g. add peak times to ACD phone recordings

Financial – provide discounts, etc. for making requests during certain

time periods – e.g. sunset dinner specials

When sales team creates unlevel incoming load

Change commission period/schedule.

When internal department creates unlevel load, find out

why and apply a countermeasure or incentive that works

for all.



Prerequisites to

Production Smoothing

1. Connect the processes where possible (cells)

2. Create pull

3. Create flow (balance the work)

4. Achieve predictability (level output produced

daily for the cell or the line)

5. Reduce work type changeover time

6. Increase number of changeovers per day so

can increase the number of each type of work

produced per day

42

Heijunka for the Office

44

Heijunka

Wheel

Lean Management


Process Ownership & Value

Stream Alignment

Value Stream Champion / Manager

Sole individual responsible for the performance of an entire

value stream across multiple departments or divisions.

Often carry P & L responsibility.

Process Owner

Sole individual responsible for the performance of a process

across many functions, regardless of the org chart.

Ongoing monitoring

Ongoing improvement

Org chart management

Direct reporting lines for day-to-day operation

Dotted lines to subject matter/policy expertise.


Creating Lean Leaders & Culture

The improvement professional’s primary role is

to sell and teach.

Many leaders aren’t improvement savvy.

Help them understand the process, the resources required,

etc. – answer Why? Why? Why?

Many individuals have been “burned” by previous

improvement approaches and are fearful in today’s

economy.

Help them see what’s in it for them.

Most people – from leadership to frontlines – aren’t

proficient problem solvers.

Teach them to fish.



Looking for Stuff: Time is Money

Organization with 1,500 employees Earn average of $22 per hour

Work 250 days per year

Each employee spends an average of 10 minutes per day looking or waiting for stuff Individual impact

= 41.7 hours wasted time per year

= 0ver a week of frustrating, unfulfilling, nonproductive time

Organizational impact = 62,550 hours of nonproductive time

30 FTEs worth of wasted resources

= $1.4 unnecessary direct expense per year

48


Translating Office/Service

Improvements into Financial Terms

(aka “Monetizing Results”)

49


Monetizing Results –

Expense Reduction Possibilities

Payroll

Paid overtime

Attrition (if flat or losing market share)

In-sourcing previously outsourced services

Supplies (one-time gain when implementing kanban)

Software licenses

Shipping expenses

Facility-related

Leases

Utilities

Borrowing expenses (due to improved cash flow)

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Cost Avoidance Possibilities

Freed capacity / hiring expenses

Turnover reduction / hiring expenses

Regulatory fines

Not scrapping nonreturnable material/supplies

Not ordering duplicate material/supplies

Not having to borrow money (due to improved

cash flow)

51


Monetizing Results – Revenue Gains, Revenue

Loss Avoidance, and Profit Gains

Freed capacity

Ability to absorb additional work without additional

labor or equipment

New revenue streams

Revenue gains

Shorter time to market

Sales team fully functional more quickly

Market share gains

Retaining high risk (“jeopardy”) accounts

52



Revenue Loss Possibilities

Reducing PT in T&M Environments

Overcome by market share gains & new revenue

streams

53

54

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Transcript of Advanced Lean Strategies for Office & Service Environments