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The LEAN e-NEWSLETTER: #003
July 1, 2006
PRESIDENT'S CORNER
This is a time of celebration and satisfaction for our company and for Russia. On 6-7 June our Russian partner, Center Org Prom hosted the very first Lean Forum in Russia. There were more than 230 participants with more then 30 different presenters from Russia, Turkey, Japan and the USA.
In my opening presentation I set the tone of the conference with a challenge to Russian organizations to regain their role in the world marketplace using Lean techniques. There were many examples of companies within Russia and around the world that have gained a significant market share after implementing Lean Tools and Lean techniques. There were very good examples from continuous-flow processes like Aluminum, Titanium and Steel production operations to balance with the Automotive and Garment industries.
On the second day we discussed how Lean techniques can be used in processes other than discreet manufacturing and how they can increase the competitiveness of service oriented organizations. This month's newsletter talks about processes outside the manufacturing facility. Inside corporate administration offices, in banks and financial institutions, in schools and hotels, in the cubicles of Back-office-processes, Lean can help to reduce operational costs and increase competitiveness.
Visit us each month as we try to talk about diversified uses of Lean Tools and how they can help every operation be more productive.
Mike Wader
FEATURE ARTICLE
Using Lean Techniques In Non-Manufacturing Processes
By Mike Wader
For more than 40 years manufacturing companies around the world have been using Lean techniques to improve their operations and become more competitive. This use of Lean Tools has spread into the corporate offices and administration functions of many manufacturing companies. These companies, famous for using Lean techniques like Toyota and General Electric, found tremendous saving, millions of dollars annually, as they streamlined their support functions by removing the hidden wastes. The exact same tools that made them manufacturing success stories had made them world-class administrative examples.
Departments like Human Resources, Sales and Marketing have reduced the number of forms used, reduced the cycle to hire new employees, and speed up the develop of new customers. Purchasing, Accounts Payable/Receivable and Order Entry operations have materials strategically located to provide Just-in-time availability and laid out to reduce hand-offs and wasteful waiting time. Quality Assurance offices have used Lean techniques to improve their Regulatory Compliance and Customer Feedback operations while reducing defect and rework wastes.
Now these Lean office techniques are being applied in Information Technology and BPOs (Back office Process Operations). There are many examples on the internet of Lean Construction, Lean Healthcare success stories.
But how can we apply these tools and what should we be looking for to see the waste that exist within our support operations. Within most service organizations there are two sources of Motion waste. Waste that the service providers spend looking for materials, inventory, or supplies to give service. Have you ever measured the actual numbers of steps taken or distance that the service providers travel. Often it can be reduced by 50% with the relocation of materials and supplies closer to the point of use. The second is the wastes of the customer traveling too far. At times customers have to travel to many locations to take care of one operation. In the doctors of, it is “go down this hallway for an x-ray” then go down this other hallway for a urine sample”, then go down this third hallway to get your vital measurements from a nurse”. What ever happened to the idea of one-stop service?
The hidden waste of Waiting Time waste is evident in almost every administrative process. If it is the order taking, procurement of materials, processing and insurance claim or completing a Back-Office Process, there always seems to be one or two steps in the process that causes delays. While most other information flows freely, one or two processes require the skills of just one or two people and they become the bottleneck within the process.
Over Processing wastes exist in most none manufacturing process because of bureaucratic procedures or company policies. Why does it take so many levels of approval before an office clerk or staff person can get approval to but something they need to do their jobs? Loan processing and bank loans are notorious for excessive levels of approval before execution of the funds dispersal. Design engineering offices have the same problem as they have to wait for so many redundant approvals from customers before sending the design out to be built.
Often we find the waste of excessive Defects and Rework that are corrected at the point where they occur instead of being passed on, which is good. But no one is documenting that they ever occur and therefore no one knows why the process usually takes longer than originally designed to take.
When we want to make improvements and remove these wastes the best place to start is with a Value Stream Map just like in the manufacturing process. The entire process needs to be mapped from the receiving the order or order entry to completion of the paper work or administrative function and the customer receiving what they wanted. The map reveals where processes are delayed and where paperwork lies in queue to be processed for hours or some times days before Value Added action is taken.
When a software or construction design team has to change-over from one project to another and often this causes delays in transition or getting started on time. The same Quick Change-over techniques that apply to manufacturing can be used here. Make sure the right materials and people are at the right place at the right time (JIT) and have checklist and Standard Operation Procedures clearly written and available to clear up questions about the change over procedures.
When the administrative, designing, financial, and retail industries began to understand that there are plenty of tools to be used in improving their processes they will began to become just as competitive as their manufacturing sister processes. Before Jack Welch left GE he said that they made more improvements and saved more money when they applied these skills to GE Capitol than they did in all of the manufacturing processes together. That is a pretty resounding endorsement to use them outside of manufacturing.
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