Advanced Lean Strategies for Office & Service Environments
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Advanced Lean Strategies for Office & Service Environments
- 1. Lean Webinar Series: Advanced Lean for Office & Service November 9, 2010 Company LOGO
- 2. 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. © 2010 Karen Martin & Associates 2
- 3. Creating a Lean Enterprise Initial Lean focus Eliminate muda – Waste Advanced Lean Eliminate muri – Overburden (people or equipment) Eliminate mura – Uneveness © 2010 Karen Martin & Associates 3
- 4. 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 nonmanufacturing 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. © 2010 Karen Martin & Associates Karen Martin, Principal Karen Martin & Associates 4
- 5. Webinar Participants’ Experience 60 49% 50 39% 40 30 20 9% 10 3% 0 True Beginner © 2010 Karen Martin & Associates Basic Understanding Skilled Highly Skilled 5
- 6. Value Stream Mapping Proficiency 60 48% 50 40 35% 30 20 10 12% 5% 0 Never created one © 2010 Karen Martin & Associates Just learning Skilled Highly skilled 6
- 7. Most Advanced Lean Tool(s) None Visual management A3 Value stream mapping 5S Kaizen events Kanban © 2010 Karen Martin & Associates Layout/cells Root cause analysis Metrics-based process mapping Takt time Critical-to-Quality Tree PDCA and DMAIC 7
- 8. Building a Lean Enterprise Process Stabilization Tools
- 9. Building a Lean Enterprise FlowEnhancing Tools
- 10. Building a Lean Enterprise
- 11. 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
- 12. Building a Lean Enterprise
- 13. Problems with Poor Layout Sales Estimating Design Engineer Materials Purchasing Scheduling Internal suppliers and customers are not connected Difficult to solve problems Difficulty innovating / sharing best practices Difficult to find work and track progress 13
- 14. Office Cell Linking people and processes into the most efficient combination to maximize value-added content while minimizing waste. Cross-functional One piece flow Balanced -- waste removed Cross-trained team Standard work Staffed to meet demand Forms Shared files In Out More efficient communication Single point scheduling 14
- 15. Loan Processing Flow 1 Legend Work-In-Process (WIP) (Before) Account Executive (AE) Sequence Number 2 Account Manager (AM) Underwriter (UW) Elevators & Restrooms 4 UW 5 5 AE 6 Funder (FD) 1 4 AE 2 AM 4 1 2 AM 4 3 Set-Up (SU) 6 FD
- 16. Loan Processing Flow (After) Customer Customer Shared Resource 1 AE Elevators & Restrooms 2 AM 2 1 AM AE 2 3 2 1 AE AM Set-Up AM AE 5 4 3 4 5 FD UW Set-Up UW FD Customer Customer 1
- 17. Mortgage Application Process Improvement Results Metric Before After Time to process a loan 5 Days 1.5 Days Customer complaints 4/Loan 1/Loan WIP 60 Loans 25 Loans 17
- 18. Building a Lean Enterprise
- 19. 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) 19
- 20. Pull System Flow Diagram Closed loop Customer RFQ Verify In In Complete Completed Enter info. quote per Quote Box in QEF log Box Quote QEF Customer Information Request Document Flow WIP Locations © 2008 Karen Martin & Associates
- 21. 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. © 2008 Karen Martin & Associates
- 22. Pull System in Admin Processes Step A Step B Step C Step D 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 © 2010 Karen Martin & Associates Step E
- 23. Single Bin Kanban System Cardboard Divider Kanban Card Place card on top of parts immediately under divider (1) Appropriate Sized Bin (kanban quantity fits into one bin) (2) (3) Draw Line Inside Insert Cardboard Pan at Order Divider to Create Point Level Physical Barrier
- 25. 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 26
- 27. Building a Lean Enterprise
- 28. Creating a Lean Enterprise Eliminate muda – Waste Eliminate muri – Overburden (people or equipment) Eliminate mura – Uneveness 28
- 29. Unbalanced Work 20 18 Takt Time Process Cycle Time 16 = 15 Min. 14 12 10 8 6 4 2 0 Order Entry Sales Review Design Estimating 29
- 30. 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
- 31. Takt Time Example: Continuous Production Available work time Takt time = Customer demand “Touch down” 480 minutes/day Takt time = 45 new accounts = 10.6 mins 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. 31
- 32. Balanced Work Process Cycle Time 20 Takt Time = 15 Min. 15 10 5 0 Order Entry & Review Standard Design Complex Design Estimating 32
- 33. 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
- 34. 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 © 2010 Karen Martin & Associates 34
- 35. Task-level FTE Requirements Process Time # FTEs Required = 20 mins # FTEs = 10 mins Takt Time 2 FTEs required to = meet customer demand 35
- 36. Creating a Lean Enterprise Eliminate muda – Waste Eliminate muri – Overburden (people or equipment) Eliminate mura – Uneveness 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 © 2008 Karen Martin & Associates 37
- 38. 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” © 2010 Karen Martin & Associates
- 39. 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. © 2010 Karen Martin & Associates 39
- 40. Prerequisites to Production Smoothing 1. 2. 3. 4. Connect the processes where possible (cells) Create pull Create flow (balance the work) 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 © 2010 Karen Martin & Associates
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- 42. Heijunka for the Office 42
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- 45. Lean Management © 2010 Karen Martin & Associates 45
- 46. 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. © 2010 Karen Martin & Associates 46
- 47. 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. © 2010 Karen Martin & Associates 47
- 48. 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 © 2010 Karen Martin & Associates 48
- 49. Translating Office/Service Improvements into Financial Terms (aka “Monetizing Results”) © 2010 Karen Martin & Associates 49
- 50. 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) © 2010 Karen Martin & Associates 50
- 51. Monetizing Results – 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) © 2010 Karen Martin & Associates 51
- 52. 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 © 2010 Karen Martin & Associates 52
- 53. Monetizing Results – Revenue Loss Possibilities Reducing PT in T&M Environments Overcome by market share gains & new revenue streams © 2010 Karen Martin & Associates 53
- 54. For Further Questions 7770 Regents Road #635 San Diego, CA 92122 858.677.6799 ksm@ksmartin.com Free webinars and monthly newsletter: www.ksmartin.com/subscribe Connect with us: 54