Lean
Written by Malcolm MacDonald-
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Lean has made Toyota great
Higher customer expectations, profit pressures and reduced lead times are challenges most businesses continue to face. Lean Enterprise is a business operating philosophy in which ‘Customer First’ drives internal processes, has provided a solution for many companies by eliminating nonvalue-adding activities, thus helping to reduce lead times, increase productivity and improve quality and throughput.
So what can it do for your business?
But Lean is not a new concept in the manufacturing industry. For more than 40 years, Lean has been successfully implemented on the shop floor to eliminate waste and increase revenue. It is only recently that companies are using ‘Lean Office’ as a key productivity factor to streamline and eliminate waste from their office and administrative processes and achieve bottom-line savings.
If you consider that an average of 70% of all cost related with meeting a customer demand is an administrative or non-production-related function, how can you afford not to become ‘Lean?’ Benefits of a Lean Office Lean in an office environment can impact throughout an organisation.
At an Enterprise Level it streamlines and accelerates those processes that touch external customers and suppliers such as order entry, customer service, accounts payable/receivable processing, marketing/sales, research and development, product development and distribution.
At an Organisational Level it streamlines key support processes (e.g. Information Technology, Human Resources, engineering and purchasing) and identifies internal customer requirements and value, improves communication and crossfunctional co-operation. Which organisation does not need that?
At a Departmental Level it focuses on objectives, reduces activities that add time but little value, measures progress to Takt Time (a process time bench-mark), creates flow to improve the process, implements Pull and Kanban systems and uses Visual Management to identify issues. These are all key elements of Lean.
At an Individual Level it reduces paperwork, manual entries and errors using Standard Work Procedures and improves organisation using 5S (a housekeeping methodology but so much more), and clarifies individual roles, responsibilities and objectives.
So why is ‘Lean Office?’ not more widely used? Common reasons include:
- Lack of clearly defined ‘Product Flows’
- Limited data collection
- Lack of understanding between ‘Waste’ and non ‘Value-Added’ activities in offices
It is common for Lean projects to begin with Value Stream mapping (what is happening now!) and analysis to optimise one product flow (i.e. Value Stream) at a time. Often, this is a challenge in an office environment where there are many small, intersecting value streams rather than a clear ‘product flow’.
In addition, these value streams may not be visible (e.g. occurring electronically), or may occur less frequently. Nevertheless, the multiple flows of customer demand and need across each desk, service person or even computer, must be identified and sorted out in order to obtain an accurate picture of the process.
Most organisations collect limited, if any, data on administrative processes. Just as with Lean on the shop floor, Lean Office places great emphasis on data-driven decision making. Typical data for the plant level include cycle time and changeover time. For support and administrative operations, determining what data to include depends on what questions you are trying to answer about your value stream and how you define the ‘product’ produced by these operations.
For example, if your objective is to reduce ‘days in receivable’ (how long it sits waiting to be processed before it hits the bank account), it would be helpful to define “invoices” as the product and identify the total number of invoices issued, cycle time and queue time for processing and collection, and total cycle time. From this information, you can determine where bottlenecks most likely occur and eliminate areas of waste in your ‘desired state’ process.
Just as in Lean Manufacturing, waste can be categorised into seven areas (often called the seven deadly wastes):
- Transportation: moving materials, products or information that does not add value;
- Inventory: more information (paper), project, material on hand than the customer needs right now;
- Motion: any unnecessary movement (like walking around the office) to successfully complete an operation or task;
- Waiting: inactive (in or out tray) or lost time created when material, information, people or equipment is not ready;
- Overproduction: producing too much or producing it before it is needed;
- Over processing: efforts that create no value from the customer’s viewpoint (polishing the proverbial!);
- Defects: work that contains errors, rework, and mistakes or lacks something.
Lean is a proven, company-wide, systematic (common sense) approach to eliminate or minimise waste, resulting in the production of goods and services at the lowest possible cost. It is not merely a manufacturing program confined to the shop floor. Lean is every system, every process, and every employee within the company and should extend to include the entire supply chain and its customers as well. It is then that you will truly become a Lean Enterprise!
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