Higher customer expectations, cost cutting pressures, thinner margins and shorter lead times are challenges your organization faces on a daily basis. A management system built around Lean is not only an enabler of achieving operational excellence but also provides flexibility in the way your processes are managed. What you need are robust, waste free, flexible office processes that meet customer needs and enable you to survive in the global marketplace.
Consider that 60 to 80 percent of all costs related to meeting customer demand are administrative or office related functions then it doesn’t take rocket science to conclude that applying Lean to streamline and eliminate waste from your office and administrative processes will result in bottom line savings.
The Benefits of a Lean Office
A lean office management system can impact administrative processes at all levels of your organization:
Enterprise Level Processes– the processes that touch your external customers and suppliers-order entry, customer service, accounts payable, accounts receivables, marketing/sales, research and development, product development and distribution. Lean can streamline and speed up these processes.
Organizational Level Processes-the key support processes in your organization-Information Technology, Human Resources, Engineering, and Purchasing. Lean will streamline these processes and improve process efficiency.
Departmental Level Activities-lean reduces activities that add time but little or no value. It can help create flow at the pull of the customer, reduce hand-offs and improve departmental quality.
Individual Level Tasks-Lean can reduce the paperwork, manual entries and errors standardize work procedures, help improve workplace organization, and clarify individual roles and responsibilities.
Before applying Lean tools to the office environment we must understand the flow of work. Just as we map the value stream and focus on reducing lead time and eliminating waste in manufacturing we must map administrative processes to better understand them and eliminate waste.
Processes like order entry, quoting, planning, purchasing, product development and others are full of waste. As a matter of fact, 75-90% of the steps in service/administrative processes add no value-the lean definition of waste. These wasteful steps cause delays and customer dissatisfaction. Since one of the key principles of lean thinking is to minimize the time between the receipt of a customer order and fulfillment of that order, we must look at the entire lead time. In order to see the waste in these processes we must map them. After we identify the waste (non-value-added steps) and what needs to be worked on, then we can apply the traditional Lean tools such as pull systems, continuous flow, co-location, point of use storage, continuous flow, 5S, visual controls and mistake proofing.
Secondly, you must collect data. If you are like most organizations you collect very limited data on your administrative processes. Office Lean is not unlike manufacturing Lean-it is based on data driven decision making. For office and administrative processes determining what data to include depends on the questions you want to answer about your value stream and how you define the product/service produced by these processes. For example, if your objective is to reduce the number of engineering change orders (ECNs). It would be helpful to define ECNs as the product and identify the total number of ECNs issued, cycle time and queue time for processing, and total cycle time. From this information you can determine where constraints most likely occur and eliminates areas of waste in your “future state” process.
Examples of Lean Office Applications
A client’s value stream map indicated that out of a total lead time of 22 weeks only 1 week was spent doing true value-added work. This steel fabricator found that a large part of the non-value-added lead time was identified as “waiting for approval”. Approvals were built into many stages of the order fulfillment process but were the responsibility of management staff that was often unavailable. The client standardized the work procedures to eliminate the need for many of the approvals and reduced their lead time by 2 weeks.
In reviewing the order entry process for a client we found that a significant amount of time was used to acknowledge the order. Whenever an order was entered, an acknowledgement was automatically printed and then manually sorted and mailed to each customer. The first question we asked was: “Who really wants these acknowledgements?” It turned out that only a few of their customers wanted an acknowledgement, and those that did said an e-mail response would be sufficient The client changed their order processing system to code any customer seeking an acknowledgement, then automatically acknowledging these customers via e-mail at the end of the order entry process. This resulted in freeing up an overworked office staff to allow them to spend more time on value-added activities.
A loudspeaker manufacturer discovered that much of its lead time was attributed to delays in obtaining customer approvals during the design and prototype cycle. There was no effective means of managing the customer approval process. It seemed that once the information was given to the customer, it disappeared into a “Black Hole”. We suggested to the client that they develop a visual management system (a centrally located schedule board) that shows the status of every job in house. This provided visibility for every step of the process and reduced lead-time in the design and prototype process by 50 percent.
As you can see by these examples Lean solutions are surprisingly simple and do not require great expenditure of capital.
Lean is a proven, systematic approach for eliminating/minimizing waste that results in the production of goods or services at the lowest possible cost. It goes beyond the shop floor. Lean is every system, every process and every employee in the company.