What is Lean Office October 1, 2006

"Lean Office" is becoming a popular concept, but what does it really mean? Some think that organizing their desks using 5S principles is the place to start; however, there is much resistance to this approach by itself and with good reason. Before applying any of the lean tools to an office environment, it is important to understand the flow of work. Just as we map the value stream and focus on shortening lead time and eliminating waste in manufacturing, we must map administrative processes to better understand them and eliminate waste. It is at that point at which we can apply the tools. Processes like product development, order processing, planning, purchasing, and the like are full of wasteful steps that cause delays. Since one of the key principles in lean thinking is to minimize the time between the customer order and the fulfillment of that order, we must look at the entire lead time. This lead time includes many non-manufacturing processes- in fact, for the service organization it doesnt include any manufacturing processes. In order to see the waste in these processes, we must map them. We must understand the relationship between steps in a process, and we must learn to see the waste in these processes. After we identify the waste and what needs to be worked on, then we can apply traditional lean tools such as continuous flow, pull systems, layout changes, 5S principles, visual controls, and error proofing. Below are three examples of processes to which we can apply lean office principles and examples of waste we might find:

1. Order Processing- errors in data entry, lack of standard work, imbalance of work between associates, customers waiting 2. Engineering Change Orders long lead times regardless of type of change, delays due to multiple approvers, unnecessary approvers, inefficient approval process, wasted time in meetings, engineering resources doing work that could be done by others to speed up process, etc. 3. Purchasing Requisition and Ordering Process inappropriate approval processes, errors in paperwork/data entry, large expediting costs. Lets consider the service department at an auto dealership not far from where I live. About two years ago, the process by which a customer would check his/her automobile in for service was: 1. Pull vehicle in to service area and park. 2. Wait for an attendant

3. When an attendant arrives, give your name and reason for service and go into the service lounge. 4. Wait (average about 20-30 minutes) for someone to call you. 5. When called, meet with a service associate to discuss the service and sign paperwork. This process took on the average about 30 40 minutes. After receiving poor feedback from their customers, this dealership decided to apply some lean thinking. The new process is as follows: 1. 2. 3. 4. Pull vehicle into parking lot and give already waiting attendant your information. Pull into service area and leave vehicle with keys. Wait in lobby for service associate (average 1 - 4 minutes) Meet with a service associate to discuss the service and sign paperwork.

The new process takes less than 15 minutes from start to finish. This very simple example shows that delays can be eliminated by re-balancing work, eliminating steps, re-locating people and processes, and applying other lean concepts. Lean for Administrative Processes: The Seven Wastes September 1, 2005

Applying lean to administrative processes is an often misunderstood concept. Many efforts at lean office are limited to 5S implementation in the office only. Such efforts often fall by the wayside since measuring improvement is nearly impossible. While 5S is a powerful tool that will improve overall efficiency within any operation, it is important to first analyze the administrative processes themselves to determine how to apply process kaizen tools such as 5S. The best way to accomplish this is to first understand how the seven wastes of manufacturing apply to administrative processes and then apply process mapping methods to the process to identify improvement opportunities. Recall that the seven wastes of manufacturing are:

Overproduction Transportation Unnecessary Inventory Inappropriate Processing Waiting Excess Motion Defects

The so-called "eighth waste" has been identified as underutilized people (with respect to their minds/ideas). How would each of these wastes apply to administrative processes, such as order processing, processing engineering change orders, purchasing, and corrective actions? Let us examine each of the wastes and learn how they might apply. 1. Overproduction. Overproduction is producing more than what is actually required by the upstream process. In manufacturing, this is often done in an attempt to keep machines running and to avoid too many changeovers. It may also be the result of historically poor quality (running more than what is needed to make up for defects). In administrative processes, overproduction may refer to things like printing paperwork out before it is needed purchasing items before they are needed, and processing paperwork before the next process is ready for it. Each of these may create a queue, which will cause the lead time for a process to increase. When administrative process lead times are high, the end customer will ultimately end up with a product later than anticipated for several possible reasons: manufacturing did not have visibility to an order quickly enough, manufacturing did not receive parts when they were needed, etc. 2. Transportation. In manufacturing, transportation refers to moving product either within or between factories. In administrative processes, transportation refers to things such as multiple paperwork hand-offs and requiring too many approvals. 3. Unnecessary Inventory. In manufacturing, inventory has a clear cost, whether it be excessive raw materials, WIP (perhaps the greatest culprit), or excessive finished goods. Holding too much inventory increases lead time and has a significant cost associated with it, usually estimated at 20% to 40% of the average value of inventory over a year. For administrative processes, things like filled in-boxes (electronic and paper), too many office supplies, and batch processing of transactions/reports. The result of unnecessary inventory in administrative processes is increased lead time. 4. Inappropriate Processing. In manufacturing, this often refers to the use of mass production equipment where leaner equipment may be used. It also refers to reworking products. In administrative processes, it may refer to re-entering/re-checking data, making extra copies distributing too many reports, making excessive transactions, management accounting activities, and adding unnecessary details in expense reports, budgets, etc. 5. Waiting. The waste of waiting in manufacturing refers to operators waiting for machinery to finish cycling. The solution is to balance the work of operators (often having one operator run multiple pieces of equipment.) In administrative processes, system downtime, paperwork/approval queues (waiting in someone's inbox), and waiting for information from outside sources (customer or supplier) are examples of the waste of waiting.

6. Excess Motion. Excess motion in manufacturing refers to operators having to walk around to find tools, inventory, and people. Also, it refers to ergonomic concerns in manufacturing operations. In the administrative processes, excess motion primarily refers to people having to walk to office equipment or (even more importantly) having to walk to find people. 7. Defects. In manufacturing, the waste of defects is obvious. Defects cause parts to be either thrown away or re-worked. Defects in administrative processes are often mistakes on paperwork/data entry, which increase lead time or lead to unfilled orders and other potential manufacturing issues. 8. Underutilization of Employees' Minds/Ideas. This waste applies to manufacturing and administrative processes in the same way. In order to be successful, a lean program must involve employees at all levels of the organization. Everyone must generate improvement ideas and be involved in implementation.

Lean for Administrative Processes 2: Process Mapping September 1, 2005

In part one of "Lean for Administrative Processes," I wrote about the application of the "seven wastes" to lean. In this article, I will discuss process mapping for administrative processes. Current Condition Mapping After gaining an understanding of the wastes you will find within administrative processes, you must map the current condition. There are six basic steps. 1. Document Customer information/needs. As with any other aspect of lean, it is important to understand what the customer values. Ask the question, "What is the customer willing to pay for?" 2. Identify the key processes. With a group of employees that are involved in the administrative process, list out each of the key processes. 3. Based on customer requirements and the processes themselves, select process metrics. Metrics may include lead time, processing time, % errors, 4. Collect data (walk through process). This involves calculating the above metrics based on a process walkthrough (and data collection).

5. Establish how each process sets its priorities. In any administrative process in which information is transferred, prioritizing work is a key factor. It will need to be standardized during development of the future condition. 6. Calculate key summary metrics for the entire process. In most cases, lead time and % valuecreating lead time will be the key metrics. This tells you how long the process actually takes and how much of that time is value-creating versus waste. Future Condition Mapping After the current condition has been clearly identified, creating the future condition involves the following six steps. 1. Confirm customer needs / requirements and calculate takt time. Takt time, as you may recall, is a measure of customer demand relative to available time. It is calculated by dividing the available time by the number of units demanded in the same period. Takt time is not always easy to calculate for administrative processes, but a good estimate can almost always be made. Takt time will tell you how often the customer requires a product (whether the product be an engineering change, processed order, or actual product. For example, the takt time for customer ordering might be 15 minutes. That means that a customer order must be processed every 15 minutes. 2. Determine Performance Audit Window. Similar to the concept of "pitch" in manufacturing, it is important to determine how often to check on performance to takt. For takt times that are very long, this interval might be correspondingly long. For example, if for a particular process, takt time is measured in weeks, a multiple daily performance check/audit would be completely unnecessary. Performance might be monitored over a much longer time period. 3. Determine which steps in the process create value and which generate waste. This involves critically examining each process step and determining if it is value-creating or if it is waste. 4. Create a work flow with fewer interruptions. Similar to the concept of one-piece flow, this step determines where work flow can be uninterrupted. This is usually done by combining steps into one (and perhaps having one individual perform several steps in sequence.) 5. Determine how to control work between areas of flow. This step is mostly about prioritizing work. Just as in manufacturing, pull systems or FIFO lanes are implemented to control work between steps. 6. Identify process improvements that need to be made to achieve the future state. This step involves team brainstorming. The team must generate as many ideas as possible to achieve the future state.

After a future state is developed, develop an implementation plan, which should be periodically monitored and updated. This is similar to the value stream plan, which would be made for monitoring manufacturing improvements within a value stream.

Creating an Environment for Continuous Improvement May 1, 2009

Very often, I am asked what the biggest challenges are facing operations excellence initiatives like lean manufacturing and six sigma. Based on my experiences with managers from a widely diverse group of industries, one common thread seems to be difficulty "sustaining" improvements. I must admit, I do not like the term "sustaining" when it comes to continuous improvement because this gives people the false idea that improvements, once made, should remain (as originally made) in place for months and years. In actuality, sustaining operational excellence means constant change for the better (kaizen). All levels of employees should be constantly looking for waste in their operations and eliminating it. The question is: how can we ensure that this happens? In this article, I'll cover three basic concepts that will help create an environment for sustaining continuous improvement. The first concept is to create visual standards for all operations that can easily be verified. Standard work charts and visual metrics are examples. Standard work charts should visually depict a set of operations or work elements and how they are to be accomplished in meeting customer requirements (usually expressed using takt time, the heartbeat of the customer) Visual metrics generally involve graphical depiction of a few key process indicators. For example, an area involved in injection molding operations might post process indicators like equipment downtime, changeover time, and defect rate. Both standard work charts and visual metric displays do two things: they allow everyone to understand the operating standard and the performance of the area. Standards are the basis for kaizen, or change for the better. As standard operations are observed, we can improve them. Performance metrics can be trended over time to identify problems or opportunities for improvement. The second concept is to create visual means of communication. When improvements are made to a process, there are usually minor problems that arise as a result. These minor problems are often ignored because there is no effective method in place for communication. The result is usually regression back to the old way of doing things and a perceived lack of "sustainment." It is important to institute a visual means of communicating problems and

improvement ideas that can be tracked. What we've found to be the most effective method is to use a kaizen board. A kaizen board, pictured below gathers feedback in the form of problems or improvement ideas. The feedback is written and addressed.

The third concept is to create a "no-blame" environment for employees. Having visual standards and an effective means of communication is great, but, if employees are afraid to expose problems, the system will fail. Creating a "no-blame" environment is absolutely the most important of the three concepts, and it is based on the idea originally made popular by Shigeo Shingo: "Errors occur because the system allows them to occur." When an organization works under this paradigm, problems are exposed and solutions/ideas are generated and more effective. The reason solutions will be more effective is because they will be aimed at improving systems rather than re-training or disciplining people. In summary, three items need to be in place to create a true environment for sustaining continuous improvements: 1. Visual Standards to create transparent operations 2. Visual Communication to create a feedback mechanism. 3. A No-Blame Environment that brings problems to the surface and focuses solutions on system improvement.

Developing a Foundation for Lean Implementation

July 31, 2003 What separates a deeply rooted lean organization from one that is lean on the surface only? I have visited many manufacturing companies that claim to be implementing lean; the best of them truly have embraced most or all elements of lean, particularly those related to the people side of the equation. What seems to be lacking in most unsuccessful lean implementations are what I believe to be the key elements of a foundation for lean: total employee involvement and management commitment. One manufacturing executive told me he expected lean implementation to be 50% technical and 50% people, but the reality for him was 95% people and only 5% technical. Thats right; the most important element in implementing lean is people. First of all, executive management must be committed to lean. If lean is a grass roots effort, it will have limited success. This is because lean involves so much of the organization. It involves procurement, manufacturing, quality, sales, marketing, and human resources. Each of these organizations will need to participate in the transformation. Therefore, the executives must want it.They must believe that it will improve their bottom line. If they dont, it will fail. After management has committed to implementing lean, the next step in forming a foundation for lean is communicating this commitment to the entire organization. This often missing but critical step conveys the importance of the program to the employees. Company newsletters, e-mail, the intranet, and any other such tools should be used, but the most important means of communication is having a company executive directly address the employees. The executive should explain what lean is, why the company is going to implement it, and what the next steps will be. After the employees have been informed that this program is real and that the company is committed, the organization should begin scouting for team leaders. These are often the people that voluntarily seek to get involved in the program; the team leaders will help to train the rest of the organization.The organization should then find a change agent, often an external (or in some cases internal) consultant that can train the trainers and work collaboratively with management to move the program forward. The final step in forming the foundation for lean is planning a reward system. One common factor in successful lean organizations is a reward system for employees. The system must reward employees for suggesting and implementing useful ideas that eliminate waste in the

organization, and the system must reward employees for sustaining lean throughout the organization. After taking these steps, an organization has an increased likelihood of initial and sustained success as a lean enterprise. Lean is not something that an industrial or manufacturing engineering group does to an organization; it is a cultural change. The importance of developing a foundation for this cultural change is critical to the success of any organization that begins a lean journey. The Learning Organization and Lean

August 1, 2004

I remember reading Peter Senges The Fifth Discipline about 10 years ago. This book contained a curious term: learning organization. Ive heard that term used many times since in different ways, but Senge defined it as a place (Senge, 1990): where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together. The focus is not only on developing new skills; it is also on how to learn new skills, knowledge, and capability- learning how to learn. How do we take this rather philosophical concept and create a lean learning organization? Learning how to learn is important for the lean organization. Consider that lean is a journey. One does not become lean and then rest on his laurels. Training is a very important part of the process, but the concept of learning how to learn is deeper than that. It is about ensuring that an organization continues to innovate and progress toward a waste-free value stream. This means that the lean organization must put in place a system to ensure that it continues to learn. This article contains three ideas that will help organizations do this. 1. Capture and utilize lessons learned at all levels. Organizations often make the same types of mistakes repeatedly. This is true from strategic decisions down to the shop floor. The true learning organization does not repeat such errors over a long period of time. It captures the error, determines its root cause, and puts in place preventive measures to ensure this type of error is not made again. We are working with a

company right now whose business is very seasonal; they have in the last year decided not to continue the cycle of layoffs and re-hiring because it has resulted in higher overall costs (re-training, re-hiring, severance, etc.). Instead, when times are slow, it spends more time on improvements. The result is higher profitability. 2. Improve Communication Through Employee Feedback Programs. It is important to encourage and implement ideas from employees. For example, each year Toyota receives 1,000,000 ideas, and 90% of these ideas are implemented. The creative yet structured environment that Toyota has fostered is what allows that astounding number of new ideas to be possible each year. At many organizations, I have witnessed the impact that employees at all levels (particular the worker bee level) have had on an organization after the organization had put in place an effective feedback program. An effective feedback program has three simple elements: a. Effectively trained employees Employees need to learn how to give good ideas; they need to understand lean, problem-solving, and how to effectively function in a team environment. b. Incentive There are many ways to create an effective incentive program for ideas.Awards can be monetary, symbolic, or some combination. The system should include team and individual incentive. c. Empowerment Employees need to be empowered to make decisions and implement good ideas. Many times, organizations give greater incentives to those who suggest andimplement ideas. Of course, the employees must feel comfortable implementing ideas (and they must have the training to do it). 3. Create a Lean Training / Kaizen Office that is responsible for training. Organizations should develop and annually revise training programs for all employees. For the organization that has been on its lean journey for more than 18 months, it is appropriate to have such an office plan and administer lean training. The training should ultimately be extended to suppliers and customers as well; this will help extend the reach of the learning organization. Together, these three concepts work remarkably well together to help an organization become a lean learning organization. To read more about how Toyota manages to be such an effective learning organization, read Toyotas Learning Organization. Overcoming Resistance to Change in a Lean Company Change Resistance The term resistance to change is commonly used in Lean circles. It simply means that people are set in their ways, and often dont want to modify their routine. Surprisingly, this change resistance doesnt just occur when people who like their jobs are asked to make a change. Resistance even comes from people who are chronically upset with theirworking conditions. For them, the known evil is preferable to the unknown.

For someone to resist a change, there obviously has to be a change. These new conditions are the Events that occur around people every day. And these Events, big or small, good or bad, invariably lead to some Result. For example, when the weather changes and it rains (Event), people get wet (Result). In truth, the progression from Events to Results is little more complicated than that. Where Change Resistance Happens

Resistance to Change Affects the How You Think Links

The steps in the How-You-Think-Links are: 1. Event. Something happens. The weather channel reports that it is going to hit 90 degrees today. Since this step is objective, there is no change resistance associated with it. 2. Interpretation. An Event inherently has no meaning to it. For example, is a 90 degree day good or bad? A business owner might Interpret it as good if she sells ice cream. An employee might view it as bad if his boss has decided to leave the air conditioning off to save money. The spin one puts on the Event is his Interpretation. This is the step where resistance to change starts. If the Interpretation is negative, it plants the seeds of change resistance. 3. Emotion. After you apply meaning to an Event, you have an emotional response to it. Many times this response is virtually unnoticed, but your Emotions set your state of mind and affect the Decisions you make. While some Emotions are highly visiblered faces, steam coming from ones ears, smilesmost are hidden from external view. This makes it hard to identify change resistance at this step. That hot day makes the boss happy if she is anticipating record profits from ice cream sales. But the employee is likely angry about the bosss lack of compassion for not cranking up the A/C.

4. Decision. Regardless of the situation, people always have optionsalthough some of them might be unappealing. Unfortunately, individuals often create artificial limits on their choices. They either dont know a better way, or they let their Emotions influence the choices they put on the table. The business owner has to Decide how much ice cream to stock up onall in all, a rather positive Decision to be stuck with. That overheated employee has to make a harder choice. Confront the boss, buy a fan, stew in sweltering misery, or find a new (cooler) job. 5. Action. This is where the rubber meets the road. Skills, support network, resources, and a host of other things influence how well a person can act on her Decision. This is generally the most outwardly observable step that a person takes. Bosses should realize, though, that even though this is where they observe a persons change resistance, it is not where that resistance started. Addressing it here is a band-aid approach. 6. Results. People try to get the best outcomes they can. Unfortunately, not all Results are good ones. But if a person pays attention to how he passes through the earlier steps, he can improve the odds of getting what he wants. Preventing Change Resistance Fortunately, there is good news about the resistance people exhibit when there is a change. Neither a company nor an individual wants resistance. It stresses out employees, and reducesproductivity for the company. This means that both sides share a common goal: preventing resistance to change. So how can leaders get good Results instead of resistant employees? Leaders have the best opportunity in the Event link. Since they are the ones pushing the change, they can structure it to match how their employees will Interpret it. Done properly, the resulting Emotion will be a positive one. What can leaders do to minimize their employees change resistance? 1. Know their employees. If leaders dont understand what makes their employees tick, they will have no chance at meeting their employees needs. And if those needs are not addressed, employees will Interpret the Event in a negative way. 2. Think about the desired Results. Leaders must consider what positive Results look like, but they must be realistic. They probably shouldnt be thinking that Toyotas culture is attainable on the first go-around. Instead, leaders should envision the Results they can reasonably expect from the change they are making, and think how it will play out in each one of the links. How will employees Interpret the change? What will the Emotions be? What Decisions will employees make?

Strong leaders will get feedback from trusted employees to make sure they get this step right. Doing this sort of pre-mortem on the rollout of any new process will help a leader identify and address areas where the change will drive resistance. 3. Create a win-win situation. When making a change, leaders should think about how it will be good for their team as well as the company. Im not talking about the book answers for why Lean helps employees. Im talking about matching the changes the leader is making to the specific problems that her team is facing. A good place to start is by listening to what the team is complaining about to each other. They tend to be far more open when talking to their coworkers than their bosses. Driving Positive Change Positive responses to change doesnt come by accident. They comes from a well-thought out planof how people will move through the links in the diagram. Leaders announce far too many changes without considering the path to a good Result. Using the How-You-Think-Links is not a cure-all for getting good Results. Positive outcomes take a lot of hard work. The links, though, are a goodanalysis tool for preventing change resistance and clearing obstacles on the path to success. Problem Solving Culture

September 1, 2009

Most Lean Six Sigma literature claims the following: Six Sigma means quality, Lean means speed! One must have both six sigma and lean or some form of a lean six sigma "program" to achieve faster lead-times, better productivity, and better quality. Case Closed! I, however, must challenge this assertion. Lean does not simply mean speed. Lean is the term that was used to describe the Toyota Production System (TPS). TPS is not all about speed and nothing about quality. In fact, when most people think of Toyota, they think of quality first. Both Six Sigma and the Toyota Production System attempt to achieve the best quality; however, there are some differences in how these ends are achieved. In order to be successful, Six Sigma and the Toyota Production System require a culture change- a change in the way we think about problems. In this article, I will cover some of the keys to creating a Problem Solving Culture. First of all, solving problems is the key to any continuous improvement effort. When we solve problems, we become more productive, and we deliver better quality products to our customer faster. What does it take to become a problem solving organization? Is it simply teaching a problem solving method such as DMAIC or some other Root Cause Analysis method?

In truth, most companies have people who have had some form of problem solving training, yet very few of those companies have a problem solving culture. Let's look at three missing ingredients. 1. A problem solving company must treat problems as opportunities for improvement rather than opportunities to assign blame. Based on my experience, when a problem occurs at most companies, the first thing people want to know is "who did it?" When they find out, they usually perform a "rubber-stamp" root-cause analysis and state that the root cause was lack of training. Since re-training does not prevent the problem from occurring again, it will undoubtedly be repeated. Under these conditions, very rarely can problems be seen as opportunities for improvement. If you were a person who discovered a defect at such an organization, would you be willing to bring the problem to the surface so that it could be solved? 2. Problems must be treated as "system" failures rather than people failures. Allow me to illustrate. Let's suppose that a machine operator is tasked with observing a machine to ensure that it is not creating defects. It is inevitable in such a situation that a defect will go undetected from time to time and be discovered in a downstream process. A problem solving company would observe this as an opportunity to change the system rather than to re-train the operator. The change should be to prevent the defects from occurring in the first place by error-proofing the process or at least error-proofing/automating the detection process at the source of the defect. 3. All employees must be empowered to identify and solve problems. In a problem solving company, there must be a process in place by which people can identify and then solve or elevate problems to be addressed. The process must define who is responsible for identifying problems, what must be done to contain the problem (i.e., prevent a defect from reaching the customer), and what process must be followed for solving the problem and creating countermeasures. When these three ingredients become part of a company culture, better productivity and better quality become reality. This is because people are empowered to identify problems and because problems are opportunities for improvement. If a company encourages its employees to identify and solve more problems, improvement will happen.