Lean Office & Business Processes Not Just for Manufacturing Michelle Manary & Deb Harcus Manary Harcus Consulting Corp

Agenda Organizational Effectiveness & Lean What is Lean & how does it work? Lean Office Tools & Terminology Success Strategies Role(s) of HR in Lean Initiatives 8 Service Industry Wastes Value Stream Mapping Case Study Debrief, Q&A

Organizational Effectiveness & Lean Source: Queens University

What is Lean? Lean is a system that continually searches for and eliminates waste throughout the total enterprise and value chain Lean applies to office and administrative environments In Service industries, there are 8 types of waste Eliminating waste results in: Shorter lead times Reduced costs Less inventory Higher throughput Higher return on assets Six Sigma is a system focused on the elimination of defects. Lean applies to office and administrative environments Not just manufacturing In Service industries, there are 8 types of waste Eliminating waste results in: Shorter lead times (faster turnaround) Reduced costs (less effort, paper, steps, etc.) Less inventory (eliminating backlogs) Higher throughput (fewer resources, or get more done with existing resources) Higher return on assets (better use of tools and people) Henry Ford was the first lean thinker The word “Lean” was first used in 1990 to describe the Toyota Production System Six Sigma is a system focused on the elimination of defects. TQM or Quality is more commonly known as Six Sigma today

Some Lean Office Tools The Language of Lean Value Stream Mapping Pull vs Push 5S & Visual Controls Kaizen Event The Language of Lean 5S Kaizen Gemba Pitch VSM Value Add SIPOC Mapping Symbols Takt Pull vs Push Hansei Heijunka

Strategies for Success with Lean Base decisions on long-term, system-wide goals Create continuous flow to bring problems to the surface Level the workload (Heijunka) Build a culture of stopping to fix problems Standardized work Use visual controls Use reliable, thoroughly tested technology that serves your people and processes Grow leaders who thoroughly understand the work, and can teach it to others Respect your extended network by helping them improve Go and see for yourself (get in the gemba) Make decisions slowly, by consensus and implement rapidly Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen) Base decisions on long-term, system-wide goals Create continuous flow to bring problems to the surface Level the workload (Heijunka) Build a culture of stopping to fix problems, to get quality right the first time Standardized work and tasks are the foundation for continuous improvement & employee empowerment Use visual controls so problems can’t be hidden Use reliable, thoroughly tested technology that serves your people and processes Grow leaders who thoroughly understand the work, and can teach it to others Respect your extended network by helping them improve (eg: suppliers) Go and see for yourself (get in the gemba) Make decisions slowly, by consensus and implement rapidly Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen) Source: The Toyota Way, Liker 2004 Source: The Toyota Way, Liker 2004

Various Role(s) of HR in Lean Initiatives Ensuring top down support & alignment Review/revise HR strategy to support Business strategy Change Management Organizational Effectiveness Develop Managers who are Lean Facilitators Redefine Jobs to support Value Stream Manager role Lean Participant Ensuring top down support & alignment Review/revise HR strategy to support Business strategy Change Management – employee communication, understanding, skills development Organizational Effectiveness –internal “systems” need to support the desired business results Develop Managers who are Lean Facilitators Redefine Jobs to support Value Stream Managers role Lean Participant

8 Service Industry Wastes Corrections Transportation Extra processing Inventory Approval process Excess motion Backlog in work queues Underutilized employees Corrections (e.g.: errors, typos, misspelling, wrong data, accuracy, validating information) Transportation (e.g.: excessive email attachments, multiple hand-offs, multiple approvals, interoffice envelopes, email) Extra processing (e.g.: re-entering data, unnecessary emails, expediting caused by poor planning) Inventory (e.g.: any form of batch processing, stocks of sales literature, stocks of office supplies, emails waiting for action) Process of getting approvals (e.g.: too many, too few, people not available, methods used) Excess motion (e.g.: generating information no-one looks at, walking to/from copier, filing area or fax machine, other peoples offices, poor office layout) Backlog in work queues (e.g.: dealing with variability in demand) Underutilized employees (e.g.: no cross-training, inadequate tools, limited employee authority & responsibility, individual versus team thinking)

5S & Visual Controls Sort – What is not needed. Sort through, then sort out. Set in Order – What must be kept, make it visible and self explanatory. Shine – everything that remains. Standardize – Set standards for the first 3S’s Sustain – Requires discipline, stick to the rules and make them a habit Perform any necessary realignment of office layout, work stations, walkways, aisles, entrances. Mark-off the inventory locations, inventory levels, equipment/machine locations, storage locations (cabinets, shelves, tables) Help errors and mistakes easy to see and deal with Sort – What is not needed. Sort through, then sort out. When in doubt, throw it out Set in Order – What must be kept, make it visible and self explanatory so everyone knows what goes where Shine – everything that remains. Clean equipment and work space Standardize – Set standards for the first 3S’s Sustain – Requires discipline, stick to the rules and make them a habit 5S is not free, but it does have accuracy and efficiency benefits

A Successful Office Kaizen Blitz (pronounced Ki-zen) Kaizen Means: “Continuous Improvement” A “Kaizen Event” is normally 3 days long Starts with a SIPOC map Using Value Stream Mapping techniques: - Map the current state - Analyze & kaizen blitz possible improvements - Map future state Begin to implement changes & measure results

Suppliers Inputs Processes Outputs Customers SIPOC Map Suppliers Inputs Processes Outputs Customers Defines the practical limits of your mapping activity (scope) Ensures you gather all the information you’ll need Identifies the processes (which may have sub-processes) Captures the voice of the customer.

SIPOC Map Example New Employment Process – SIPOC Map Suppliers Inputs Outputs Requirements Customers Exec Committee Hiring Budgets Recruitment & Selection Payroll & Tax Setup Benefits Enrolment Orientation Training New Employee Qualified Manager Dept Managers Job Descriptions Candidates Fits XYZ Culture Recruiters Co-workers Oriented to Business Customers Setup for Payroll, Benefits

Value Stream Mapping VSM=The assessment and planning tool of lean practitioners 3 states exist: Current, Perceived, Future The only way to ensure you capture the true current state is to: walk the process Current state map Future state map Implementation plan Drawing Risk of not mapping the current state is that you have no baseline or justification for making changes. VSM=The assessment and planning tool of lean practitioners 3 states exist: Current, Perceived, Future The only way to ensure you capture the true current state is to: walk the process (use a stopwatch) or get the people who do work in the process involved, and map the current state themselves Drawing Plan & Implement

Value Stream Mapping Symbols xcel IN Customer or Supplier Process Box Inventory/Inbox Delay Time Information Flow 1 Day P/T=2min L/T=0 days Schedule % C/A=99% Electronic Information Flow Other Electronic Inbox (queue) Data Box Workflow Material (Paper) Movement Worker Iterations or Rework Wor

Value Add, Process & Lead Time Rework, Checking, Revisions Non-Value Add Time Value Add Time Queue/Wait Time Process Time Lead Time

Map Current State Document customer information & need Identify main processes to deliver service Start with customer and work backwards Collect data on main processes (attributes/metrics) Perform value stream walkthrough and fill in the data boxes, including “work-in-process” Identify process boxes where flow stops and batch or queue occurs In the office, inventory is information in a queue (paper or electronic) Establish how each process knows what to process next (information flow) Can be formal or informal; how is work prioritized? Calculate lead time vs process time Calculate % accurate & complete Calculate value add

Example - Current State VSM Map Insurance Claim Processing Timeline Value Stream Metrics - Process Time (P/T): 75 min Lead Time (L/T): 26-39 days % Complete & Accurate (%C/A): 29%

Typical Data Attributes/Metrics Process & available time Set up time (eg: between computer systems) Lead time/turnaround time (LT) Typical batch size or frequency % Complete and Accurate (%C&A) Rework/revisions Number of people involved Downtime (eg: information systems) Inventory – queues of information (eg: electronic, paper) Demand Team needs to decide which attributes/metrics will work best for tracking progress toward the targets.

Value Stream Managers Each Value Stream needs a Value Stream Manager For product and/or service ownership beyond the function Assign responsibility for future state mapping and implementing lean value streams to line managers with the capability to make change happen across functional and departmental boundaries Value Stream Managers should make their progress reports to the senior manager on site.

Which Steps Add Value and Which are Waste? Now that the process is visible, what problems do you see? Challenge every step – ask the following: What is really needed by the customer? (Takt) How often do we need to check our performance? (Pitch) Why are the current steps performed? What can be done differently or not at all? Is the order of the steps creating waste? Can we eliminate certain steps or do others more intelligently? What assumptions underlie the current process? Are existing tools and guides appropriate? Go back to the 8 wastes to see if the step is a waste. Now that the process is visible, what problems do you see? Challenge every step – ask the following: What is really needed by the customer? (Takt) How often do we need to check our performance? (Pitch) Why are the current steps performed? What can be done differently or not at all? Is the order of the steps creating waste? Can we eliminate certain steps or do others more intelligently? What assumptions underlie the current process? Are existing tools and guides appropriate? Go back to the 8 wastes to see if the step is a waste

Future State Questions What does the customer need and how are we doing in serving this need? Takt time=Demand rate Which steps create/add value and which are waste? How can we flow work with fewer interruptions/handoffs? How can we control work between interruptions/handoffs? How will we balance the work load and/or different activities? How do we set pitch? Pitch is the tempo of the output Ideal: Takt = Pitch What process improvements will be necessary? Can we establish a pace or rhythm that improves processing? What does the customer need and how are we doing in serving this need? Takt time=Demand rate (Effective working time/customer requirements in that working time) Which steps create/add value and which are waste? How can we flow work with fewer interruptions/handoffs? How can we control work between interruptions/handoffs? How will work be prioritized? How will we balance the work load and/or different activities? How do we set pitch Pitch is the tempo of the output Ideal: Takt = Pitch What process improvements will be necessary? Can we establish a pace or rhythm that improves processing?

Project Tracking Center What gets measured gets monitored. What gets monitored, gets done. A document board in a highly visible area, and as close to the work area as possible Post the Current and Future state maps Show Implementation Timelines Key measures of progress and success Value stream performance indicators Implementation progress & impact Other documents as required (as few as possible)

Case Study #1 Identify map developer & spokesperson for your group Read case & then map the current state process You have 2 colors of sticky notes – use one color for a process step, the other color for time spent waiting for something to happen Utilize the mapping symbols Identify waste and problems Gather and measure a variety of attributes, such as: PT – process time LT – lead time %VA - percent of process that adds value %C/A – percent of process that is correct & accurate %D/T – delay time # of people involved # of process steps required Brainstorm kaizen opportunities Stop

Case Study Debrief What do you see? What problems are pointed out? Where were some of the “lean” opportunities? Discuss areas in your business that could benefit from lean thinking

Process Improvements Identify all process improvements that could be done or will be necessary to implement the future state (Kaizen “bursts” or opportunities) Prioritize the list for quick hits and big hitters based on data or consensus Decide which attributes will be the best ones to use Map the desired future state & estimate expected results Consider Six Sigma for projects with unknown solutions and the root cause is unknown Identify all process improvements that could be done or will be necessary to implement the future state (Kaizen “bursts” or opportunities) Prioritize the list for quick hits and big hitters based on data or consensus This prioritization is the basis for the implementation plan Decide which attributes will be the best ones to use Map the desired future state & estimate expected results Implement quick hits first (low cost, simple to change) Implement more complex changes next, one at a time Big hitters are usually tracked as projects Consider Six Sigma for projects with unknown solutions and the root cause is unknown

Measure The Impact Attribute Current State Performance Future State Goal Future State Expected Result Actual Result

Questions?

Not The End Lean is a new beginning Reinventing your business, increasing your competitive position, a differentiator It’s a continuous improvement journey Not an event or a project Lean is a way of thinking that all employees ultimately learn and continue themselves. It becomes part of the company culture and an organizational commitment