Training YOU to Recreate Your World Lean Office Training YOU to Recreate Your World

Course Agenda Lean office overview Definition of waste Orientation to YESCO Hawaii Round one of simulation Value Stream Mapping (current state) Implementing lean tools Round two of simulation Value Stream Mapping (future state) Round three final simulation Final Evaluation 2

Introductions Who are you? Where are you from? What do you want to learn today? ?’s 3

What is Lean Office? Lean Office is a systematic approach applied to the value chain with an aim to streamline the business processes by: Eliminating waste Utilizing lean techniques Resulting in: Lead time reduction and Productivity improvement 4

Why Lean Office? “In America today we have good people working in poor processes. What we want is good people working in great processes” Michael Hammer 5

Why Lean Office? “ Toyota Production System will not work unless it is used as an overall management system. TPS is not something that can only be used on the Production floor.” Taiichi Ohno 6

Lean Office $ LEAD TIME REDUCTION Time equals money 7

“Eliminate Non-Value Added Activities” Waste Elimination Business as Usual Customer Contact Waste Customer Delivery Lead-Time Lean Systems “Eliminate Non-Value Added Activities” Processes have evolved over the years but may never have been mapped and recalibrated toward no waste Customer Contact Customer Delivery Lead-Time (Shorter) 8

Value Added vs. Non-Value Added Activities Value Added (VA) The customer is willing to pay for it Physically transforms the product (or document or information) Is done right the first time Non-value Added (NVA) Consumes resources, but does not add value to the product or service Necessary Non-value Added (N-NVA) Does not add value to the product or service but are CURRENTLY NECESSARY Customer Contract or specification QS 9000 or customer standard Government regulation Current state-of-the-art work method or technology 9

Why Lean Office? Only 30% of the total costs are directly manufacturing Where is the rest of the money being spent? 10

with customer demand and requirements Lean Organization Process View Business Operations Customer Delight A streamlined flow of goods or services through an organization in concert with customer demand and requirements We can begin to reduce the complexity of an organization by implementing Lean Tools and Techniques in support processes. We can gain a competitive advantage by streamlining the organization, focusing on these four areas 1) Identify, manage or break the constraints 2) Eliminate waste and non value added work 3) Synchronize all activities toward customer delight 4) Apply an employee based cross functional continuous improvement plan We can begin to reduce the complexity of an organization by implementing the Lean tools and techniques in the support processes. We can gain a competitive advantage by streamlining the organization by focusing on these four areas. Where are the constraints? Where is the waste in the processes? Are all processes focused on the customer? Do the employees have an understanding of the overall business? Streamline, Synchronize, and Integrate 11

Business Activities 12 Two points: Look at how producing the parts (perform manufacturing operations) is just a small part of the big picture and is most of the “value added activity” Look at all the support activities and how the Lean Champion must navigate through all the “functional silos” 12

Sites of Waste Policies Macroscopic wastes Major wastes Organizational structure Management policies and methods Macroscopic wastes Supply chain Office layout Major wastes Process and cell level Microscopic wastes Operator and computer level 13

Lean = Eliminating the Waste Value Added Defects Overproduction Waiting Non-utilized talent Transportation Inventory Motion Extra processing Typically 95% of Total Lead Time is Non-Value Added!!! ©2006 MMTC 14

Waste of Defects Money and time wasted to find and fix mistakes Lack of process controls Poor work instructions Inadequate training Data entry error Missing information Missed specifications Pricing error What defects do you see in your company? Ask for examples… 15

Waste of Overproduction Making multiple schedules due to system incompatibilities E-mails/memos to everyone Printing extra documents just-in-case More information than the process requires More information than the customer needs Creating reports no one reads Ask what they see in their company. 16

Waste of Waiting Time lost when people and resources are waiting: Unbalanced workload Equipment break downs Batch processing Waiting for information Waiting for copiers/faxes Waiting for customer response Waiting for an internal response Ask examples from them 17

Waiting Waste Packages delivered and waiting. Where should they go? Who do they belong to? ©2006 MMTC 18

Waste of Non-Utilized Talent Unclear job descriptions Lack of training Lack of synergy and collaboration No feedback loop for continuous improvement Suggestions for improvements that are not investigated/utilized This creates a lot of waste. Errors are made, questions need to be asked with no one around who has the answers, folks working with blinders on. 19

Waste of Non-Utilized Talent The subject matter expert is not asked for her input to solve the problem 20

Waste of Transportation Poor office layout Walking around to correct mistakes and find answers Retrieving or storing files Carrying documents to and from shared equipment Going to get signatures Taking files to another person Ask for other examples 21

Waste of Inventory Storing of obsolete prints and specs Obsolete databases/files and folders Files pile up between work desks Open projects (WIP) Office supplies E-mails waiting to be read Unused records in a database Is this happening in your company? Other examples 22

Inventory Waste Looks like too much toner on hand especially since they just replaced the machine that uses it 23

Waste of Motion Looking for items because they are out of place Mis- or unfiled papers Saving files everywhere Handling paperwork that could be electronic Extra clicks or keystrokes Working around other open files on desk Ask for their examples 24

Waste of Extra Processing Doing more than is required to meet customer requirements Unnecessary paperwork Redundant approvals Repeated manual entry of data Use of outdated standard forms Use of inappropriate software Creating hard copies of reports What examples do they have? 25

Above the Shop Floor… This pile represents over a dozen jobs. How many labor hours to produce this paper?

Tell me about this photo… What else do you see? Are there any hidden images? Were you even going bother to look until I ask you? Waste in the Office manisn’t always

Office Simulation Let’s learn by doing! 28 Exercise: Break group into teams of 4-5 and spread the teams out to different white boards. Have them draw the DOWNTIME acronym and list 2 to 3 examples of each of the 8 wastes that exists in their office. 28

YESCO Hawaii A New Division 29

YESCO Hawaii Orientation You are all employees of YESCO Hawaii Positions to be filled: - Sales - Material Control - Business Office - Scheduling Engineering - Production/Installation Process Engineer We will work in batches of 5 at Sales and 1 everywhere else We will measure the following - # of orders shipped - # of invoices faxed - # of quote drawings completed - Work in process 30

YESCO Hawaii – Company Policies Work shift is 10 minutes Keep busy at all times The goal is to Install and invoice 14 orders and complete 3 new business quotes 31

YESCO Hawaii Round 1 32

Metrics Scorecard Select an extra person to fill out this chart 33

Round 2 YESCO Hawaii 34 Make your improvements and lets try it again Make some improvements! Make your improvements and lets try it again 34

Metrics Scorecard Enter your data into your chart 35

Learn the tools to recreate your WORLD LET’S GET LEAN Learn the tools to recreate your WORLD 36

DVD Its all about Time DVD is the “Time” DVD showing office waste – 18 mins. 37

Characteristics of a Lean Process People arranged in process order One-piece flow processes Ergonomically-correct work areas Pull system discipline “Standard operations” defined and implemented Cross-functional, multi-process associates Process intolerant of abnormalities Improves morale, safety, reduces waste… Ask how? 38

7 Steps for Value Stream Mapping with Swim Lanes Create a macro level flow of process Select a functional area to map Detail the steps Identify NVA and N-NVA steps Analyze the process Develop a future map Develop and implement action plan 39

Create Flow of Process Have someone sketch it up on the board

2. Select Functional Area or value stream Break up departments into “swim lanes” “YESCO Hawaii” Value Stream Map of business process Swim Lane border (divides departments) Sales Business Office In this case we will look at the whole business process Material Control Scheduling ©2006 MMTC 41

3. Detail the Steps

Process Mapping Guidelines Gather the information from the actual process - “go see” where the work is being performed Get the real data versus the theoretical way it should be done or the way people “think” it is done Use the “experts” (people doing the work) to develop the maps Use the maps as a microscope on the process to allow you to see where to make improvements What are some examples? 43

Use the Experts… 44

Explanation of Flow Diagram Symbols & Colors Describe the process step O If the step is Non-Value Added, which DOWNTIME waste(s) does it represent? W N T I Color in: M What is the walk/travel distance? E Value Added Non-Value Added Necessary Non-Value Added How much time does it take to complete the process step? 45

Explanation of Flow Diagram Symbols & Colors Represents “Inventory” 46

Explanation of Flow Diagram Symbols & Colors Yes or No? Represents a “Decision” 47

Explanation of Flow Diagram Symbols & Colors Connects a process within a swim lane 48

Explanation of Flow Diagram Symbols & Colors Connects steps that cross swim lanes 49

Explanation of Flow Diagram Symbols & Colors Optional Represents electronic work/data transmission 50

Explanation of Flow Diagram Symbols & Colors RAI Represents document Reviews, Approvals or Inspections (RAI) 51

4. Identify NVA & N-NVA Steps

Examples of NVA Activities Traveling (excess transportation or motion of people or materials) Inspecting or checking (review-approval-authorization cycles) Work reporting (“done right the first time” rule) Redundant or unnecessary data entry Supervising Counting Reformatting or creating duplicate copies Filing and file maintenance What are some examples? 53

5. Analyze the Value Stream Map 1. Total each of the different process events Time SLAM – swim lane analysis matrix Handout copy – have them fill it out Steps 54

5. Analyze the Value Stream Map (using Starbursts) NOTE: Paste a bright green post-it near improvement opportunities that you have identified from you current state value stream map. Write a small description of the waste and how to fix it. STARBURST

5. Analyze the Process Map 2. Identify opportunities to combine steps that occur between two or more people In order to eliminate handoffs or delays 3. Identify opportunities to perform work simultaneously instead of sequentially In “parallel” instead of “serially”. What is the earliest a particular work step can occur? Identify opportunities where work (documents or information) can be delivered to the next person or operation one piece at a time instead of delivering work in a “Batch” Identify opportunities to build into the process signals or advanced notice to downstream departments to prepare to receive or produce work What are some examples? 56

Parallel vs. Serial Processing 57

5. Analyze the Process Map 4. Identify opportunities to “co-locate” people doing work: To improve communication To reduce the effects of handoffs and of transportation distances. 5. Identify opportunities to automate any of the work Electronically capture and transmit documents (scan-mail) Replace manual handoff with an electronic handoff Electronically capture and report process events and work status Replace hard copy forms, worksheets, or spreadsheets with electronic versions, accessible from the network Electronically combine several documents into a single database What are some examples? 58

5. Analyze the Process Map 6. Identify problems which if solved will reduce time or error rate 7. Determine whether the entire process is a candidate for “reengineering” What are some examples? 59

6. Develop Future Map Now that opportunities for improvement have been identified through the analysis step, start a new map incorporating the improvements you identified. Remember to take a picture of your before and after states. 60

7. Develop & Implement Action Plan Create a list of actions Prioritize the list – Impact-Difficulty Grid Assign responsibility Define due dates What are some examples? 61

Impact/Difficulty Matrix Easy Hard High Impact What are some examples? Low 62

Sustaining Improvements Recognize that several follow-up activities may be necessary: Implementing and refining a measurement or performance monitoring system Initiating additional improvements or corrections based on the measured results of the improved process Reconvene Team representatives until the projected levels of improvement have been achieved and sustained for at least three months What are some examples? 63

Exercise – Map the process! What are some examples? 64

Symbols & Colors for Process Mapping Step Between Process Step Same Person Step I RAI Inventory Review, Approve Inspect Decision 65

Lean Tools Fill up your Tool Box! 66

Establishing Takt Time Takt Time is the pace needed to meet customer demand. If you have a Takt Time of two minutes, that means every two minutes the process is completed once. Every two hours, two days or two weeks, whatever your sell rate (customer demand) is your Takt Time. Establishing Takt Time Your Operating Time per Shift Takt Time = Customer Requirement per Shift = 60 sec GOAL: Produce to Demand! 27,600 sec (7.67 hours) 460 orders 67

If you can’t do 5S, you can’t do Lean! 5S & Visual Management A proven method used to systematically organize, clean, and standardize the workplace If you can’t do 5S, you can’t do Lean! 68

5S & Visual Management Seiri Saiton Seiso Seiketsu Shitsuke Sort Set-In-Order Shine Standardize Sustain Clear out Configure Clean Conformity Custom 69

Elements of a 5S Program 5S Sort - what is not needed, sort through, then sort out; “When in doubt, throw it out!” Set-in-order - what must be kept; make visible and self-explanatory so everyone knows where everything goes Shine - everything that remains. Clean equipment, tools and workplace Standardize - implement best practices to keep the workplace clean and organize Sustain - making a habit of properly maintaining correct procedures 5S 70

What is Standardized Work? Standardized Work is a method enabling employees to improve their control of operations and measure their performance against documented standards Performance is optimized by reducing variation and waste in operations by the efficient arrangement of people, products, and machines, thus improving product quality 71

Cellular / Flow Processing Arrange people and workspace to achieve one-piece flow Minimizes wastes of: Transportation Inventory Motion Extra Processing Defects Overproduction Waiting Non-utilized Talent Single piece flow Pull process control Reduced waste Improved floor space 72

One Piece Flow Consider these conditions for “flow” in the office setting: One piece processing versus “batch” People in process sequence Multi-process work sequence Multi-process skilled people Synchronization of operations (work balance) 73

Poka-Yoke / Mistake-Proofing Poka-Yoke is the removal of all potential causes of error either through design, process, or mistake-proofing devices, to ensure consistent process results Poka-Yoke helps build quality into processes to achieve “Zero Defects” 74

Kaizen Kaizen has a bias for action! Kai = Change Zen = Good (for the better) Kaizen = Continuous Improvement Kaizen has a bias for action! 75

Round 3 Yesco Hawaii What are some examples? 76 Remember to think outside the box! What are some examples? 76

Metrics Scorecard Enter your data into your chart 77

Customer Service Request – IT Provider Old Process – Average 50 days New Process - Average 7 days Waste removed Define order Service Rep defines order Customer Customer Service Rep Mgr verifies order Customer Service Prepares form Admin inputs To data base Mgr approves quote Quote Needed? No Yes Mgr approves quote Purchasing quotes order Admin inputs to data base No Quote above $8,000? Yes The lead time to fulfill a customer service request was dramatically reduced by mapping the process and focusing on non value added work.. Mgr approval Mgt Board approval Purchasing fills order Account VP approval Order processing Receives and Signs off Admin sends Approval notice Order processing Receives and Signs off Purchasing fills order 78

YESCO Las Vegas Success Story The business office has reduced Node 5 (last day of labor to date of invoice) from an average of 15 to 20 days to 5 to 12 days for the Exteriors Branch. The same concepts are being used to streamline the billing process for Interiors eliminating several hand offs and reducing Node 5 as well. 79

YESCO Electronics Success Story… 80

Lending Process – Financial Institution Time spent by Loan Processor – Old Process 10/15% 10/20% 5% 60/75% Adm/clerical -filing -typing -mailing -gathering data General phone Inquiries from members Fill in for Other staff Loan Processing New Lean Process after Kaizen Event In the banking industry revenue is generated mainly by interest received from loans. The shorter the lead time for the lending process allows more loans to be generated. This increases revenue for the bank. In this example Loan Processor time was spent on non value added work. Reassignment of the clerical work and a new process for taking phone calls dramatically improve the time for Lending money. 5% 5% 90% Phone inquiries Loans only Fill in for Other staff Loan Processing 81

Keys to Success Create a sense of urgency Have a vision, communicate it continuously Focus on key process drivers Remove all obstacles to achieve the vision Create short term victories Don’t declare victory too soon Speak with data Don’t assume Analyze data – doubt it Make decisions with data Take action based on data Check results 82

The ideal first project… … is clearly and unambiguously measurable. This is not always possible for administrative Kaizens. …satisfies a widely-perceived need. … is a repeatable process. … is self-contained, not subject to uncontrollable external influence. 83

Administrative Process Improvement Administrative Kaizens are often discontinuous mini-Kaizens. The team meets first to understand the nature of the project and decide what they will need to know. The current state is described. A process map may be developed. Any information unavailable at the first meeting is provided prior to the second meeting. The second meeting is generally one day. The project is analyzed and a complete action plan is developed. The plan is implemented and the outcomes are monitored. If necessary, a follow up meeting is held. . 84

The Kaizen Project Team Team members are selected on a project-by-project basis. There is a team leader chosen to facilitate and coordinate. The leader is not in charge in the traditional sense. The team can be comprised of: Subject matter experts in the target area. Others in the same segment of the organization. Individuals from other areas of the organization. This includes technical staff. Individuals from outside the organization. 85

The Kaizen Project Team An open, egalitarian structure is important. When Kaizen project work is underway, organizational position is irrelevant and disregarded. All team members are considered equal within the team. 86

Key Kaizen Tenets An open atmosphere is critical. Free thinking and contribution are necessary. Everything is open to question. No assumptions are made. A Kaizen event is not developing a list of ideas or recommendations to be studied. The outcome is implemented. 87

Now – Recreate that World Map it – with the experts Study your map Implement changes Celebrate Study and implement more changes Repeat, Repeat, Repeat 88

Questions? 89