Getting the Most Bang Out of Your Resources!! Dr. Frances Kennedy Professor and Director, School of...

Getting the Most Bang Out of Your Resources!!

Dr. Frances Kennedy

Professor and Director,School of Accountancy

and FinanceClemson University

LEAN CONCEPTS

Strategic Lean

More than a shop-floor tool

Process improvement should beapplied throughout organization

Support functions must participate and contribute to lean journey for it to succeed

Lean is a total business strategy

Lean Principles

Value Streams

Empo

werm

ent

Value

Flow

and

Pul

l

Perfection

Lean Principles

Value Streams

Sequences of processes and activities delivering customer value

Discharge Process:•Cross functional•Multiple care providers

• Pharmacy• Doctor • Nurses• Quality • Coding• Bed Control• Outpatient • Billing

Supplier Payment Process:•Ordering•Receiving•Storage•Inventory•Payment•Systems

Form a team with members from all constituent areas

What does it mean to “map the Value Stream”?

CURRENT State VS map

Customer: Petroleum, Aeronautical Companies

Expectations: Orders processed within 1 day

Initiate Order

Keys order in Computer

45s pl

Verify Order

Review Order 15s

Sales Mail Sort

Sort/30s

Central Mail Sort

Post/302

8 hrsCentral Mail

Room

Sort Orders/5s

Place in Out Box/5s

Sales Mail Sort

Sort by Customer/5s

Date Stamp/2s

Place in Cust Rep Folders/

10s

Check Part Numbers

Verify Part # /10s pl

Check Part Numbers/15s pl

Attach Revisions/10 s pl

Sort by Customer/10s pl

Establish Price 60s pl

Assign Delivery Date

Assign Delivery Date/30s pl

File Hard Copy15 m

4 hrs 4 hrs 2 hrs 1 hrs 4 hrs 4 hrs

Schedule

8:00; 11:00; 3:00

3x Daily

Faxed Orders

Phone Orders (Expedites)

1x Daily

Order Acknowledgements

8 hrs

Returned Work/4mExpedite

Order/10m

.16

480 240 240 120 60 240 240 480

553.75.28 11.25 .923.75

BASELINE DATA:Total Order lead Time = 2149.19 min or 4.5 daysTotal Order Cycle Time = 49.19 minValue Added Percent = 2.3% (2149.19/49.19)

Customer Order ProcessCurrent State Map

Queue Time

Kaizen Customer Mail Hand Delivery

Electronic Process

s = secondsPl = per line item

Exception ProcessingLead Time = 4.5 Days

Cycle Time = 49 min.

FUTURE State VS map

Standard Work

Process

Kanban Folders

U-Shaped

Cell

Queue Time

Kaizen Customer Mail Hand Delivery

Electronic Process

s = secondsPl = per line item

Exception Processing

Customer: Petroleum, Aeronautical Companies

Expectations: Orders processed within 1 day

Customer Service Supervisor

Keys order in Computer/1m

Central Mail Sort

Cycle Time 5m

Central Mail Room

Sort Orders/5 s

Schedule

8:00; 11:00; 3:00

3x Daily

Faxed Orders

Phone Orders

(Expedites)

1x Daily

Order Acknowledgements

Proposed:Total Order lead Time =297.56 min or 5 hoursTotal Order Cycle Time = 42.56 minValue Added Percent = 14.3% (42.56/297.56)

Customer Order ProcessFuture State Map

Runner 3x Daily

Kanban

E-mail Acknowledgements

Runner 4x Daily

.16 1 40.9 5

15 120120

Exception Processing

.25 Worker

145 min / day

Order Processing Cell

3 Workers: 40.9 m

Kanban

Kanban

Load every 2 hrs

Schedule

Lead Time = 5 HoursCycle Time = 43 mins.

Current Conditions Value Stream Map

Ideal State Value Stream Map

Future State Value Stream Map

Lean Principles

Value Streams

Value

GOAL

100% Quality Smooth Flow On timeFlow

and

Pul

l

What is Waste?

Waiting

Errors!

Motion

Transporting

Obstacles to Quality, Flow and

Time!!

Spaghetti DiagramWaste in time and movement!!

Key – 5S

Wasted time looking!

Sort

Straighten

Shine

Standardize

Sustain

Value Streams

Empo

werm

ent

Value

Flow

and

Pul

l

Perfection

100% quality; unbroken flow; at the pull of the customer

Information and authority to act when needed

Necessary for Lean Consists of visuals that

Supply information Trigger need Alert issues Provide instructions Demonstrate control and location

Visuals

Stove A

Stove B

Stove C

A B C

Push or pull? left side or right? How did you know?

Pull Systems

Kimberly Clinic

Defined the Perfect Patience Experience

Mapped the process

“Saw” the waste – bottleneck was the lab

Implemented a new process targeting the lab

Began initiatives in all areas

30 MINUTES!!

Call Center

Songs: “Don’t Worry; Be Happy” and “Jeopardy”

Center of Discussion Goal attainment Color coding

Employee Journey helped to ‘see’ where they were going

Continuous Improvement is critical!

Results!

Lean Accounting:

Use of same Lean tools in accounting department as in operations

Accounting for Lean:

Accurate, timely, and understandable information for motivating lean transformation

Lean Accounting vs.

Accounting for Lean

The DRIVING Question

Where do I start in Accounting?!?

Start with People!

Create a safe environment

Develop a joint vision

Communicate – Solicit opinions and suggestions

5S the office workspace

Remove cabinets, bins

Remove unused and redundant reports

Review/revise retention policies and enforce

Rearrange office layout

Result Cleaner, more orderly workplace

Positive impact on morale

Save time hunting for files and reports Use that time for more interesting and value-added analysis Cross-training

N = NoviceB = Beginner I = IntermediateE = Expert

Form a Vision One Controller’s Approach: Developed levels of performance in 10 key responsibilities

1. Housekeeping

2. Management of Objectives

3. Employee and Process Development

4. Performance Measurement

5. Developing Your Suppliers

6. Safety/Health

7. Customer Service

8. Reporting Compliance

9. Communication

10.Documentation/Standardized Work Tasks

Established a Champion to lead a team in each area

Performance Measurement LevelsLevel 1 PM’s are not standard. Few functions have measures.

There is no quantitative basis for rewarding exceptional performance. Employees don’t know where they stand.

Level 2 Some departmental measures are in place and employees are aware of the measure. Internal and external customer focus is a key topic, but feedback measures are not in place.

Level 3 PM’s are in place for 75% of the tasks. Critical tasks are measured, and successful completion is 95%. All tasks have primary customer focus. Customer feedback is requested periodically.

Level 4 Customer focus is clear. Commitments to due dates are supported by PM’s. Follow up meetings review performance for continuous improvement.

Level 5 PM’s are used to support continuous improvement on all critical tasks. Customer satisfaction surveys ensure proper focus. The team works as a unit toward 100% compliance.

Selecting the activity/process to improve Does this activity require a simple change that can be

implemented at no cost?

How much employee time will it take to plan, analyze and implement a change?

Is it likely that there will be additional costs involved?

What is the impact of the change on the information’s customer?

What is the impact on the quality of information?

Selecting the activity Is it the quickest or costless?

Will it have the most impact?

Does it save resources?

Will it impact other departments?

Biggest Headache?Customer

Complaints?

Prepare an Action Plan

Current State What do we do now?

Date:

Future State Ideally, what could it be?

Date: 

Suppliers paid on periodic basis. Use three-way matching on all payments. All discrepancies

investigated.

 80% supply purchases on blanket

purchase orders. Payment is authorized upon receipt quantity.

No matching and discrepancy investigation necessary

Obstacles & Challenges How to Overcome

 Number of vendors and part numbers will make it hard to

visualize

 Visit and see what others are

doing; Involve people who ‘design’ as

their job, such as marketing and design engineers

What are the first steps?

1. ______________________________________

2.______________________________________

3.______________________________________

4.______________________________________

Organize cross-functional team

Enlist champion

Schedule first meeting

Prepare project plan

What needs to be in place in . . .

3 mos? Project Plan in place, data collected, New process designed.

6 mos? Be ready to test.

9 mos? New process implemented

12 mos? Sustained

Who needs to be involved in the process?

___________________ _____________________

___________________ _____________________

___________________ _____________________

___________________ _____________________

Ann B., Purchasing

Mark W. Receiving

Terry D., Accounting

Chris B., Accounting

Karen M., Purchasing Tom H., Systems

Next? Understand the process!

Map it Collect data Draw it Talk to the people directly in it

Identify the waste! Time? Redundant controls and reporting? Inadequate training?

Design new process! Map the new process Communicate it – post it! Implement and adjust

Customer: Petroleum, Aeronautical Companies

Expectations: Orders processed within 1 day

Initiate Order

Keys order in Computer

45s pl

Verify Order

Review Order 15s

Sales Mail Sort

Sort/30s

Central Mail Sort

Post/302

8 hrsCentral Mail

Room

Sort Orders/5s

Place in Out Box/5s

Sales Mail Sort

Sort by Customer/5s

Date Stamp/2s

Place in Cust Rep Folders/

10s

Check Part Numbers

Verify Part # /10s pl

Check Part Numbers/15s pl

Attach Revisions/10 s pl

Sort by Customer/10s pl

Establish Price 60s pl

Assign Delivery Date

Assign Delivery Date/30s pl

File Hard Copy15 m

4 hrs 4 hrs 2 hrs 1 hrs 4 hrs 4 hrs

Schedule

8:00; 11:00; 3:00

3x Daily

Faxed Orders

Phone Orders (Expedites)

1x Daily

Order Acknowledgements

8 hrs

Returned Work/4mExpedite

Order/10m

.16

480 240 240 120 60 240 240 480

553.75.28 11.25 .923.75

BASELINE DATA:Total Order lead Time = 2149.19 min or 4.5 daysTotal Order Cycle Time = 49.19 minValue Added Percent = 2.3% (2149.19/49.19)

Customer Order ProcessCurrent State Map

Queue Time

Kaizen Customer Mail Hand Delivery

Electronic Process

s = secondsPl = per line item

Exception Processing

Waiting Errors!

Transporting

Key Points It all starts with your people!

Workplace 5S better workplace, helps to understand waste, better experience

Be honest about the current process

Target easy waste first and “Just do it!”

Involve all the process constituents in the solution

Use visuals to communicate, measure and celebrate!

Plan to sustain improvements