WCBF Lean Six Sigma Summit Chicago

Transferring Lean Principles to the Front Office

Mike Shuck, Manufacturing SpecialistChicago Manufacturing Center

Manufacturing Extension Partnership

Toyota Production System

Lean Manufacturing

Can just as easily be:

Toyota Transactional System

Lean Transactions

Transferring Lean Principles to the Front Office

Manufacturing versus Transactional

It really does not matter……..?

Does the House of Lean look any different?

Transferring Lean Principles to the Front Office

Lean Building BlocksManufacturing

ValueStreamMapping

Continuous Improvement

Quick Changeover

Standardized Work Batch Reduction Teams

Quality at Source

5S Workplace Organization

Visual Plant Layout

POUS

Cellular/FlowPull/Kanban TPM

Continuous Improvement

Lean Building BlocksAdmin/Office

ValueStreamMapping

Continuous Improvement

Voice of Customer

Standardized Work Problem Solving Teams

Quality at Source

5S Workplace Organization

Visual Office Layout

Leveling

Cellular/FlowPull/Kanban IT

Continuous Improvement

Everyone is in the Value Stream

Transferring Lean Principles to the Front Office

Accountin

gScheduling

Accounts

Payable

Accounts Receivable

Inside S

ales

Marketin

g

Human Resources Supply

ChainShipping

Receivin

g EngineeringSales

Manufacturin

g

CreditOrder Entry

Quality

Maintenance

Informatio

n

Technology

Everyone is in the Value Stream• Where do you start?

• Where would your customer want you to start?– Where are you difficult to do business with?– Friction points– Let the data lead you there

• Just start…………. SOMEWHERE

Transferring Lean Principles to the Front Office

Transferring Lean Principles to the Front Office

Some will say

“I agree, this is good stuff…..Start……”

Just start somewhere else …

because I have enough to do as it is!!!

During your lean journey, you’ll encounter

four types of people:

1. See it and get it

2. Don’t see it….eventually do

3. Don’t see it …good employees

4. Don’t see it and don’t want you to get it !

Transferring Lean Principles to the Front Office

Transferring Lean Principles to the Front Office

What happens if you do not start with the VSM?

Bosses favorite project

Feel good projects

Projects which can be completed quickly

Projects which cause the least friction

I’m relieved…..it might not include our department

A hit and miss approach

And the silo mentality can continues……………..

Sa

les

Ma

rke

tin

g

Ord

er

En

try

Sc

he

du

lin

g

Ma

nu

fac

turi

ng

Su

pp

ly C

ha

in

Sh

ipp

ing

-And by the way…..silos will always exists

-You can only lower the height

-Or decrease the wall thickness

Transferring Lean Principles to the Front Office

Lean = Eliminating WasteValue Added

Typically 95% of all lead time is non value-added

Non-Value Added

• Overproduction

• Waiting

• Transportation

• Non-Value Added Processing

• Excess Inventory

• Defects

• Excess Motion

• Underutilized People

Is VA and NVA any different in the office?

Overproduction WasteDefinition & Causes

Manufacturing• Misuse of automation• Long setup time• Unleveled scheduling• Over-engineered

Admin/Office• Wrong priority• Ineffective

communication• Unbalanced workload• Not focusing on company

objective

Making more, earlier and/or faster than required by the next step in the process

Waiting WasteDefinition & Causes

Manufacturing• Unbalanced workload• Unplanned maintenance• Long setup time• Upstream quality

problems• Misuse of automation

Admin/Office• Unbalanced workload• Redundant approval• Unreliable software or

hardware• Unavailable documents

• Incomplete and/or incorrect information

Idle time created when waiting for …

Transportation WasteDefinition & Causes

Manufacturing• Poor plant layout• Large batch sizes• Large storage areas• Long lead times

Admin/Office• Poor location of offices• Multiple file storage areas

& systems• Multiple approvals• Lack of identification

Transporting parts, materials, documents, and information around the facility.

Non-Value-Added Processing WasteDefinition & Causes

Manufacturing• Product changes without

process changes• True customer

requirements not clearly defined

• Redundant approvals• Rework

Admin/Office• Lack of communication• Redundant approval• Too many information

systems• Repetition of same

information in different documents

Effort that adds no value to the product or service from the customer’s viewpoint.

Excess Inventory WasteDefinition & Causes

Manufacturing• Inefficiencies and

unexpected problems• Unleveled scheduling• Poor forecast• Poorly designed reward

system• Unreliable suppliers

Admin/Office• Poor scheduling• Unbalanced workload• Buying too many office

supplies• Lack of system to manage

inventory• Batch processes

Any supply in excess of one piece flow.

Defects WasteDefinition & Causes

Manufacturing• Weak process controls• Poor quality• Deficient planned

maintenance• Poor product design

Admin/Office• Under-trained employees• High employee turnover• Doing process in a rush• Confusing procedures

Inspection and correction of parts, materials, or information.

Excess Motion WasteDefinition & Causes

Manufacturing• Poor people/machine

effectiveness• Inconsistent work methods• Poor facility or cell layout• Poor workplace

organization

Admin/Office• Poor workplace

organization• Lack of training• Nonstandard work

methods• Poor office layout

Any unnecessary work movements of people or equipment.

Underutilized People WasteDefinition & Causes

Manufacturing• Low or no investment in

training• Low pay, high turnover• Poor hiring practices• Not asking “What do you

think?”• Low expectations• Penalizing experimentation

Admin/Office• Low or no investment in

training• Low pay, high turnover• Poor hiring practices• Not asking “What do you

think?”• Low expectations• Penalizing experimentation

The waste of not using people’s creative abilities.

• Start closest to the customer.• Are you invoicing correctly?• Are you price lists current?• Do you use Voice of the Customer (VOC)?• How long to replace a incorrect shipment?• How long to correct the credit adjustment?• How long to answer the phone?• Are your lead times too long?• How long to get a quote?• How many customers are you gaining?• How many customers are you losing?

Transferring Lean Principles to the Front Office

So where do you focus in the office?

• How long does it take to develop a new product?• Are you offering the best freight options?• Are you expediting when you don’t need to?• Who controls expediting?• How much friction is there in you AR/AP?• What are you spending your freight on?• Are there visuals indicators as to how we are doing?• Can customers track their order online?• Can they order, get samples online?• Is there repetition of same information in different documents?

Transferring Lean Principles to the Front Office

Information Technology• How reliable are your systems?• Are all your reports used?• Do others ask for specific reports or do you give the

them data to sort themselves?• Are all your forms accessible via an intranet?

Transferring Lean Principles to the Front Office

Other office areas to focus

Finance• How long does it take to process Capital Expenditures?• How long is the budgeting process?• How many days does it take you to close month end?

Transferring Lean Principles to the Front Office

6 minutes video of Western Union Current State

Transferring Lean Principles to the Front Office

Discuss video

Transferring Lean Principles to the Front Office

2 minutes video of Future State

Transferring Lean Principles to the Front Office

Western Union Changes

• Cross training of office personnel

• Contract was signed later – after scheduling training during delivering training & equipment

• Excessive volume and phone call backlog led to the salesperson, customer and order entry person gathering the information real time – this required 15 continuousminutes but the tradeoff was no call backs/phone tag

• Took 5-6 months to implement and done with week long kaizen events

Western Union Results Before After %(+/-)Number of Handoffs

73 18 75 %

Number of Steps 229 69 70 %

Number of Delays

80 17 79 %

Cycle Time 49 hrs 17 hrs 65 %

Total Lead Time 90 days 19 days 79 %

Attrition 15 % 1 % 99 %

Revenue Increase(12 month)

-$3.1

Million

122,500

More days

of potential revenue

EBIT -$1.7

million

• Explain the following, including your rationale:

• Takt?

• Where will you flow, where do you need to pull?

• What is the pacemaker process?

• Will you level the workload?

• Are supporting improvements necessary?

• Resulting lead time improvement?

Team Tips: Presenting Your Future State Map

Don’t Wait!

You need a plan!

1. Tie it to business objectives.

2. Break your Future state into “loops.”

3. Make a Value Stream Plan: What to do by when.

4. Relate the Future State Map to your layout.

5. Conduct Value Stream Reviews by walking the flow.

Implementation

A Plan to Get There

Use the Value Stream Map to interrupt the data

Without data, you only have opinions and everyone has one!

Don’t let perfect get in the way of better!

Start somewhere……………

Transferring Lean Principles to the Front Office

Current State VSM Example

Transferring Lean Principles to the Front Office

Prioritize your to do list / projects / Kaizens

Easy to do

High impact

1

Easy to do

Low impact

2

Hard to do

Low impact

4

Hard to do

High impact

3

Thank You

Transferring Lean Principles to the Front Office