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Lean Office
Lean Enterprise Program
UCSD Extension
Instructor: Karen Martin
Learning Objectives
• You will learn how to:
– Identify and eliminate the eight wastes as they
exist in office and service processes.
– Use key metrics to improve office and service
processes.
– Create metrics-based process maps to identify
waste, design improved processes and
standardize office and service work.
The Impact of Pre-Production
Processes on Total Lead Time
Total Lead Time
Pre-Production Processes

Order Entry
Design/configuration
Documentation
Work order management
Material preparation

© 2011 Karen Martin & Associates

Prod.

Fabrication
Assembly
Test
Package

3
Common Product Cost Components

Direct Labor
5%

Overhead

25%

65%

Materials

© 2011 Karen Martin & Associates

44
“White Collar” Challenges
•
•
•
•
•
•
•
•
•

Defining value through the external customer’s eyes.
Identifying the “product.”
Not used to cross-functional problem solving.
Not used to being measured.
Resistance to standardization.
Dependence on inspection.
Not used to quick decisions and execution.
Challenging overkill re: regulatory compliance.
Challenging policy and VERY long-standing
paradigms.
• Change is more emotional than mfg.
© 2011 Karen Martin & Associates

5
Cultural Differences – Mfg vs. Office
Shop Floor Traits

Office Traits

Sense of urgency

Less urgent

Time scarce resource

Time expands to complete the
task

Production quotas

Excessive work waits

Standard times and methods

Few processing standards

Real time performance
measurements

Few to no real time
measurements

Daily production meetings

Weekly staff meetings

Desire for change

Desire to maintain
Lean in the Office
• Lean principles are the same
– Define value
• This is the most shocking element initially

– Create flow by eliminating waste
• Eight wastes are the same

• Metrics differ slightly
• VSMs differ slightly
• Lean tools used to make improvements are
basically are the same
• The environment/culture is significantly different.

© 2011 Karen Martin & Associates

7
Customer-Defined Value
• Value-Add (VA) - any operation or activity the
customer values and is (or would be) willing to
pay for if he/she knew the incremental cost of
that activity.
• Non-Value-Add (NVA) - any operation or activity
that consumes time and/or resources but does
not add value to the service provided or product
sold to the customer.
– Necessary – regulatory requirements, etc.
– Unnecessary – everything else

© 2011 Karen Martin & Associates

8
Eight Wastes (Muda)

•
•
•
•
•

Overproduction
Inventory
Waiting
Over-Processing
Errors

• Motion (people)
• Transportation
(material/data)

• Underutilized
people

© 2011 Karen Martin & Associates

9
Eight Wastes

• Overproduction
•
•
•
•

Inventory
Waiting
Over-Processing
Errors

• Motion (people)
• Transportation
(material/data)

• Underutilized
people

© 2011 Karen Martin & Associates

10
Overproduction
• Producing too much, too fast, too soon
– More than required by next process
– Earlier than required by next process
– Faster than required by next process

• Creating or providing anything before it can
be consumed or acted upon by the
downstream customer
• Results in wastes of inventory and waiting
• What are the reasons for overproduction?

© 2011 Karen Martin & Associates

11
Work-in-process (WIP) is a symptom
of overproduction
Three Types of WIP
• Waiting to be processed
• Currently being worked on
• Completed, but not yet passed on
Step 2’s WIP
WIP WIP

WIP
Step 1

Step 2

© 2011 Karen Martin & Associates

Step 3

13
Eight Wastes

• Overproduction

• Motion (people)
• Transportation

• Inventory
• Waiting
• Over-Processing
• Errors

(material/data)

• Underutilized
people

© 2011 Karen Martin & Associates

14
Inventory Woes
• Stockout problems
– Extended lead times to complete the job
– Additional labor and expenses to deal with it

• Non-material inventory expenses
–
–
–
–
–

Space
Labor to manage it
Risk of obsolescence or damage
Risk of customer changing his/her mind
Reduced cash flow

• Per unit price becomes less relevant in a Lean
enterprise
© 2011 Karen Martin & Associates

15
No Control over Inventory
UCSD Class: Lean Office
Eight Wastes

• Overproduction
• Inventory
• Waiting

• Motion (people)
• Transportation
(material/data)

• Over-Processing
• Errors

• Underutilized
people

© 2011 Karen Martin & Associates

18
Over-Processing
• Effort that adds no value from the customer’s
point of view
–
–
–
–
–
–
–
–
–
–
–

Unnecessary handoffs
Re-entering data
Multiple approvals / signatures
Audits / inspections (verifying the work of others)
Creating excessive documentation
Excessive reporting
Redundancies
Unnecessary meetings
Excess features / making it “too good”
Over-specified plans and materials
Excess approval sign-offs
© 2011 Karen Martin & Associates

19
Eliminating Over-Processing
Future State

Current State

Main
Tech

Main
Tech

ISEA

CRANE
SUPPLY

ISEA

CRANE
SUPPLY

C.O.

C.O.
DAAS

DAAS

DEPT
HEAD

SNAP

ITEM
MGR

STOCK
POINT

DEPT
HEAD

SNAP

STOCK
POINT

SK

SK
BO1

BO1
DOCKSIDE

CRANE
DEPOT
SUPV

PEO
IWS2

Handoffs= 47
Lead Time = 486 hrs (60.7 days)
Process Time = 108 hrs (13.5 days)

SUPV

PEO
IWS2

Handoffs= 10 (78% improvement)
Lead Time = 90 hrs (11.3 days)
Process Time = 58 hrs (7.3 days)
20
Excessive Approvals & Authorizations
• Is the approval redundant? (same skill set and
perspective as another approver)
• Is the approval a “rubber stamp”?
• Does the approver have the technical skills and
experience to understand what they are signing?
• Does the approver have the authorization to
approve or deny?
• Is the approver accessible?
• Is the approver on the routing list merely to stay
informed?
© 2011 Karen Martin & Associates

21
Eight Wastes

• Overproduction
• Inventory

• Motion (people)
• Transportation
(material/data)

• Waiting
• Over-Processing
• Errors

• Underutilized
people

© 2011 Karen Martin & Associates

22
Waiting
• Types of waiting
– People waiting for information, material or equipment
– Information, material or equipment waiting for people
– People waiting for people

• Idle time created when waiting for…
– Information, input, decisions, approvals or authorization
to proceed
– Supplies and material
– Handoff
– Next batch
– Meetings to begin
– System to function properly
– Looking for stuff
© 2011 Karen Martin & Associates

23
Looking for Stuff: Time is Money
• Organization with 1,500 employees
– Earn average of $22 per hour
– Work 250 days per year

• Each employee spends an average of 10 minutes
per day looking or waiting for stuff
– Individual impact
• = 41.7 hours wasted time per year
• = 0ver a week of frustrating, unfulfilling, nonproductive time

– Organizational impact
• = 62,550 hours of nonproductive time
• 30 FTEs worth of wasted resources
• = $1.4 unnecessary direct expense per year

© 2011 Karen Martin & Associates

24
Eight Wastes

•
•
•
•

Overproduction
Inventory
Waiting
Over-Processing

• Errors/Defects

• Motion (people)
• Transportation
(material/data)

• Underutilized
people

© 2011 Karen Martin & Associates

25
Errors
• Errors become defects that require rework
• Key metric - % Complete & Accurate
(%C&A)

© 2011 Karen Martin & Associates

26
Eight Wastes

•
•
•
•
•

Overproduction
Inventory
Waiting
Over-Processing
Errors

• Motion (people)
• Transportation
(material/data)

• Underutilized
people

© 2011 Karen Martin & Associates

27
Motion (people)
• Traveling to remote locations
• Walking to shared equipment
• Walking material/information to downstream
customer
• Walking to offices for approvals, signatures,
exchange of information, etc.
• Walking to and from supplies
• Looking for supplies, equipment, documents
• Ergonomic issues
• Risks: Time, Morale, Safety
© 2011 Karen Martin & Associates

28
Spaghetti
Diagram
ECN Process

• Visualize
travel of:
– People
– Product
(“the thing”)

12.5 miles
per ECN
Spaghetti Diagram – Mail Room
(Shows people or product travel)

Start
Desk
Table

Table

Table

6, 7, 8, 9

Table

6, 7, 8, 9

4b

6, 7, 8, 9

4a

Table

6, 7, 8, 9

3

11 10

Desk

Desk

4c

6, 7, 8, 9

Table

6, 7, 8, 9

Desk

Desk

Desk
Desk

cart

Desk

Desk

Table

1
2

Table

Desk

Table

Desk

Staging Area

12
Motion Waste

Shared
equipment
Impact of Shared Equipment
• Distance traveled to printer
– Dept A = 92 ft. per trip
– Dept B = 696 ft. per trip

• 120 occurrences / day = 4656 miles/year
• Walk pace = 1 mile per hour = 582 days/year of
unproductive, non-value-adding time = 2.2 FTEs

© 2011 Karen Martin & Associates

32
Eight Wastes

•
•
•
•
•

Overproduction
Inventory
Waiting
Over-Processing
Errors

• Motion (people)

• Transportation
(material/data)
• Underutilized
people

© 2011 Karen Martin & Associates

33
Transportation (product)
• Transporting material, paperwork or
information between individuals,
departments, buildings, regional/corporate
offices, customer locations, etc.
– Is hard copy really needed?
– Does it have to be shipped overnight?

© 2011 Karen Martin & Associates

34
Eight Wastes

•
•
•
•
•

Overproduction
Inventory
Waiting
Over-Processing
Errors

• Motion (people)
• Transportation
(material/data)

• Underutilized
workforce

© 2011 Karen Martin & Associates

35
Under-utilized Workforce
• Not utilizing the full skill set and potential of
each worker (KSAC = Knowledge, Skills,
Aptitude/Ability, Creativity)

– Not training workers to their maximum capacity
– Occupying staff with work that doesn’t need to be
done, limiting time for creativity
– Narrow scopes of responsibility; overspecialization
– Not utilized for improvement design and
implementation

© 2011 Karen Martin & Associates

36
Key Metrics

© 2011 Karen Martin & Associates

37
Task-Level Metrics: Time
• Process time (PT)
– The time it takes to actually perform the work, if one is
able to work on it uninterrupted
– Includes task-specific doing, talking, and thinking
– aka “touch time,” work time, cycle time

• Lead time (LT)
– The elapsed time from the time work is made available
until it’s completed and passed on to the next person or
department in the chain
– aka throughput time, turnaround time, elapsed time

© 2011 Karen Martin & Associates

38
Summary Metrics: Time
• Critical Path PT
• Critical Path LT
• Activity Ratio (AR)
– The percentage of time work is being done to the
patient/item/data passing through the process
– AR = (∑ CP PT ÷ ∑ CP LT) × 100
– 100 – AR = Idle time

© 2011 Karen Martin & Associates

39
Key Lean Metric: Quality
• %Complete and Accurate (%C&A)
– % time downstream customer can perform task
without having to “CAC” the incoming work:
• Correct information or material that was supplied
• Add information that should have been supplied
• Clarify information that should or could have been
clear

– This output metric is measured by the
immediate downstream customer and all
subsequent downstream customers.
© 2011 Karen Martin & Associates

40
Summary Metrics: Quality
• Rolled First Pass Yield (RFPY) =
– %C&A × %C&A × %C&A × …
– The percentage of occurrences where the
information/data/people being processed pass
through the entire process with no rework
required
– Example: (0.95 x 0.60 x 0.85 x 0.75) x 100 =
36.3% RFPY

© 2011 Karen Martin & Associates

41
Summary Metrics: Labor Requirements

• Total PT
– Sum of all activities, not just critical path

• Labor Requirements
# FTEs

=

Total PT (in hrs) X # occurrences/year
Available work hrs/year

Freed
= CS FTEs - FS FTEs
Capacity
* FTE = Full-time Equivalent (2 half time employees = 1 FTE)

© 2011 Karen Martin & Associates

42
What do you do with freed capacity?
•
•
•
•
•
•
•
•
•
•
•
•
•

Absorb additional work without increasing staff
Reduce payroll through natural attrition
Innovate – create new revenue streams
Conduct ongoing continuous improvement activities
Do a better job with fewer errors and higher safety
Talk and work with your customers and suppliers
Mentor staff to create career growth opportunities
Provide additional workforce development; cross-train
Better work/life balance
Slow down & think
Get/stay caught up
Do the things you haven’t been able to get to
Collaborate with other areas
© 2011 Karen Martin & Associates

43
Dinner DVD
Time: The Next Dimension of
Quality

© 2011 Karen Martin & Associates

44
Value Stream Mapping
in the Office

© 2011 Karen Martin & Associates

45
Narrowing the Scope: Example
Units
Domestic

Consumables
Warranty
Service Parts

Order
Fulfillment
Process

NonWarranty

Units
International

Consumables
Warranty
Service Parts

NonWarranty
Current State Value Stream Map
Supplies Purchasing - Current State VSM
Purchasing — Non-repetitive purchases less than $5,000
Inititate Req.

1

Originator
31
PT = 10 mins.
C&A = 10%
Supplies
Hard Copy

Form File

File Maker

Quicken

Vendor
Website

Excel

ERP

Data Entry

Review
Budget

2

Review Req.

Finance
PT = 5 mins.
C&A = 60%

0.25 days

4 hrs.

PT = 5 mins.
C&A = 95%

0.5 days
5 mins.

20 Reqs

Review 4
Requisition

40 hrs.

PT = 5 mins.
C&A = 90%

8 hrs.

PT = 5 mins.
C&A = 100%

1 days
5 mins.

8 hrs.

7

10 Reqs

1

PT = 10 mins.
C&A = 95%

4 hrs.

PT = 15 mins.
C&A = 98%

0.5 days
10 mins.

Approve in
ERP

24 hrs.

PT = 5 mins.
C&A = 90%

3 days
15 mins.

Submit PO
to Supplier

8
63 Reqs

9

10
External
Supplier

Corp Purchasing
Manager
1

Admin Asst

Financial Mgr
1

1 days
5 mins.

Enter
Requisition

Review 6
Requisition

IS Manager
1

1

5 days
5 mins.

Review 5
Requisition

Sys Engineer

Supervisor
2

6
2 hrs.

3

Corp Purchasing
6
56 hrs.

PT = 15 mins.
C&A = 98%

7 days
5 mins.

80 hrs.

PT = 20 mins.

10 days
15 mins.

LT = 28.4 days
PT = 65 mins.
AR = 0.477%
RFPY = 4.2%

Customer Demand:
615 requisitions per y ear

PT = Process Time
LT = Lead Time
C&A = % Complete & Accurate
AR = Activ ity Ratio (PT/LT x 100)
RFPY = Rolled First Pass Y ield
Future State Value Stream Map
Supplies Purchasing - Future State VSM
Purchasing — Non-repetitive purchases less than $5,000
Additional
IT access
Enter Req.
in ERP
Integrate Form
File with File
Maker

1

Originator
31
PT=30 mins.
C&A = 85%
Supplies
Requisition
Checklist
Vendor
Websites

File Maker

Cross
Training

Approval

Additional
IT access

2

4 hrs.

6 hrs.

0.75 days
5 mins.

Place
Order

3

4

5
External
Supplier

6

PT=20 mins.

80 hrs.

PT=20 mins.
C&A = 98%

1 days
5 mins.

Dedicated
Buyers

Corp Purchasing
8 hrs.

PT=5 mins.
C&A = 90%

PT=5 mins.
C&A = 95%

0.5 days

Approve
in ERP
Dept.
Manager
1

Supervisor
2

Use budget in place
of Quicken

Auto Notify

Standard
Work for
review

Review
Req.

ERP

10 days
20 mins.

LT = 12.3 days
PT = 30 mins.
AR = 0.508%

Customer Demand:
615 requistions per year

PT = Process Time
LT = Lead Time
C&A = % Complete & Accurate
AR = Activity Ratio (PT/LT x 100)
RFPY = Rolled First Pass Yield

RFPY = 71%
Projected Improvements
Purchasing Process

Metric

Projected
Future State

Current State

%
Improvement

LT

28.4 days

12.3 days

56.7%

PT

65 mins.

30 mins.

53.8%

AR (PT/LT x 100)

0.48%

0.51%

6.3%

RFPY

4.2%

71.0%

1,590%

# Steps

10

5

50%

# IT Systems

6

3

50%

Projected freed capacity = 358.8 hrs = 9 business weeks
© 2011 Karen Martin & Associates

49
Typical Differences - Manufacturing vs. Office VSMs
Manufacturing

Office

Upper right

Center

Upper left

None

“The thing” we’re
following

Raw material, subassemblies, finished goods

Paper and electronic
Information

Information Flow

More structured /
formalized I.T. systems

Multiple I.T. systems and
work-arounds

Multiple points across VSM

Work not scheduled

Inventory triangle

In-bin (if preferred)

First Pass Yield (FPY)

Percent Complete &
Accurate (%C&A)

Takt Time

Typically can be applied

Only applicable with
dedicated resources

LT determination for
each block

Based on WIP between
process blocks

Based on a single item
passing through

Straight forward

Much more refined (due to
excessive variation)

Customer icon
Supplier icon

Schedule notification
WIP icon
Quality Metric

Scope / Product
family definition
Metrics-Based Process
Mapping (MBPM)

© 2011 Karen Martin & Associates

51
The Improvement Process

Plan

Act

Do

Check
© 2010 Karen Martin & Associates

52
Traditional Method Used:
Process Flow Chart
Look up Customer
in Eclipse
SALES

New
Customer?

Yes

Enter Order
SALES

Product in
Stock?

Yes

Print Ship Ticket
SALES

Load Trucks
SHIPPING

No
No

Enter Customer
Information
ADMIN

Yes

Perform Credit
Check
FINANCE

Okay?

Notify Sales COD
Only; Notify Admin
No
to update
Customer Profile
FINANCE

Order Material
PURCHASING

Receive Material
RECEIVING

Where’s the quality? Where’s the time?
What is a Metrics-Based Process Map?
• Cross-functional process map
• A visual process analysis tool which integrates:
– Functional orientation of traditional swim lane
process maps
– Key Lean metrics:
• Lead Time
• Process Time
• Quality (Percent Complete and Accurate)

• Tool which highlights the disconnects / wastes /
delays in a process
– Keeps the improvement focus properly directed

• Becomes standard work for workforce training and
process monitoring
© 2011 Karen Martin & Associates

54
When Do We MBPM?
• Value Stream Driven
– VSM is the strategic tool that identifies when
we need to perform a more detailed analysis of
a process
– MBPM is a tactical tool used to flesh out the
details at each step to see the “waste behind
the waste”
• Enables a team to “drill down” from a few targeted
blocks on the VSM

• Effective analytical tool for “white collar”
Kaizen Events (usually Day 1)

© 2011 Karen Martin & Associates

55
Step Step
Functions 1
2

Parallel
Steps
For each step, document:
Add’l Barriers
to Flow

Activity
(Verb/Noun)

Who

Process Time
Lead Time

Percent Complete
and Accurate
(%C&A)
Summary
Data
PT = 85 min
LT = 28.7 hrs

Timeline
Creating the Current State MBPM
Phase I
1. Label the map in upper right corner.
 Process name, date, facilitator and/or team members

2. List the functions involved in left column.
3. Document all activities/steps.
 Verb/noun; concise language; include function as well.

4. Number the activities.
 One number per column; concurrent activities are labeled A,
B, C, etc.

5. Add activity-specific metrics (PT, LT, %C&A),
barriers to flow, and number of staff involved (if
relevant).
 Include units of measure (mins, hrs, days, etc.)
© 2011 Karen Martin & Associates

59
Creating the Current State MBPM
Phase II

6. Define the critical path.
 Longest LT unless “dead-end” step; use colored marker

7. Create the timeline.
8. Calculate the summary metrics
 CP PT Sum, CP LT Sum, AR, RFPY, Total PT, Labor
Required

9. Define the value-adding and necessary nonvalue-adding activities
 Use small colored post-it labeled with “VA” and “N.”

10. Circle the step-specific metrics that indicate the
greatest opportunity for improvement.
 Use red marker.
 Longest LTs, Low %C&As, High PTs, Low step-specific ARs
© 2011 Karen Martin & Associates

60
Metrics-Based Process Mapping
Key Metrics
Metric

CP LT Sum
CP PT Sum

AR
RFPY
# Steps
Total PT

Labor
requirements
Freed capacity

Current State

Projected
Future State

Projected %
Improvement
Metrics-Based Process
Mapping (MBPM)
Simulation

© 2011 Karen Martin & Associates

62
Building a Lean Enterprise

Process
Stabilization
Tools
Standardized Work Job Aids
• Simple

• Visual
• Physical

• Posted at
point of use
• Created by
people who
do the work
and tested
by others
The Rings of Knowledge (ROKs)
Job Aids

© 2010 Karen Martin & Associates
Standardized Work for Electronic
Data Entry

© 2010 Karen Martin & Associates

66
Checklists
assure all
critical tasks
are done
within defined
timeframes
Building a Lean Enterprise

Flow-Enabling
Tools
© 2011 Karen Martin & Associates

69
Metrics-Based Process Map (MBPM)

Critical
Path
Auto-Calculated Results
Lean in the Office – Summary
• Lean principles are the same
– Define value
• This is the most shocking element initially

– Create flow by eliminating waste
• Eight wastes are the same

• Metrics differ slightly
• VSMs differ slightly
• Lean tools used to make improvements are
basically are the same
• The environment/culture is significantly different.

© 2011 Karen Martin & Associates

72
Learning Objectives
• You will learn how to:
– Identify and eliminate the eight wastes as they
exist in office and service processes.
– Use key metrics to improve office and service
processes.
– Create metrics-based process maps to identify
waste, design improved processes and
standardize office and service work.
For Further Questions

7770 Regents Road #635
San Diego, CA 92122
858.677.6799
ksm@ksmartin.com
Free monthly newsletter:
www.ksmartin.com/subscribe
Learn / Connect :

74

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UCSD Class: Lean Office

  • 1. Lean Office Lean Enterprise Program UCSD Extension Instructor: Karen Martin
  • 2. Learning Objectives • You will learn how to: – Identify and eliminate the eight wastes as they exist in office and service processes. – Use key metrics to improve office and service processes. – Create metrics-based process maps to identify waste, design improved processes and standardize office and service work.
  • 3. The Impact of Pre-Production Processes on Total Lead Time Total Lead Time Pre-Production Processes Order Entry Design/configuration Documentation Work order management Material preparation © 2011 Karen Martin & Associates Prod. Fabrication Assembly Test Package 3
  • 4. Common Product Cost Components Direct Labor 5% Overhead 25% 65% Materials © 2011 Karen Martin & Associates 44
  • 5. “White Collar” Challenges • • • • • • • • • Defining value through the external customer’s eyes. Identifying the “product.” Not used to cross-functional problem solving. Not used to being measured. Resistance to standardization. Dependence on inspection. Not used to quick decisions and execution. Challenging overkill re: regulatory compliance. Challenging policy and VERY long-standing paradigms. • Change is more emotional than mfg. © 2011 Karen Martin & Associates 5
  • 6. Cultural Differences – Mfg vs. Office Shop Floor Traits Office Traits Sense of urgency Less urgent Time scarce resource Time expands to complete the task Production quotas Excessive work waits Standard times and methods Few processing standards Real time performance measurements Few to no real time measurements Daily production meetings Weekly staff meetings Desire for change Desire to maintain
  • 7. Lean in the Office • Lean principles are the same – Define value • This is the most shocking element initially – Create flow by eliminating waste • Eight wastes are the same • Metrics differ slightly • VSMs differ slightly • Lean tools used to make improvements are basically are the same • The environment/culture is significantly different. © 2011 Karen Martin & Associates 7
  • 8. Customer-Defined Value • Value-Add (VA) - any operation or activity the customer values and is (or would be) willing to pay for if he/she knew the incremental cost of that activity. • Non-Value-Add (NVA) - any operation or activity that consumes time and/or resources but does not add value to the service provided or product sold to the customer. – Necessary – regulatory requirements, etc. – Unnecessary – everything else © 2011 Karen Martin & Associates 8
  • 9. Eight Wastes (Muda) • • • • • Overproduction Inventory Waiting Over-Processing Errors • Motion (people) • Transportation (material/data) • Underutilized people © 2011 Karen Martin & Associates 9
  • 10. Eight Wastes • Overproduction • • • • Inventory Waiting Over-Processing Errors • Motion (people) • Transportation (material/data) • Underutilized people © 2011 Karen Martin & Associates 10
  • 11. Overproduction • Producing too much, too fast, too soon – More than required by next process – Earlier than required by next process – Faster than required by next process • Creating or providing anything before it can be consumed or acted upon by the downstream customer • Results in wastes of inventory and waiting • What are the reasons for overproduction? © 2011 Karen Martin & Associates 11
  • 12. Work-in-process (WIP) is a symptom of overproduction
  • 13. Three Types of WIP • Waiting to be processed • Currently being worked on • Completed, but not yet passed on Step 2’s WIP WIP WIP WIP Step 1 Step 2 © 2011 Karen Martin & Associates Step 3 13
  • 14. Eight Wastes • Overproduction • Motion (people) • Transportation • Inventory • Waiting • Over-Processing • Errors (material/data) • Underutilized people © 2011 Karen Martin & Associates 14
  • 15. Inventory Woes • Stockout problems – Extended lead times to complete the job – Additional labor and expenses to deal with it • Non-material inventory expenses – – – – – Space Labor to manage it Risk of obsolescence or damage Risk of customer changing his/her mind Reduced cash flow • Per unit price becomes less relevant in a Lean enterprise © 2011 Karen Martin & Associates 15
  • 16. No Control over Inventory
  • 18. Eight Wastes • Overproduction • Inventory • Waiting • Motion (people) • Transportation (material/data) • Over-Processing • Errors • Underutilized people © 2011 Karen Martin & Associates 18
  • 19. Over-Processing • Effort that adds no value from the customer’s point of view – – – – – – – – – – – Unnecessary handoffs Re-entering data Multiple approvals / signatures Audits / inspections (verifying the work of others) Creating excessive documentation Excessive reporting Redundancies Unnecessary meetings Excess features / making it “too good” Over-specified plans and materials Excess approval sign-offs © 2011 Karen Martin & Associates 19
  • 20. Eliminating Over-Processing Future State Current State Main Tech Main Tech ISEA CRANE SUPPLY ISEA CRANE SUPPLY C.O. C.O. DAAS DAAS DEPT HEAD SNAP ITEM MGR STOCK POINT DEPT HEAD SNAP STOCK POINT SK SK BO1 BO1 DOCKSIDE CRANE DEPOT SUPV PEO IWS2 Handoffs= 47 Lead Time = 486 hrs (60.7 days) Process Time = 108 hrs (13.5 days) SUPV PEO IWS2 Handoffs= 10 (78% improvement) Lead Time = 90 hrs (11.3 days) Process Time = 58 hrs (7.3 days) 20
  • 21. Excessive Approvals & Authorizations • Is the approval redundant? (same skill set and perspective as another approver) • Is the approval a “rubber stamp”? • Does the approver have the technical skills and experience to understand what they are signing? • Does the approver have the authorization to approve or deny? • Is the approver accessible? • Is the approver on the routing list merely to stay informed? © 2011 Karen Martin & Associates 21
  • 22. Eight Wastes • Overproduction • Inventory • Motion (people) • Transportation (material/data) • Waiting • Over-Processing • Errors • Underutilized people © 2011 Karen Martin & Associates 22
  • 23. Waiting • Types of waiting – People waiting for information, material or equipment – Information, material or equipment waiting for people – People waiting for people • Idle time created when waiting for… – Information, input, decisions, approvals or authorization to proceed – Supplies and material – Handoff – Next batch – Meetings to begin – System to function properly – Looking for stuff © 2011 Karen Martin & Associates 23
  • 24. Looking for Stuff: Time is Money • Organization with 1,500 employees – Earn average of $22 per hour – Work 250 days per year • Each employee spends an average of 10 minutes per day looking or waiting for stuff – Individual impact • = 41.7 hours wasted time per year • = 0ver a week of frustrating, unfulfilling, nonproductive time – Organizational impact • = 62,550 hours of nonproductive time • 30 FTEs worth of wasted resources • = $1.4 unnecessary direct expense per year © 2011 Karen Martin & Associates 24
  • 25. Eight Wastes • • • • Overproduction Inventory Waiting Over-Processing • Errors/Defects • Motion (people) • Transportation (material/data) • Underutilized people © 2011 Karen Martin & Associates 25
  • 26. Errors • Errors become defects that require rework • Key metric - % Complete & Accurate (%C&A) © 2011 Karen Martin & Associates 26
  • 27. Eight Wastes • • • • • Overproduction Inventory Waiting Over-Processing Errors • Motion (people) • Transportation (material/data) • Underutilized people © 2011 Karen Martin & Associates 27
  • 28. Motion (people) • Traveling to remote locations • Walking to shared equipment • Walking material/information to downstream customer • Walking to offices for approvals, signatures, exchange of information, etc. • Walking to and from supplies • Looking for supplies, equipment, documents • Ergonomic issues • Risks: Time, Morale, Safety © 2011 Karen Martin & Associates 28
  • 29. Spaghetti Diagram ECN Process • Visualize travel of: – People – Product (“the thing”) 12.5 miles per ECN
  • 30. Spaghetti Diagram – Mail Room (Shows people or product travel) Start Desk Table Table Table 6, 7, 8, 9 Table 6, 7, 8, 9 4b 6, 7, 8, 9 4a Table 6, 7, 8, 9 3 11 10 Desk Desk 4c 6, 7, 8, 9 Table 6, 7, 8, 9 Desk Desk Desk Desk cart Desk Desk Table 1 2 Table Desk Table Desk Staging Area 12
  • 32. Impact of Shared Equipment • Distance traveled to printer – Dept A = 92 ft. per trip – Dept B = 696 ft. per trip • 120 occurrences / day = 4656 miles/year • Walk pace = 1 mile per hour = 582 days/year of unproductive, non-value-adding time = 2.2 FTEs © 2011 Karen Martin & Associates 32
  • 33. Eight Wastes • • • • • Overproduction Inventory Waiting Over-Processing Errors • Motion (people) • Transportation (material/data) • Underutilized people © 2011 Karen Martin & Associates 33
  • 34. Transportation (product) • Transporting material, paperwork or information between individuals, departments, buildings, regional/corporate offices, customer locations, etc. – Is hard copy really needed? – Does it have to be shipped overnight? © 2011 Karen Martin & Associates 34
  • 35. Eight Wastes • • • • • Overproduction Inventory Waiting Over-Processing Errors • Motion (people) • Transportation (material/data) • Underutilized workforce © 2011 Karen Martin & Associates 35
  • 36. Under-utilized Workforce • Not utilizing the full skill set and potential of each worker (KSAC = Knowledge, Skills, Aptitude/Ability, Creativity) – Not training workers to their maximum capacity – Occupying staff with work that doesn’t need to be done, limiting time for creativity – Narrow scopes of responsibility; overspecialization – Not utilized for improvement design and implementation © 2011 Karen Martin & Associates 36
  • 37. Key Metrics © 2011 Karen Martin & Associates 37
  • 38. Task-Level Metrics: Time • Process time (PT) – The time it takes to actually perform the work, if one is able to work on it uninterrupted – Includes task-specific doing, talking, and thinking – aka “touch time,” work time, cycle time • Lead time (LT) – The elapsed time from the time work is made available until it’s completed and passed on to the next person or department in the chain – aka throughput time, turnaround time, elapsed time © 2011 Karen Martin & Associates 38
  • 39. Summary Metrics: Time • Critical Path PT • Critical Path LT • Activity Ratio (AR) – The percentage of time work is being done to the patient/item/data passing through the process – AR = (∑ CP PT ÷ ∑ CP LT) × 100 – 100 – AR = Idle time © 2011 Karen Martin & Associates 39
  • 40. Key Lean Metric: Quality • %Complete and Accurate (%C&A) – % time downstream customer can perform task without having to “CAC” the incoming work: • Correct information or material that was supplied • Add information that should have been supplied • Clarify information that should or could have been clear – This output metric is measured by the immediate downstream customer and all subsequent downstream customers. © 2011 Karen Martin & Associates 40
  • 41. Summary Metrics: Quality • Rolled First Pass Yield (RFPY) = – %C&A × %C&A × %C&A × … – The percentage of occurrences where the information/data/people being processed pass through the entire process with no rework required – Example: (0.95 x 0.60 x 0.85 x 0.75) x 100 = 36.3% RFPY © 2011 Karen Martin & Associates 41
  • 42. Summary Metrics: Labor Requirements • Total PT – Sum of all activities, not just critical path • Labor Requirements # FTEs = Total PT (in hrs) X # occurrences/year Available work hrs/year Freed = CS FTEs - FS FTEs Capacity * FTE = Full-time Equivalent (2 half time employees = 1 FTE) © 2011 Karen Martin & Associates 42
  • 43. What do you do with freed capacity? • • • • • • • • • • • • • Absorb additional work without increasing staff Reduce payroll through natural attrition Innovate – create new revenue streams Conduct ongoing continuous improvement activities Do a better job with fewer errors and higher safety Talk and work with your customers and suppliers Mentor staff to create career growth opportunities Provide additional workforce development; cross-train Better work/life balance Slow down & think Get/stay caught up Do the things you haven’t been able to get to Collaborate with other areas © 2011 Karen Martin & Associates 43
  • 44. Dinner DVD Time: The Next Dimension of Quality © 2011 Karen Martin & Associates 44
  • 45. Value Stream Mapping in the Office © 2011 Karen Martin & Associates 45
  • 46. Narrowing the Scope: Example Units Domestic Consumables Warranty Service Parts Order Fulfillment Process NonWarranty Units International Consumables Warranty Service Parts NonWarranty
  • 47. Current State Value Stream Map Supplies Purchasing - Current State VSM Purchasing — Non-repetitive purchases less than $5,000 Inititate Req. 1 Originator 31 PT = 10 mins. C&A = 10% Supplies Hard Copy Form File File Maker Quicken Vendor Website Excel ERP Data Entry Review Budget 2 Review Req. Finance PT = 5 mins. C&A = 60% 0.25 days 4 hrs. PT = 5 mins. C&A = 95% 0.5 days 5 mins. 20 Reqs Review 4 Requisition 40 hrs. PT = 5 mins. C&A = 90% 8 hrs. PT = 5 mins. C&A = 100% 1 days 5 mins. 8 hrs. 7 10 Reqs 1 PT = 10 mins. C&A = 95% 4 hrs. PT = 15 mins. C&A = 98% 0.5 days 10 mins. Approve in ERP 24 hrs. PT = 5 mins. C&A = 90% 3 days 15 mins. Submit PO to Supplier 8 63 Reqs 9 10 External Supplier Corp Purchasing Manager 1 Admin Asst Financial Mgr 1 1 days 5 mins. Enter Requisition Review 6 Requisition IS Manager 1 1 5 days 5 mins. Review 5 Requisition Sys Engineer Supervisor 2 6 2 hrs. 3 Corp Purchasing 6 56 hrs. PT = 15 mins. C&A = 98% 7 days 5 mins. 80 hrs. PT = 20 mins. 10 days 15 mins. LT = 28.4 days PT = 65 mins. AR = 0.477% RFPY = 4.2% Customer Demand: 615 requisitions per y ear PT = Process Time LT = Lead Time C&A = % Complete & Accurate AR = Activ ity Ratio (PT/LT x 100) RFPY = Rolled First Pass Y ield
  • 48. Future State Value Stream Map Supplies Purchasing - Future State VSM Purchasing — Non-repetitive purchases less than $5,000 Additional IT access Enter Req. in ERP Integrate Form File with File Maker 1 Originator 31 PT=30 mins. C&A = 85% Supplies Requisition Checklist Vendor Websites File Maker Cross Training Approval Additional IT access 2 4 hrs. 6 hrs. 0.75 days 5 mins. Place Order 3 4 5 External Supplier 6 PT=20 mins. 80 hrs. PT=20 mins. C&A = 98% 1 days 5 mins. Dedicated Buyers Corp Purchasing 8 hrs. PT=5 mins. C&A = 90% PT=5 mins. C&A = 95% 0.5 days Approve in ERP Dept. Manager 1 Supervisor 2 Use budget in place of Quicken Auto Notify Standard Work for review Review Req. ERP 10 days 20 mins. LT = 12.3 days PT = 30 mins. AR = 0.508% Customer Demand: 615 requistions per year PT = Process Time LT = Lead Time C&A = % Complete & Accurate AR = Activity Ratio (PT/LT x 100) RFPY = Rolled First Pass Yield RFPY = 71%
  • 49. Projected Improvements Purchasing Process Metric Projected Future State Current State % Improvement LT 28.4 days 12.3 days 56.7% PT 65 mins. 30 mins. 53.8% AR (PT/LT x 100) 0.48% 0.51% 6.3% RFPY 4.2% 71.0% 1,590% # Steps 10 5 50% # IT Systems 6 3 50% Projected freed capacity = 358.8 hrs = 9 business weeks © 2011 Karen Martin & Associates 49
  • 50. Typical Differences - Manufacturing vs. Office VSMs Manufacturing Office Upper right Center Upper left None “The thing” we’re following Raw material, subassemblies, finished goods Paper and electronic Information Information Flow More structured / formalized I.T. systems Multiple I.T. systems and work-arounds Multiple points across VSM Work not scheduled Inventory triangle In-bin (if preferred) First Pass Yield (FPY) Percent Complete & Accurate (%C&A) Takt Time Typically can be applied Only applicable with dedicated resources LT determination for each block Based on WIP between process blocks Based on a single item passing through Straight forward Much more refined (due to excessive variation) Customer icon Supplier icon Schedule notification WIP icon Quality Metric Scope / Product family definition
  • 51. Metrics-Based Process Mapping (MBPM) © 2011 Karen Martin & Associates 51
  • 52. The Improvement Process Plan Act Do Check © 2010 Karen Martin & Associates 52
  • 53. Traditional Method Used: Process Flow Chart Look up Customer in Eclipse SALES New Customer? Yes Enter Order SALES Product in Stock? Yes Print Ship Ticket SALES Load Trucks SHIPPING No No Enter Customer Information ADMIN Yes Perform Credit Check FINANCE Okay? Notify Sales COD Only; Notify Admin No to update Customer Profile FINANCE Order Material PURCHASING Receive Material RECEIVING Where’s the quality? Where’s the time?
  • 54. What is a Metrics-Based Process Map? • Cross-functional process map • A visual process analysis tool which integrates: – Functional orientation of traditional swim lane process maps – Key Lean metrics: • Lead Time • Process Time • Quality (Percent Complete and Accurate) • Tool which highlights the disconnects / wastes / delays in a process – Keeps the improvement focus properly directed • Becomes standard work for workforce training and process monitoring © 2011 Karen Martin & Associates 54
  • 55. When Do We MBPM? • Value Stream Driven – VSM is the strategic tool that identifies when we need to perform a more detailed analysis of a process – MBPM is a tactical tool used to flesh out the details at each step to see the “waste behind the waste” • Enables a team to “drill down” from a few targeted blocks on the VSM • Effective analytical tool for “white collar” Kaizen Events (usually Day 1) © 2011 Karen Martin & Associates 55
  • 57. For each step, document: Add’l Barriers to Flow Activity (Verb/Noun) Who Process Time Lead Time Percent Complete and Accurate (%C&A)
  • 58. Summary Data PT = 85 min LT = 28.7 hrs Timeline
  • 59. Creating the Current State MBPM Phase I 1. Label the map in upper right corner.  Process name, date, facilitator and/or team members 2. List the functions involved in left column. 3. Document all activities/steps.  Verb/noun; concise language; include function as well. 4. Number the activities.  One number per column; concurrent activities are labeled A, B, C, etc. 5. Add activity-specific metrics (PT, LT, %C&A), barriers to flow, and number of staff involved (if relevant).  Include units of measure (mins, hrs, days, etc.) © 2011 Karen Martin & Associates 59
  • 60. Creating the Current State MBPM Phase II 6. Define the critical path.  Longest LT unless “dead-end” step; use colored marker 7. Create the timeline. 8. Calculate the summary metrics  CP PT Sum, CP LT Sum, AR, RFPY, Total PT, Labor Required 9. Define the value-adding and necessary nonvalue-adding activities  Use small colored post-it labeled with “VA” and “N.” 10. Circle the step-specific metrics that indicate the greatest opportunity for improvement.  Use red marker.  Longest LTs, Low %C&As, High PTs, Low step-specific ARs © 2011 Karen Martin & Associates 60
  • 61. Metrics-Based Process Mapping Key Metrics Metric CP LT Sum CP PT Sum AR RFPY # Steps Total PT Labor requirements Freed capacity Current State Projected Future State Projected % Improvement
  • 62. Metrics-Based Process Mapping (MBPM) Simulation © 2011 Karen Martin & Associates 62
  • 63. Building a Lean Enterprise Process Stabilization Tools
  • 64. Standardized Work Job Aids • Simple • Visual • Physical • Posted at point of use • Created by people who do the work and tested by others
  • 65. The Rings of Knowledge (ROKs) Job Aids © 2010 Karen Martin & Associates
  • 66. Standardized Work for Electronic Data Entry © 2010 Karen Martin & Associates 66
  • 67. Checklists assure all critical tasks are done within defined timeframes
  • 68. Building a Lean Enterprise Flow-Enabling Tools
  • 69. © 2011 Karen Martin & Associates 69
  • 70. Metrics-Based Process Map (MBPM) Critical Path
  • 72. Lean in the Office – Summary • Lean principles are the same – Define value • This is the most shocking element initially – Create flow by eliminating waste • Eight wastes are the same • Metrics differ slightly • VSMs differ slightly • Lean tools used to make improvements are basically are the same • The environment/culture is significantly different. © 2011 Karen Martin & Associates 72
  • 73. Learning Objectives • You will learn how to: – Identify and eliminate the eight wastes as they exist in office and service processes. – Use key metrics to improve office and service processes. – Create metrics-based process maps to identify waste, design improved processes and standardize office and service work.
  • 74. For Further Questions 7770 Regents Road #635 San Diego, CA 92122 858.677.6799 ksm@ksmartin.com Free monthly newsletter: www.ksmartin.com/subscribe Learn / Connect : 74