2. Learning Objectives
⢠You will learn how to:
â Identify and eliminate the eight wastes as they
exist in office and service processes.
â Use key metrics to improve office and service
processes.
â 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
Š 2011 Karen Martin & Associates
Prod.
Fabrication
Assembly
Test
Package
3
4. Common Product Cost Components
Direct Labor
5%
Overhead
25%
65%
Materials
Š 2011 Karen Martin & Associates
44
5. âWhite Collarâ Challenges
â˘
â˘
â˘
â˘
â˘
â˘
â˘
â˘
â˘
Defining value through the external customerâs eyes.
Identifying the âproduct.â
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.
Š 2011 Karen Martin & Associates
5
6. Cultural Differences â 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
â Define value
⢠This is the most shocking element initially
â 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.
Š 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.
â Necessary â regulatory requirements, etc.
â Unnecessary â everything else
Š 2011 Karen Martin & Associates
8
11. Overproduction
⢠Producing too much, too fast, too soon
â More than required by next process
â Earlier than required by next process
â 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?
Š 2011 Karen Martin & Associates
11
13. Three Types of WIP
⢠Waiting to be processed
⢠Currently being worked on
⢠Completed, but not yet passed on
Step 2âs WIP
WIP WIP
WIP
Step 1
Step 2
Š 2011 Karen Martin & Associates
Step 3
13
15. Inventory Woes
⢠Stockout problems
â Extended lead times to complete the job
â Additional labor and expenses to deal with it
⢠Non-material inventory expenses
â
â
â
â
â
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
Š 2011 Karen Martin & Associates
15
19. Over-Processing
⢠Effort that adds no value from the customerâs
point of view
â
â
â
â
â
â
â
â
â
â
â
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 âtoo goodâ
Over-specified plans and materials
Excess approval sign-offs
Š 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 ârubber stampâ?
⢠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?
Š 2011 Karen Martin & Associates
21
23. Waiting
⢠Types of waiting
â People waiting for information, material or equipment
â Information, material or equipment waiting for people
â People waiting for people
⢠Idle time created when waiting forâŚ
â Information, input, decisions, approvals or authorization
to proceed
â Supplies and material
â Handoff
â Next batch
â Meetings to begin
â System to function properly
â Looking for stuff
Š 2011 Karen Martin & Associates
23
24. Looking for Stuff: Time is Money
⢠Organization with 1,500 employees
â Earn average of $22 per hour
â Work 250 days per year
⢠Each employee spends an average of 10 minutes
per day looking or waiting for stuff
â Individual impact
⢠= 41.7 hours wasted time per year
⢠= 0ver a week of frustrating, unfulfilling, nonproductive time
â Organizational impact
⢠= 62,550 hours of nonproductive time
⢠30 FTEs worth of wasted resources
⢠= $1.4 unnecessary direct expense per year
Š 2011 Karen Martin & Associates
24
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
Š 2011 Karen Martin & Associates
28
32. Impact of Shared Equipment
⢠Distance traveled to printer
â Dept A = 92 ft. per trip
â 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
Š 2011 Karen Martin & Associates
32
34. Transportation (product)
⢠Transporting material, paperwork or
information between individuals,
departments, buildings, regional/corporate
offices, customer locations, etc.
â Is hard copy really needed?
â Does it have to be shipped overnight?
Š 2011 Karen Martin & Associates
34
36. Under-utilized Workforce
⢠Not utilizing the full skill set and potential of
each worker (KSAC = Knowledge, Skills,
Aptitude/Ability, Creativity)
â Not training workers to their maximum capacity
â Occupying staff with work that doesnât need to be
done, limiting time for creativity
â Narrow scopes of responsibility; overspecialization
â Not utilized for improvement design and
implementation
Š 2011 Karen Martin & Associates
36
38. Task-Level Metrics: Time
⢠Process time (PT)
â The time it takes to actually perform the work, if one is
able to work on it uninterrupted
â Includes task-specific doing, talking, and thinking
â aka âtouch time,â work time, cycle time
⢠Lead time (LT)
â The elapsed time from the time work is made available
until itâs completed and passed on to the next person or
department in the chain
â aka throughput time, turnaround time, elapsed time
Š 2011 Karen Martin & Associates
38
39. Summary Metrics: Time
⢠Critical Path PT
⢠Critical Path LT
⢠Activity Ratio (AR)
â The percentage of time work is being done to the
patient/item/data passing through the process
â AR = (â CP PT á â CP LT) Ă 100
â 100 â AR = Idle time
Š 2011 Karen Martin & Associates
39
40. Key Lean Metric: Quality
⢠%Complete and Accurate (%C&A)
â % time downstream customer can perform task
without having to âCACâ 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
â This output metric is measured by the
immediate downstream customer and all
subsequent downstream customers.
Š 2011 Karen Martin & Associates
40
41. Summary Metrics: Quality
⢠Rolled First Pass Yield (RFPY) =
â %C&A Ă %C&A Ă %C&A Ă âŚ
â The percentage of occurrences where the
information/data/people being processed pass
through the entire process with no rework
required
â Example: (0.95 x 0.60 x 0.85 x 0.75) x 100 =
36.3% RFPY
Š 2011 Karen Martin & Associates
41
42. Summary Metrics: Labor Requirements
⢠Total PT
â 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)
Š 2011 Karen Martin & Associates
42
43. What do you do with freed capacity?
â˘
â˘
â˘
â˘
â˘
â˘
â˘
â˘
â˘
â˘
â˘
â˘
â˘
Absorb additional work without increasing staff
Reduce payroll through natural attrition
Innovate â 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 havenât been able to get to
Collaborate with other areas
Š 2011 Karen Martin & Associates
43
44. Dinner DVD
Time: The Next Dimension of
Quality
Š 2011 Karen Martin & Associates
44
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 â 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 â 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
Š 2011 Karen Martin & Associates
49
50. Typical Differences - Manufacturing vs. Office VSMs
Manufacturing
Office
Upper right
Center
Upper left
None
âThe thingâ weâre
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
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
Whereâs the quality? Whereâs the time?
54. What is a Metrics-Based Process Map?
⢠Cross-functional process map
⢠A visual process analysis tool which integrates:
â Functional orientation of traditional swim lane
process maps
â Key Lean metrics:
⢠Lead Time
⢠Process Time
⢠Quality (Percent Complete and Accurate)
⢠Tool which highlights the disconnects / wastes /
delays in a process
â Keeps the improvement focus properly directed
⢠Becomes standard work for workforce training and
process monitoring
Š 2011 Karen Martin & Associates
54
55. When Do We MBPM?
⢠Value Stream Driven
â VSM is the strategic tool that identifies when
we need to perform a more detailed analysis of
a process
â MBPM is a tactical tool used to flesh out the
details at each step to see the âwaste behind
the wasteâ
⢠Enables a team to âdrill downâ from a few targeted
blocks on the VSM
⢠Effective analytical tool for âwhite collarâ
Kaizen Events (usually Day 1)
Š 2011 Karen Martin & Associates
55
59. Creating the Current State MBPM
Phase I
1. Label the map in upper right corner.
ďś Process name, date, facilitator and/or team members
2. List the functions involved in left column.
3. Document all activities/steps.
ďś Verb/noun; concise language; include function as well.
4. Number the activities.
ďś 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).
ďś Include units of measure (mins, hrs, days, etc.)
Š 2011 Karen Martin & Associates
59
60. Creating the Current State MBPM
Phase II
6. Define the critical path.
ďś Longest LT unless âdead-endâ step; use colored marker
7. Create the timeline.
8. Calculate the summary metrics
ďś CP PT Sum, CP LT Sum, AR, RFPY, Total PT, Labor
Required
9. Define the value-adding and necessary nonvalue-adding activities
ďś Use small colored post-it labeled with âVAâ and âN.â
10. Circle the step-specific metrics that indicate the
greatest opportunity for improvement.
ďś Use red marker.
ďś Longest LTs, Low %C&As, High PTs, Low step-specific ARs
Š 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
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
Š 2010 Karen Martin & Associates
72. Lean in the Office â Summary
⢠Lean principles are the same
â Define value
⢠This is the most shocking element initially
â 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.
Š 2011 Karen Martin & Associates
72
73. Learning Objectives
⢠You will learn how to:
â Identify and eliminate the eight wastes as they
exist in office and service processes.
â Use key metrics to improve office and service
processes.
â 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
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74