Lean Office

Lean Office

LEAN OFFICE
A Quantitative Approach to
Optimize Business Processes

Jose Zavala
APQP Manager Mexico Operations
Delphi Packard Electric Systems

Shingo Prize for Excellence in Manufacturing May of 2003 - Page 1 Packard Electric Systems

Agenda
Lean Office

Introduction
– Resistance to Change and Kaizen
– Creating the Vision and Identifying Opportunities
– Lean Office Kaizen Model and Methodology
The Macro Current State Map (Tasks)
– Using the Worksheet Tool and Data Analysis
– Targeting Areas of Opportunities
The Micro Current State Map (Activities)
– Click-down Analysis at Activity Level
– Correlating Summary Information with Task Level
Developing the Future State
– Action Items for Areas of Opportunity
– Measuring Success by Using the Project Tracker
Q&A and Closing Comments


Introduction
Resistance to Change and Kaizen
Lean Office

Resistance to Change
– Using this mathematical relationship: D x V x F < R
– Where all variables fall between a value from Zero to Ten:
» D - is the Level of Dissatisfaction and Care
» V - is the Vision
» F - is the First Step
» R - is the Resistance to Change
– When any variable on the left side of the equation equals Zero, the whole
value goes to Zero, NOTHING HAPPENS!
The Logic for Kaizen
Endless loop begins here

Dissatisfaction?

No Yes Yes No
R rules! D<>0? Care? Vision? Research
No
Yes

First Step


Introduction
Creating the Vision and Identifying Opportunities
Lean Office

Creating the Vision and Values
– Organizations can’t achieve change unless they have a picture or vision
of where they want to be (the desired future) and a set of values that
prescribes how they want to reach that future.
– Vision should consider the external environment, customer needs and
competition.
– Benchmarking against best-in-class companies is one way to ensure that
the vision is set high.
Identifying Opportunities
– Focus on core processes such as customer engagement, product,
process or service development as well as distribution. Those core
processes were not really considered by previous Lean efforts.
– Assess the company’s score card and target the most significant metrics.
– Identify activities that are key for the performance of those metrics.
– Typical core business processes and opportunities have the following
attributes: strategic importance, significant customer impact and
applicability to other regions, areas or divisions within the company.


Introduction
Lean Office
– Sales
» Creating Purchase Orders
» Invoicing
» Pricing new products
» Engineering Change definition and implementation
– Quality
» Production Part Approval Process
» Process and Product Validation
» Funding for process improvements
» Cost Recovery
– Product Engineering
» Part Validation
» Design Records creation and update
– Production Control and Logistics
» Imports and Exports
» Parts Distribution and Warehousing
» Inventory Audits


Introduction
Lean Office

Other areas of opportunities are:
– Long, unpredictable processing lead times
– Presence of bottleneck departments
– Multiple iterations (of unpredictable duration) for problem resolution
– Lack of standard work practice and disparate routing
– Multiple, uncontrolled document copies in simultaneous circulation
– Presence of unofficial and/or uncontrolled expedite path (fast-track)
– Batching of documents
– Ineffective (or inexistent) workload scheduling
– Personal filing systems with incomplete, inconsistent and erroneous file
sites (official and unofficial)
– Production of reports which nobody uses
– Expense reporting systems

Extracted from: Value Stream Management (UK 2000), page 54 – Prentice Hall

Introduction
Lean Office Kaizen Model and Methodology
Lean Office
Start BSOP prog
sorts info
Auto

BSOP prog
TASKS
Longest Path Identified is: 47.958 days long
EDI (95%) Cust Fax only (5%) prints info
resources Auto
Path ID ABCDFOPQ Total Te 42.375 Std Dev 1.8319
Task ID A B C D F O P Q
Start BSOP prog
Info Info Opt (o) 1 2 2 2 4 17 1 2
Weekly Daily W eekly Daily sorts info
Scope Scope
No (1%)
Info OK? Most (m) 3 4 3 4 5 18 2 2.5
Auto
Pess (p) 4 6 5 6 12 18.5 3 2.75
Yes (99%)
Avg T e 2.8 4.0 3.2 4.0 6.0 17.9 2.0 2.5
Weekly/16 Daily/16 Weekly/3 Daily/3
Var σ2 0.25 0.44 0.25 0.44 1.78 0.06 0.11 0.02 BSOP prog
Weeks info Weeks info Weeks info Weeks info
Input Reqs EDI (95%) Cust Fax only (5%) prints info
EDI EDI FAX FAX
into Excel Path ID DEFJPQRST Total Te 47.958 Std Dev 1.6796 resources Auto
Manual Task ID D E F J P Q R S T
Daily Input Opt (o) 3 3 5 5 1 2 5 6 3
into BSOP Most (m) 4 5 7 7 2 2.5 7 10 4 Info Info
Adjust Prod Weekly Daily Weekly Daily
Manual Pess (p) 5 7 9 9 3 2.75 9 11 5 Scope Scope
No (1%)
Info OK?
Orders
Info OK? Manual Avg T e 4.0 5.0 7.0 7.0 2.0 2.5 7.0 9.5 4.0
No (1%)
Var σ2 0.11 0.44 0.44 0.44 0.11 0.02 0.44 0.69 0.11 Daily/3 Yes (99%)
Weekly/16 Daily/16 Weekly/3
Yes (99%) Weeks info
Weeks info Weeks info Weeks info
Info Yes (90%)
Path ID GHIKNPQUVWXYZAA Total Te 45.533 Std Dev 1.5599 FAX Input Reqs
EDI EDI FAX
integrity Check FG into Excel
Task ID G H I K N P Q U V W X Y Z AA
Inventory Manual
No(10%) End Opt (o) 2 4 3 5 8 1 2 0.5 0.5 2 1 0.5 1 1.5
Manual Daily Input
Most (m) 3 6 4 6 10 2 2.5 0.7 1 4 1.5 0.7 2 1.7
into BSOP
Pess (p) 6 8 6 7 12 3 2.75 0.9 1.25 6 1.9 1 3 2 Adjust Prod
Manual
Adjust Info Avg T e 3.3 6.0 4.2 6.0 10.0 2.0 2.5 0.7 1.0 4.0 1.5 0.7 2.0 1.7 Orders
Manual 2 Info OK? Manual
Distribute Var σ 0.44 0.44 0.25 0.11 0.44 0.11 0.02 0.00 0.02 0.44 0.02 0.01 0.11 0.01 No (1%)
FG > Reqs? Prod Plan
No (10%) Manual Yes (99%)
Yes (90%)
Info Yes (90%)

Identify all Task Calculating Average integrity

No(10%)
Check FG
Inventory
Manual End

Kickoff Mtg / Training Estimate timing & Std Dev for every path
Adjust Info

Select Team Members Manual
FG > Reqs?
Distribute
Prod Plan
Manual

Business Environment
No (10%)
Yes (90%)

Share Vision & Values Identifying Critical Path

BUSINESS PROCESS
Employee N/A Employee 101.9% Employee 97.4% Secretary 93.1% Supervisor or Manager 101.6%
Task 1 0 days A Task 2 0.55 A Task 3 0.20 A Task 4 2.18 B Task 5 8.13 C
Project trigger: Gets tools catalog and identifies Prepare requisition and submit to Secretary to log it in requisition's Checks budget, availability of
Engineering needs an XYZ tool, the right tool for the process secretary tracker and submit to boss for similar tools in tool crib, approves
decides to order one approval and returns to secretary

0.000 0.000 0.000 0.375 0.500 0.875 0.125 0.188 0.344 1.500 2.510 2.520 7.000 8.000 9.000
Timeest 0.00 0.00 Timeest 0.54 0.0069 Timeest 0.20 0.0013 Timeest 0.0289 2.34 Timeest 8.00
0.1111
VA (mins) 0 0.00% VA (mins) 35 13.21% VA (mins) VA (mins) 0.96% 10 VA (mins) 151
3.87%
NVA (mins) 0 0.00% NVA (mins) 45 16.98% NVA (mins) 89.47% 85 NVA (mins) 97.42% 1020 NVA (mins) 3265
83.70%
NNVA (mins) 0 0.00% NNVA (mins) 185 69.81% NNVA (mins) 10.53% 10 NNVA (mins) 1.62% 17 NNVA (mins) 485
12.43%
0 4.82E-05 1.7668E-06 0.000835 0.012346
PC supplier 98.6% Buyer 102.0% PC supplier 79.4% Buyer 111.4% PC supplier 89.2%
Task 6 3.00 E Task 7 0.75 D Task 8 2.38 E Task 9 1.67 D Task 10 7.43 E
Updates tracker and submits Prepare and submit RFQ to 3 Vendors receive RFQ and reply with Generate PO and get Purchasing Receives PO and Delivers Tool
requisition to purchasing dept vendors quote with conditions and terms manager approval

2.250 3.000 4.000 0.625 0.750 0.813 2.000 3.000 4.000 1.000 1.500 2.000 5.000 9.000 9.000
Timeest 3.04 0.0851 Timeest 0.74 0.0010 Timeest 3.00 0.1111 Timeest 1.50 0.0278 Timeest 8.33 0.4444

Reiterate as needed
VA (mins) 30 2.08% VA (mins) 20 5.52% VA (mins) 64 5.60% VA (mins) 30 3.74% VA (mins) 65 1.82%
NVA (mins) 690 47.92% NVA (mins) 7 1.93% NVA (mins) 879 76.90% NVA (mins) 720 89.78% NVA (mins) 2042 57.25%
NNVA (mins) 720 50.00% NNVA (mins) 335 92.54% NNVA (mins) 200 17.50% NNVA (mins) 52 6.48% NNVA (mins) 1460 40.93%
0.007237 9.54E-07 0.01234568 0.000772 0.197531

VA 207 %VA 1.40% Add “Macro” Map to file
NVA 11,707 %NVA 79.12% ACTION!!
NNVA 2,883 %NNVA 19.48%
Total (mins) 14,797

VA
ACTIVITIES
Task 2

NNVA 1%
Gets tools catalog and identifies the right tool for the process 20.00

Days bt Resource
Total 15.00

19% Conclusion 340
No ACTIVITY description

1 Requests catalog to central crib (phone)
10.00

5.00

0.00
A B C D E F

Resource Code

VA (+) NVA (-) NNVA (0) 2 Delay until central crib has catalog available
10.00
3 Obtains catalog

Avg Days by Task
15 130 195
8.00
4 Selects a particular model from catalog 6.00

5 Research other sources (phone) 4.00

NVA % VA % NVA % NNVA 6
7
Make final decision for tool model
Asks for a requisition form
2.00

0.00
T 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Task #
16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

80% 4.41% 38.24% 57.35% 8
9
Wait for requisition form to be available
Gets blank requisition form
0.50

Var Days by Task
0.40

10 Prepares requisition 0.30

Evaluate Task Summary 11
12
Delay until secretary is available to receive requisition
Carry requisition to secretary's In-tray
0.20

0.10

Action Plans to
0.00
T 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Task #

Eliminate NVA Detail Activities Data Analysis
Minimize NNVA Target Areas of Opportunity
Reiterate as needed

Introduction
Lean Office

Methodology:
– Forming a team:
» Minimize the number of members.
» Team members should have authority to implement changes.
» Include people that could be affected by the outcome.
» Include expert users of the target business process.
– Selecting work room location or electronic technology to use
– Training and introduction to the initiative: the Kickoff Meeting
– Understanding the Business Process Environment:
» Customers (characteristics, location, etc)
» Suppliers
» Business process purpose
» Inputs and outputs
» Boundaries
» Process owners
– Identifying all tasks in the process (using Post-It’s TM), assign an
individual code to each task (example AA, AB, AC, etc.)

Introduction
Lean Office

Methodology (..2):
– Estimating duration time for each task in the process, specifying
» Most optimistic completion time (o), or the minimum task time if everything
progresses ideally
» Most likely completion time (m), or the most probable task time under
normal conditions
» Most pessimistic completion time (p), or the maximum task time if significant
delays are encountered
– Using the Excel spreadsheet provided and assuming a Beta Distribution,
calculate the average or expected time for each task as well as its
standard deviation (tab: “Calc”). The following formulas will be applied:
Expected Time for each Task: te = ( o + 4*m + p ) / 6
Variance (degree of uncertainty): σ2 = [ ( p – o ) / 6 ]2
– Observing the standard deviation for each path (calculated):
Standard Deviation for Path: σ = SQRT ( Σ (variances of activities) )
– Identifying the critical (longest) path
– Creating the Macro Map on corresponding tab of Excel file (next section)


Introduction
Lean Office

Methodology (..3):
– Analyzing Data and targeting areas of opportunities
» Work load by group or individuals
» Level of uncertainty of each task
» Time statistics for the whole business process
– Clicking-down on each activity
» Clarify nature of activity
» Quantify distances traveled and resources involved
» Identify type of activity (Operation, transportation, inspection or storage)
» Classify activity in terms of value:
Value Add (VA): What the customer is willing to pay for
Non-Value Add (NVA): Customer is not willing to pay for, can be eliminated
Necessary but Non-Value-Add (NNVA): Customer is not willing to pay for but it
cannot be eliminated
– Evaluating the task summary information
– Completing all tasks / activity detailed analysis
– Documenting action plans to eliminate NVA and minimize NNVA


Using the Worksheet Tool and Data Analysis
Lean Office

Standards used on worksheet
– Blue Font: Indicates this field is provided by user, not protected
– Red Font: Indicates a calculated value, non-password protected
Includes the following tabs (use them in that order):
– Calc: Capture all path tasks timing to identify critical path
– Macro, with following data analysis sections:
» Header (A1:AC4): Identifies project general information and benchmark
» Tasks (B8:T78): Graphical representation of critical path with timing
» Resources table (V9:AC40): List of human resources involved
» Estimated Time by Resource Chart (U41:AE51)
» Estimated Time by Task Number (U52:AE61)
» Variance Time by Task Number (U62:AA71)
» Business Process Statistics (W73:AA83)
» Only available until detail activity analysis is done:
Business Process VA/NVA/NNVA content
VA versus NVA & NNVA Chart (AB62:AE71)


Targeting Areas of Opportunities
Lean Office

Evaluating resources and processes: 20.00

Days bt Resource
15.00
– Total Estimated time by Resource Leveled?
10.00
» Are these dedicated resources?
5.00
» Can functions be combined?
0.00
» Could training play a significant role? A B C D E F

» Are the various resources using similar technology? R

» Does resource A really manage 16 projects for every 10.00
Leveled?
one that resource E does?

Avg Days by Task
8.00

– Estimated time by process or task number: 6.00
4.00
» What is the business process “takt time”?
2.00
» Is task # 10 the bottleneck?
0.00
» How much investment is on every task involved? T 2 3 4 5 6 7 8 9 10 11 12 13

» Is task # 3 only serving this business process?
» Is there too much walking distance in task # 5 & 10? 0.50

Var Days by Task
0.40
– Variance time by process or task number 0.30
» Why does task 10 have almost one day of variance? 0.20 Consistent?
» How can task number 5 be more consistent than task 0.10
number 10 if average time is the same? 0.00
T 2 3 4 5 6 7 8 9 10 11 12 13


Click-down Analysis at Activity Level
Lean Office

Detailed analysis of each task:
– Select the corresponding tab for the task number to analyze (example
tab T02 for task number 2 and so on).
– List all activities involved on each task (B12:B46).
– Begin each sentence with a verb (example: wait, request, selects,
moves, etc.).
Quantitative assessment:
– Once distance and resources are quantified, classify every activity
(Operation, Transportation, Inspection, or Storage -or wait-), but do not
type anything on the template, yet. Just move the cursor to the
corresponding column.
– Assess the type of value added (VA / NVA / NNVA).
– If an activity is considered a VA, then type [‘+] – apostrophe and plus
sign under the corresponding column (Oper, Transp, Insp or Storage).
– For NVA type [‘-] – apostrophe and the minus sign.
– For NNVA type [‘0] – apostrophe and the number zero.
– Continue until classifying all activities listed for each task.

Correlating Summary Information with Task Level
Lean Office
Estimated Mins

3840
Var in Mins

For every T?? tab (task detailed FROM Optim

7
Most L

8
Pessim

9
Average

8.00
Variance

0.111
53.3
% on detailed t
MACRO: 101.6%
analysis):
Total
– Section H7:L8 is calculated from the Conclusion 3901
Macro Map (tasks definition). VA (+) NVA (-) NNVA (0)

– Section U3:W8 is calculated from 151 3265 485
% VA % NVA % NNVA
the detailed activity analysis.
3.87% 83.70% 12.43%

– On this example, from the macro map: it was determined that the
estimated average time (te) was 7 days or 56 hours or 3360 minutes.
The team confirmed activities for 3901 minutes, which is very close
(101.6% of original estimated time while doing the Macro Map).
– Unfortunately, only 151 minutes (or 3.87%) is Value Added activity.
– This activity should be improved or reduced by 3265 minutes (83.7%),
which corresponds to NVA, as a minimum.
– For the 485 minutes (12.43%) of NNVA, the team should try to get
something out of the system by either upgrading technology, combining
functions, etc. If no solution is feasible, keep these activities listed for
later discussion.

Action Items for Areas of Opportunity
Lean Office
The team now has enough information to VA
identify areas of opportunity: NNVA 5%
– Target all activities classified as storage, 26%
transportation and inspection. NVA
– Check for “off-the-shelf” products that might help 69%
optimize these NVA / NNVA activities.
– Eliminate batches or pushing jobs downstream.
Since this material is not yet “needed”, it must be
handled, counted, filed, searched, etc.: MUDA
– Consider continuous flow, combining activities, etc.
– Divide your current state macro map in sections or
loops.
– Identify the pacemaker loop (typically it is the
farthest downstream loop in the process).
– Use sub-sections or loops to make the future state
definition and implementation more manageable.
– Define process key metrics.
– Develop a business process improvement plan.


Lean Office
Estimated time 29.20 Days
Standardization (TPS): Standard deviation 0.48 Days
– The process of establishing the Limits: Days
repeatability and predictability of - 3 sigma 27.76 99.50%
-2 sigma 28.24 95.00%
Man, Material, Method and Machine -1 sigma 28.72 68.00%
in work, which, when properly average 29.20
maintained, forms the basis from +1 sigma 29.68 68.00%
which improvement can be made. +2 sigma 30.17 95.00%
+3 sigma 30.65 99.50%
– With standardized work:
» You gain consistency, not quality.
» Consistently express the problems. Estimated time 25.72 Days
Standard deviation 1.98 Days
– Apply 4-S:
Limits: Days
» Seiri (Sifting, separate) - 3 sigma 19.79 99.50%
-2 sigma 21.76 95.00%
» Seiton (Sorting) -1 sigma 68.00%
23.74
» Seiso (Sweeping) average 25.72
+1 sigma 27.69 68.00%
» Seiketsu (Spick and Span)
+2 sigma 29.67 95.00%
Measure consistency +3 sigma 31.64 99.50%

Don’t go for the home run!!

Lean Office

Specific Recommendations – a Short-run Action Plan
– Introduce document control. Incorporate version number, data,
distribution list and on every document.
– DO NOT Batch and Queue
– DO NOT fast-track / Expedite
» Improve the normal process so that lead time and confidence are adequate
to obviate the need for expediting.
» Prioritize strategically important products, but introduce them to the process
singly, not in batches.
– Identify push-pull triggers. Instigate continuity. Ideally these should all
be in the same direction – and that direction should be pull.
– Educate staff on how to identify and process VA activities. Also instruct
on waste identification.
– Instigate a corporate-wide project planning and prioritization procedure.
– Implement a process-wide workflow system to replace the disparate and
ineffectual systems currently in place. Ensure all team members have
access and training.

Lean Office
– Multi-skill staff to provide operational flexibility.
– Perform only a single validation check.
Key Elements of the Lean Value Stream:
– Specify what does and does not create value from the customer’s
perspective.
– Identify all the steps necessary to design, order and produce across the
whole value stream to highlight the non-value-adding waste.
– Make those actions that create value flow without interruptions, detours,
backflows, waiting or scrap.
– Only “make” what is pulled by the customer just-in-time.
– Create a dynamic transparency of strategies, cost and information in the
value stream.
– Focus on key processes, not just separate business departments.
– Strive for perfection by continually removing successive layers of waste.
as they are uncovered.


Measuring Success by Using the Project Tracker
Lean Office

Measurements
– Keep track of performance on the next business process events.
– Look for effectiveness of action plans implemented.
– Look for consistency.
– Use the “Tracker” tab attached to the Excel file.
DAS employee buying a PC for work (1980's) Project code:
PROJECT-SPECIFIC INFORMATION OWNER Data
1 Ordered is needed by (date) Customer
2 Current State Estimated Time Employees direct report 41.45

CS Days PE R F O R M A N C E
ACTIVITY OR PROCESS STEP Owner Goal Timing Plan Actual Dur
1 Project trigger: Employee 0.0 -41.5 0
2 Prepare requisition and submit to secretary Employee 0.7 -40.8
3 Secretary to log it in requisition's tracker and submit to boss for approval
Secretary 2.8 -38.0
4 Checks budget, availability of PC's, approves and Supervisor secretary
return it to or Manager 9.0 -29.0
5 Updates tracker and submits requisition to purchasing dept
Secretary 3.8 -25.2
6 Prepare and submit RFQ to 3 vendors Buyer 2.0 -23.2
7 Vendors receive RFQ and reply with quote with conditions and terms
PC supplier 3.5 -19.7
8 Generate PO and get Purchasing manager approval Buyer 1.8 -17.8
9 Receives PO and delivers PC PC supplier 9.3 -8.5
10 PC is received and installed IS&S department 8.5 0.0

– Feedback performance to the team.
– Reiterate as needed.


Lean Office

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