UCSD Class: Lean Office

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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
  17. Eight Wastes • Overproduction • Inventory • Waiting • Motion (people) • Transportation (material/data) • Over-Processing • Errors • Underutilized people © 2011 Karen Martin & Associates 18
  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
  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
  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
  21. Eight Wastes • Overproduction • Inventory • Motion (people) • Transportation (material/data) • Waiting • Over-Processing • Errors • Underutilized people © 2011 Karen Martin & Associates 22
  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
  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
  24. Eight Wastes • • • • Overproduction Inventory Waiting Over-Processing • Errors/Defects • Motion (people) • Transportation (material/data) • Underutilized people © 2011 Karen Martin & Associates 25
  25. Errors • Errors become defects that require rework • Key metric - % Complete & Accurate (%C&A) © 2011 Karen Martin & Associates 26
  26. Eight Wastes • • • • • Overproduction Inventory Waiting Over-Processing Errors • Motion (people) • Transportation (material/data) • Underutilized people © 2011 Karen Martin & Associates 27
  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
  28. Spaghetti Diagram ECN Process • Visualize travel of: – People – Product (“the thing”) 12.5 miles per ECN
  29. 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
  30. Motion Waste Shared equipment
  31. 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
  32. Eight Wastes • • • • • Overproduction Inventory Waiting Over-Processing Errors • Motion (people) • Transportation (material/data) • Underutilized people © 2011 Karen Martin & Associates 33
  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
  34. Eight Wastes • • • • • Overproduction Inventory Waiting Over-Processing Errors • Motion (people) • Transportation (material/data) • Underutilized workforce © 2011 Karen Martin & Associates 35
  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
  36. Key Metrics © 2011 Karen Martin & Associates 37
  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
  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
  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
  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
  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
  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
  43. Dinner DVD Time: The Next Dimension of Quality © 2011 Karen Martin & Associates 44
  44. Value Stream Mapping in the Office © 2011 Karen Martin & Associates 45
  45. Narrowing the Scope: Example Units Domestic Consumables Warranty Service Parts Order Fulfillment Process NonWarranty Units International Consumables Warranty Service Parts NonWarranty
  46. 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
  47. 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%
  48. 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
  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
  50. Metrics-Based Process Mapping (MBPM) © 2011 Karen Martin & Associates 51
  51. The Improvement Process Plan Act Do Check © 2010 Karen Martin & Associates 52
  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?
  53. 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
  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
  55. Step Step Functions 1 2 Parallel Steps
  56. For each step, document: Add’l Barriers to Flow Activity (Verb/Noun) Who Process Time Lead Time Percent Complete and Accurate (%C&A)
  57. Summary Data PT = 85 min LT = 28.7 hrs Timeline
  58. 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
  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
  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
  61. Metrics-Based Process Mapping (MBPM) Simulation © 2011 Karen Martin & Associates 62
  62. Building a Lean Enterprise Process Stabilization Tools
  63. Standardized Work Job Aids • Simple • Visual • Physical • Posted at point of use • Created by people who do the work and tested by others
  64. The Rings of Knowledge (ROKs) Job Aids © 2010 Karen Martin & Associates
  65. Standardized Work for Electronic Data Entry © 2010 Karen Martin & Associates 66
  66. Checklists assure all critical tasks are done within defined timeframes
  67. Building a Lean Enterprise Flow-Enabling Tools
  68. © 2011 Karen Martin & Associates 69
  69. Metrics-Based Process Map (MBPM) Critical Path
  70. Auto-Calculated Results
  71. 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
  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.
  73. 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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