LEAN OFFICE

and
ADMINISTRATION

Presented to:
ASQ Central Arkansas
September 12, 2006

Defining Lean

A systematic approach to identifying and

eliminating waste (non-value-added
activities) through continuous improvement
by flowing the product at the pull of the
customer in pursuit of perfection
-- The MEP Lean Network

A structured approach to common

sense

1
 What is Value Added?
Value Added

Any activity that increases the market form or function of

the product or service. These are things the customer is
willing to pay for.

Non-Value Added

Any activity that does not add market form or function or is

not necessary. These activities should be eliminated,
simplified, reduced or integrated.

Definition of Value Added

Customer Value Added (Value Added)
Does the task add form, feature or function to the process, service or
information?
Would the customer be willing to pay extra or prefer us over the
competition if he or she knew we were doing this task?
Business Value Added (Necessary Non-Value Added)
Does this task support financial reporting requirements?
Would the process of producing/selling the product, service or
information breakdown if the task were removed?
Is this task required by law or regulation?
Non-Value Added
If the customer knew we were doing this, would they approve?
Does the task fit into either of the other two categories?
Can I eliminate, reduce, simplify, or integrate this activity?

2
 LEAN ENTERPRISE

Lean Office and Administration

Reduce paperwork process time and eliminate errors

Lean Information System

Not Lean versus ERP but Lean with ERP

Lean Manufacturing:
Value Stream Mapping, 5S/Visual, Quality at the Source, Cellular,
Pull/Kanban, Total Productive Maintenance, Point of Use Storage,
Setup Reduction, etc.

LEAN OFFICE
Collect payment faster, shorten the Order-to-
Cash cycle time, Increase sales while holding
resources constant
42% of cycle time occurs at the front end of a project:
Designing Profit Production
Taking orders 10% Overhead 25%
Ordering Material
8% for manufacturing & shipping
50% waiting for customer payment Direct Labor 5%

GS&A 30%

Materials 30%

3
 Why look at the support areas?
An organizations support activities are often a large
percentage of the total lead time
Untapped opportunities remain off the shop floor
However, it is harder .
To see the flow and identify wastes
To identify customer, product and customer value
Because support areas usually provide services to
more that one value stream
To measure daily production and have a takt
awareness

We have a lot of similarities, but our similarities are

different --- Yogi Berra

How Does Off the Plant Floor Differ?

Many functions are not on the traditional shop floor

value stream map
Many functions support several value streams without
clear boundaries
Harder to identify customer, product and customer value
What do we track/map?
Waste in administrative processes is much harder to see
- more entrenched and hidden

4
 Goals of Lean Office/Administration
Gain an understanding of the characteristics and
benefits of a Lean office vs. a traditional office
environment
Learn about the 8 wastes and how to minimize or
eliminate them by applying various Lean concepts
Learn how to categorize value added vs. non-value
added activities and ways to eliminate non-value-
added activities
Apply the principles of Lean to a traditional office
environment and experience, first-hand, the results
Lean has on meeting quality, cost, delivery and
service targets

History of Information Processing

Craftsmen Mass Production Lean
Environment Environment Environment
Isolated geographically Isolated functionally Grouped by value stream

Method Method Method

Face to face Face to face / telephone Wireless

Speed Speed Speed

Written / Hand Delivered Faster / delayed Really fast

Skills needed Skills needed Skills needed

Read / write Read / write Operate technology

Technology Technology Technology

Pen / paper Telephone Wireless

Business rules Business rules Business rules

None Not too formal Formal
Government Mandate
GAAP
APICS

1800s 1900s 2000

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5
LEAN = ELIMINATING WASTE
Value-Added
Non-Value-Added:
Defects
Overproduction
Waiting
Not Utilizing
People (K,S,A)
Transportation
Inventory
Motion
Excess Processing
typically, 95% of all lead time is non-value-added.

Value Added vs. Non-Value Added

Value Non-Value Value Non-Value

Added Added Added Added

Required Waiting, Rework, Run Transport,

Informa- Islands of Data, Time Storage,
tion Defects, Copies, Files, Waiting,
Distribution, Rework,
Approvals Machine
Unnecessary Reports Setup,
Inspection,
Machines
Breakdowns

Information Lead Time Manufacturing Lead Time

Total Lead Time

Typically 95% of Total Lead Time is Non-Value

Added
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6
 Office Waste
Examples?!

Overproduction Printing paperwork too soon

Inventory Filled In-boxes
Waiting System downtime
NVA Processing Re-entering data
Defects Order Entry errors
Excess Motion Walking to central filing
Transportation Movement of paperwork
Underutilized People Limited functional
responsibilities

Lean Office Approach

Achieve a functional understanding of

Lean Office and Office Value Stream
Mapping:
Learn The Language of Lean
Identify The 8 Wastes
Apply The Tools of Lean
Imagine A New Paradigm
Value Stream Mapping

learn by doing - train, simulate and measure.

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THE LANGUAGE OF LEAN
1. A systematic approach
2. to identifying and eliminating waste
3. through continuous improvement
4. by flowing the product / information
5. at the pull of the customer
6. in pursuit of perfection.

The Principal Metrics:

Quality, Cost and Service

THE 8 WASTES

8
 Defects
Inspection and correction of forms and
information in inventory
Causes of Defects Examples
Improperly trained /unskilled - Forms filled out incorrectly
employees due to improper lighting
Lack of communication - Individual methods of
/information performing tasks due to a
Performing monotonous work lack of standardized work
Doing process in a rush - Paperwork does not match
Poor design of forms and - Without a standard form,
equipment information was entered
Bad quality of supply material incorrectly
Environmental conditions - Missing information because
a checklist was unavailable
Confusing procedures
- Incompatible software

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Overproduction
Making more than is required by the next process
Making earlier than is required by the next process
Making faster than is required by the next process
Causes of Example
Overproduction - Printing documents earlier in
Just-in-case logic batches due to long changeover
Long process set-up time
Unleveled scheduling - Processing documents twice just-
Unbalanced work load in-case
Not focused on companys - Prepare monthly report early
objective - Shotgun approach for analysis
Weak organization instead of a focused approach
structure
Ineffective supervision - Multiple bosses & multiple jobs
cause wrong order of jobs
Lack of communication
- Memos to everyone
- E-mail blasts
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9
 Waiting Waste
Idle time created when waiting for?
Causes of Waiting Waste Examples

- Waiting for printer to warm-up

Unbalanced workload
- Printer/computer break-down
Redundant approval
- Mail delivery within the firm
Unreliable equipment - Different work schedule of team
Improperly coordinated members
department - Attendees not all on-time for
meetings
Long equipment setup
- Signatures/Decisions
- Information
- Proofs/Specifications
- Not delegating responsibilities

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Not Utilizing Employees Knowledge, Skills,

and Abilities

Causes of People Waste Examples

Incompatible hiring practices - Bypassing procedures to hire
a favorite candidate
Politics - Start using system software
Corporate culture without prior training
Improperly trained employee - Qualifications unclear
Old guard thinking - Not providing opportunity for
growth
Business culture - Temporary workforce

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10
 Transportation Waste
Transporting forms and information around the office

Causes of Transportation Waste Examples

Poor location of office to - Copier is too far from desk
other areas - Paper and stapler kept away
from printer and copier
Large file storage area - No signs identifying areas or
Poor document flow departments
scheduling - Walking back and forth to
Lack of signs correct mistakes
- Long travel for small amount
Defects/rework of documents
- Poor office layout

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Inventory Waste
Any supply in excess of a one-piece flow
through your office process

Causes of excess Inventory Examples

Purchasing excessive - Buying supplies just-in-case
supply material (bulk purchasing, quantity
discounts)
Unbalanced work load - Files pile up between work
Existence of irrelevant desks
data - Documents are waiting to be
Reward system matched or signed
Inconsistent work speed - Storage space filled with items
we dont need or use
Just-in-case logic - Saving files forever

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11
 Motion Waste
Any movement of people or equipment that does
not add value to the service

Causes of Motion Waste Examples

- Keeping forms far from reach of
Poor workplace
employee
organization
- Looking for items because they
Poor scheduling of do not have a defined place
work - Unfiled papers
Nonstandard work - Not grouping similar orders
method - Saving files forever
Redundant approval - Employee working by
experience instead of standard
method
- Make a draft before preparing
formal document

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Excess Processing Waste

Effort that adds no value to the service from
the customers viewpoint
Causes of Processing Waste Examples
Just-in-case logic - Printing & mailing, faxing,
Lack of communication overnight mailing, and
/information emailing the same memo
- Lack of proper instruction
Redundant for filling out form
approval/inspection - Repetition of same
True requirements undefined information in different
forms
Non-standardized business - Use of different software
process in different departments
Re-entering data when processing an
order
- Re-entering data

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12
 Can Your Office Relate to These?

Functional Organization Changing Management

MIS Technology Gaps Priorities
Excessive Controls No Decision Rules
Dated Process Design Poor Visual Control
No Back-Up/Cross Training Disorganized Workplace
Unbalanced Batching Lack of Training
Workload Obsolete Forms or Form
Computer System Design
Poor Layout

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REMEMBERING THEM
D efects
O verproduction
Waiting
N ot Utilizing People
T ransportation
I nventory
M otion
E xtra Processing

13
 THE TOOLS OF LEAN

Continuous Improvement

Pull/Kanban Kaizen Cellular/Flow TPM

Quality at Source POUS Quick Changeover

Standardized Work Batch Reduction Teams

Value
5S System Poke Yoka Visual Plant Layout Stream
Mapping

Lean Techniques

Learning to implement Lean techniques:

Standardized Work
5S
TPM
Visual Control
Point of Use Storage (POUS)
Layout

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 Lean Techniques
Learning to implement additional Lean techniques:

Pull/Kanban
Quick Changeover
Cellular Layout
Work Balancing
Quality at the Source
Team Work & Cross Training

Workplace Organization

A safe, clean, neat,

arrangement of the
workplace provides a
specific location for
everything, and
eliminates anything
not required.

The average North American executive wastes 6 weeks per year searching messy
desks and files for misplaced information Wall Street Journal

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15
 5S in the Office
Before After

31

Visual Controls

Matching
Labels

32

16
 Point of Use Storage (POUS)

Everything necessary to
complete this job is
exactly where it is used

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Standardized Work

Operations safely carried out with all tasks organized

in the best known sequence, and followed by all
employees.
Orders
Drawings
Invoices
All paperwork and non-creative work
Minimize wastes of defects, motion, extra processing

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17
 Quality at Source

Everyone must be certain that the result they are

passing to the next work station is of acceptable
quality
Everyone must be given the means to perform
inspection at the source, before they pass it along
Samples or established standards are visible tools
that can be used for such purposes
Process Documentation defining quality
requirements for each work station may need to be
developed
Minimize wastes of defects, extra processing

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Equipment Reliability
Reliability of office tools and equipment must be
assured
Possible issues:
Excessive system downtime
Slow system response time
Office Equipment downtime
May use a Total Productive Maintenance to address:
Setup and adjustment
Breakdowns - Hardware performance, Virus upgrades
Idling and minor stoppages
Reduced speed - Software upgrades, Virus, Spyware,
connection speed
Startup Computer Startup, Printer Warm-up
Defects and rework Printer/Copier malfunctions
Minimize wastes of waiting, inventory

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18
 Office Cell

Physical Linking of operations into the most efficient

combination while minimizing waste
- Most efficient combination = a balanced process
- Reduce lead time, improve teamwork
- Minimize wastes waiting, overproduction, motion,
defects, extra processing

Multi-functional
- - Co-located
One piece flow
-
- Balanced-waste removed
Cross-trained team
Forms
Standard work
Out
Staffed to meet demand
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Value Stream Mapping

Graphical technique of describing a products
process flow.
Includes cycle times, inventory, personnel, up-
times, defect rates, changeover times, etc.
Also includes all information flows

Current-State Map details as-is process.

Future-State Map details process as we want it to
be.
Used as a planning to tool to attack waste in a
systematic, coordinated manner.
Kaizen, 6 Sigma, and other Continuous
Improvement activities identified

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 Office Value Stream Mapping

Describe clients Value Stream in

terms of:
CUSTOMER(S) wants/needs
SUPPLIER(S) what is required
MANUFACTURER(S) what is done

addresses the why are we in business? question.

Value Stream and Supporting Processes

What the
customer
The Value Stream
wants when
The series of processes that create
he/she
value directly for the external
customer wants it

Hiring & Quoting Order Purchasing A/R

Payroll Entry
A/P
Support Processes - These processes only create value for internal
customers, but are currently necessary to run the business

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20
Office Value Stream Mapping

Create a basic, high level Current State

Map:
Select a Product Family
Name the sequential Order Fulfillment Steps
Focus on a Key Step (e.g., Architectural /
Engineering) to be examined during the three
day event

a point of reference / benchmark for subsequent learning.

Office Value Stream Mapping

Create the detailed Current State Map for the

Key Step in the Value Stream:
Utilize icons to represent the process as it is
today (a snapshot of reality)
Identify Value Added / Non Value Added time
and activities
Evaluate the Customer Demand Process
Capability
Examine the timeline
epiphany: a sudden intuitive leap of understanding.

21
 Current State VSM for Sales Order Process

Customer

4 Orders

EDI
Orders
Boss

FACSIMILE
Doc Doc Doc
Keeper Keeper Keeper

Receive Fill Out M atch Fill Out Check Get Copy/

Copy Fax Copy Log Approve
PO POA PO & Q SO Credit CA Form Fax

SR1 SR1 SR1 SR1 SR2 SR2 SM SM SM SM SR2

SR2
1 Copy Log SO Fill out &
Stamp Fill Out Match Fill Out Check Get Match
Get POA Copy PO of Q into Sales Approve
Received Fax Card PO & Q SO Order Log Credit CA Form PO & Q
CA Form
2 Copies Att CA Copy
Fill Out 2 Copies Sign
Sign Call of PO to SO, SO, Q,
of POA Q, PO PO
Sign Fax
Date Sign
Date SO

95% 90% 90% 90% 90% 95% 95% 95% 95% 95% 95%
99 %
C& A C& A C& A C& A C& A C& A C& A C& A C& A C& A C& A
C& A

25 sec. 120 sec. 155 sec. 65 sec. 75 sec. 45 sec. 55 sec. 30 sec. 25 sec. 125 sec. 20 sec. 110 sec.

0 Feet 20 Feet 25 Feet 6 Feet 15 Feet 30 Feet FeetFeet

25 12 Feet 0 Feet 0 Feet 12 Feet 30 Feet 175 Feet

SR1 SR2

Doc Doc Doc

Keeper Keeper Keeper

278 0 0 278 0 0 139 0 0 0 278 973

25 120 155 65 75 45 55 30 25 125 20 55 850

1823

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Value Stream Mapping Future State

Product Family A simple, visual approach to:
Focusing on a product family
Creating a clear picture of current material
Current-State and information flow associated with that
Drawing product family
Identifying Lean tools and techniques that
can improve flow and eliminate waste
Future-State
Drawing Incorporating those ideas in a new picture of
how material and information should flow
REPEAT for that
Creating product group an action plan that
Implementation makes the new picture a reality for that
product family

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22
Office Value Stream Mapping

Create the new paradigm Future State Map

for the Key Step in the Value Stream:
Begin with the Current State reality
Address the Challenges / Opportunities
Utilize creativity before capital
Create a new destiny

we can change without growth, but we cannot grow without change and control is
essential.

Office Future State Questions

1. What are company priorities?

2. What does the customer really need?

3. How often will we check our performance to customer
needs?
4. Which steps create value and which create waste?
5. How can we flow work with fewer interruptions?
6. How do we control work between interruptions? How
will work be prioritized?
7. How to balance the work load and/or different
activities?
8. What process improvements will be necessary?

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23
 Future State VSM for
Sales Order Process
Excessive Excessive
Travel Poor Copying
Organization
of Paperwork
Customer

4 Orders

EDI
Orders
Redundanc Boss
y of Effort
FACSIMILE
Doc Doc Doc
Keeper Keeper Keeper

Receive Fill Out M atch Fill Out Check Get Copy/

Copy Fax Copy Log Approve
PO POA PO & Q SO Credit CA Form Fax

SR1 SR1 SR1 SR2 SR2 SM SM SM SM SR2

SR1 SR2
1 Copy Log SO Fill out &
Stamp Fill Out Match Fill Out Check Get Match
Get POA Copy PO of Q into Sales Approve
Received Fax Card PO & Q SO Order Log Credit CA Form PO & Q
CA Form
2 Copies 2 Copies Att CA Copy
Sign Fill Out Call Sign of PO to SO, SO, Q,
of POA
Q, PO PO
Date Sign Sign Fax
Date SO

99 % 95% 90% 90% 90% 90% 95% 95% 95% 95% 95% 95%
C& A C& A C& A C& A C& A C& A C& A C& A C& A C& A C& A C& A

25 sec. 120 sec. 155 sec. 65 sec. 75 sec. 45 sec. 55 sec. 30 sec. 25 sec. 125 sec. 20 sec. 110 sec.

0 Feet 20 Feet 25 Feet 6 Feet 15 Feet 30 Feet 25

FeetFeet 12 Feet 0 Feet 0 Feet 12 Feet 30 Feet 175 Feet

SR1 SR2

Doc Doc Doc

Keeper Keeper Keeper

278 0 0 278 0 0 139 0 0 0 278 973

25 120 155 65 75 45 55 30 25 125 20 55 850

1823
47

Future State VSM for

Sales Order Process
Customer

4 Orders

EDI
Orders
Boss

FACSIMILE
Doc Doc Doc
Keeper Keeper Keeper

Receive Fill Out M atch Fill Out Check Get Copy/

Copy Fax Copy Log Approve
PO POA PO & Q SO Credit CA Form Fax

SR1 SR1 SR1 SR2 SR2 SM SM SM SM SR2

SR1 SR2
SR1 SR1 SM

1 Copy Log SO Fill out &

Stamp Fill Out Match Fill Out Check Get Match
Get POA Copy PO of Q into Sales Approve
Received Fax Card PO & Q SO Order Log Credit CA Form PO & Q
CA Form
2 Copies Att CA Copy
Sign Fill Out 2 Copies Sign File
Call of PO to SO, SO, Q,
of POA
Q, PO PO
Date Sign Sign Fax
Date SO

99 % 95% 90% 90% 90% 90% 95% 95% 95% 95% 95% 95%
C& A C& A C& A C& A C& A C& A C& A C& A C& A C& A C& A C& A

25 sec. 120 sec. 155 sec. 65 sec. 75 sec. 45 sec. 55 sec. 30 sec. 25 sec. 125 sec. 20 sec. 110 sec.

0 Feet 20 Feet 25 Feet 6 Feet 15 Feet 30 Feet 25 Feet

Feet
Feet 12 Feet 0 Feet 0 Feet 12 Feet 30 Feet 175 Feet

SR1
SR1 SR2
SR2

Doc
Doc Doc
Doc Doc
Keeper
Keeper Keeper
Keeper Keeper

278 0 0 278 0 0 139 0 0 0 278 973

25 120 155 65 75 45 55 30 25 125 20 55 850

1823

48

24
 Future State VSM for
Sales Order Process

Customer

4 Orders

EDI
Orders
FACSIMILE

Receive M atch Fill Out Check Fax &

PO Log Approve Copy
PO & Q SO Credit File

SR1 SR1
SR2 SM SM SM SR2
SM
SR1
SR2
Log SO
Stamp Match Fill Out Check Match
into Sales Approve
Received PO & Q SO Credit PO & Q
Order Log

Sign Fax SO
Sign Sign
to Cust.

Date File
Date

99 % 90% 90% 95% 95% 95% 95%

C& A C& A C& A C& A C& A C& A C& A

25 sec. 75 sec. 45 sec. 30 sec. 25 sec. 20 sec. 55 sec.

0 Feet 15 Feet 30 Feet 12 Feet 0 Feet 12 Feet 12 Feet 81 Feet

0 0 20 0 0 0 20

25 75 45 30 25 20 55 275

295

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Office/Administration Kaizen:

Develop the Kaizen Implementation

Plan for achieving the desired Future
State:
Who?
What?
When?
Where?
How?

the bottom line: where we go from here

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WHO SHOULD PARTICIPATE?
The entire Management and Office team:
Accounting, Design Engineers, Office Managers, Sales, Purchasing,
IT, Human Resources, Support Staff, and more will benefit

Quoting
Order Entry
Purchasing
Credit Checks
Hiring Practices
Shipping/Receiving
Accounts Receivable
Accounts Payable
Service & Warranty
Create Engineering Drawings
Support

LEAN OFFICE BENEFITS

Lean methodologies throughout the
enterprise (including the office) utilize
techniques that are designed to:
Reduce paperwork process time up to 90%
Improve on-time performance up to 90%
Reduce work in process up to 90%
Reduce errors up to 50%
Reduce floor space up to 75%
Improve customer service 95%

26
 Keys to Success

Prepare and motivate people

Widespread orientation to continuous improvement,
Create common understanding of need to change to
Lean
Employee Involvement
Push decision making and system development down
to the lowest levels
Trained and truly empowered people
Share information and manage expectations
Identify & empower champions
Remove roadblocks (i.e., people, layout, systems)
Make it both directive yet empowering

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Keys to Success
Atmosphere of Experimentation
Tolerating mistakes, patience, etc.
Willingness to take risks
The need to execute pilot projects prior to rolling culture
out across organization is also essential (e.g., model cells,
kaizen blitzes)
After early wins, extend across ENTIRE organization
Installing enlightened and realistic performance
measures, evaluation, and reward systems
Do away with rigid performance goals during
implementation
Do measure results and not number activities/events
Tie improvements, long term, to key macro level
performance targets. (i.e. customer responsiveness,
error reduction, on time performance, overall cost
reductions, sales effectiveness)

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27
 Examples of the Benefits of Lean Office

Payroll Engineering Order Release

Reduce non-value added Cycle time from 76 days
steps by 50% to 4 days
15 forms to 1 Total queue time from
Reduced signatures/ 56 days to 60 minutes
approvals by 25% Financial Reporting
Recruiting Reduced from 13
Cycle time from 14 days to weeks to 3 weeks
48 hours Export Licensing
50% reduction of paper 56 steps to 21 steps
resumes 52 handoffs to 5
Proposal Generation handoffs
Reduced from 30.6 days to Cycle time from 60 days
7 days to 30 days
50% first pass yield to
>90% first pass yield

Source: LAI 55

Conclusions - Lean Culture

Traditional Lean
Unclear job Written and well defined
Individual accountability work
Customer demands are Team accountability
unrealistic Customer satisfaction
Introduction of IT to measures continually met
automate information Introduction of IT as
Few cross functional appropriate
relationships Open communication and
No continuous information flow
improvement methods Strong employee input,
Measures not linked to passion for continuous
strategy improvement
Teams have clear
understanding of company
goals

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 AMS Overview Summary
AMS is a federally funded program with a statewide
mission.
AMS is part of an extended team of local, state, and
federal resources that can be utilized to address
manufacturing challenges and opportunities.
AMS provides training, project implementation, and links
to funding resources proven to affect positive change in
the front office and on the factory floor.
AMS staff will visit a manufacturing facility anywhere in
Arkansas, conduct an assessment at no cost, and
provide recommendations for improvement.

Contact Information

Jim Lilly
Phone: (501) 569-8221
Cell: (501) 837-9618
E-mail: [email protected]
www.mfgsolutions.org

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