Getting Lean Beyond the Shop Floor

Order entry, quoting, scheduling, design and engineering, purchasing, accounting-these and other front office functions can provide an eye-opening opportunity to create improvement, eliminate waste, and increase profits in your business.

Often, however, businesses implementing lean manufacturing bypass the front office and target their manufacturing processes. After all, front offices have paperwork, not inventory, right

"The greatest opportunities for improvement are often in the non-manufacturing, front office areas. Ineffective front office processes also make it more difficult for manufacturing operations to do the best, most cost-effective work," WMEP manufacturing specialist Brenda Kujawski states. "A lean enterprise must be lean in every area, including the office areas."

Office wastes can be defined in the same lean terms as we apply on the shop floor. These wastes can include:

long lead times (waiting wastes);
inventory (queued-up work in your in-basket);
over-processing (excess paperwork, redundant approvals);
motion (inefficient work area design and layout);
defects/mistakes (incomplete/ inaccurate information);
transportation and motion (complex tracking systems).

"If you've never thought of the front end of your business-your office-as being a prime area for improvement in lead times, cost, and quality, you ought to take a look at it. You'll probably be surprised," says Jerry Thiltgen, also a WMEP manufacturing specialist. It's not uncommon to discover that over 95% of the lead time in your order is found in the office functions - and only 5% of the lead time in the actual production of the product.

RB Royal charting dramatic results

One company cut its quoting process by over 90 percent, from 42 days to 3 days, by applying lean principles throughout its entire business. RB Royal Industries, Inc., a Fond du Lac-based manufacturer of custom hose and tube assemblies and precision machined products, also reduced its new product launch process by more than 70 percent. After these lean improvements were made, the time from order intake through shop order issuance was reduced from roughly 109 days to just 32 days.

"The implication of this for our company is that we have a much higher degree of success in competing on a world basis," says John Valek, RB Royal's executive vice president and general manager. "We used to find ourselves competing with other companies in Wisconsin; now we're competing with companies from Taiwan and China. The world economy is a reality, and there was no way for us to compete in the world with our old methods of doing business."

Lean tools identify waste

Value Stream Mapping (VSM) and Value Added Flow Analysis (VAFA) are two valuable lean tools for eliminating waste in the front office. VSM is a system focused, or big-picture, tool designed to identify every step in an order's path across an entire system (or through the company) from the moment an order is taken to when the final product is shipped. VAFA is a process-focused tool that digs deeper into a specific process or office function, to follow and document every step, every minute of time used within that process.

Mapping is the key to identifying potential improvement

Lean for non-manufacturing processes begins with training in VSM, VAFA, and the basics of lean manufacturing. A first step is the choice of a cross-functional team with members that represent all areas to be mapped.

The team creates a current state map by following an order's path from customer (quoting and order entry) all the way to delivery (shipping). The current state map is created by capturing, with pencil on paper, the existing flow of both material and information within your system. This visual map provides you with a real picture of the system that your organization uses to deliver products and services to your customers. It helps you to analyze actual sources of waste within your processes so you can target your improvement efforts.

"This [map] is usually a major eye opener for people," Kujawski notes. "They might know it takes on average three weeks to get an order out the door, for example, but they don't realize it's only maybe four days through the manufacturing area, and everything else is pre-manufacturing."

Next, a future state map is developed. The team then identifies ways to improve the process flow that will eliminate waste and utilize time, talent and equipment more efficiently. This invariably results in a better understanding of the entire manufacturing process. These improvements define the "future state map" - where you want to be in one month or a year from now.

Opportunities for improvement may include:

eliminating redundant approvals;
improving the flow of paperwork;
restructuring how orders are handled; and/or
labeling and rearranging a storage area to avoid ordering redundant supplies
Dig into the details to discover real value

After your company identifies a series of improvement projects, some of the projects will require a more in-depth analysis. VAFA, takes a specific process like order entry and details out, to the minute, each step in the process. Then each step is evaluated for its value - and labeled either value added, nonvalue added, or business value added, (definitions below). This analysis identifies specific steps where waste exists and leads to the next step of removing the non-value added elements of a process.

Value Added: Activities that shape or form raw material or information to meet customer requirements.

Non-value Add: Activities that require time, resources, or space but do not add value from the customer perspective.

Business Value Add: Activities that cannot be eliminated completely, therefore the focus is on reducing them. Must be performed to finish the project.

Insights into implementation

Actually making improvement can be as easy as dropping a step that has been determined as non-value added. For example, in an order entry process, a redundant approval process has been determined to add no value to the end product. This redundant process can simply be eliminated, immediately improving overall lead-time.

The improvement process can also be more complex. For one WMEP client, the team recommended that the entire front office design be reconfigured relative to their three product categories. The improvement team is also looking at flow and waste relative to an efficient new floor plan. Analysis found that the color copier was in a location that was inconvenient to its most frequent users. They measured how many color copies each product team made. In the redesign of the office layout, the color copier will be located midway between two groups, who each account for 40% of the color copies made.

The firm's management will soon form a 5S team, enlist a change agent, and train people to start getting the cubicles organized. Their Lean Advocate's rationale is that, if they standardize the organization and layout of the office work areas and sustain these changes, it'll be that much easier to move people around when there is a need for additional change.

Tactics for success

The best strategy for implementing improvements is to start with a small project, record the progress the team made, share the success, and then move on - and always maintain momentum. Communicating the team's progress and successes is very important, as is alerting people who will be affected by the changes.

As one customer put it, "We try to make things visual here. If we have a lean improvement process going, I post a work list on the server and also in a public area next to the copier. The list displays what needs to be done and gets shaded [in specific colors] according to what's left to be done... The bluer it gets, the farther along we are." The form encourages participation and enforces commitment to the improvement process.

Accurate estimating, efficient order handling, and responsive customer service protect your profit margins, maintain your reputation, and keep you competitive. And, like RB Royal, manufacturers are finding that lean front office improvements that cut days or weeks from a schedule have a significant impact on a company's ability to succeed in today's competitive environment.

© Copyright 2003 by WMEP.org

WMEP provides technical expertise and hands-on implementation assistance to small and midsize manufacturing firms on advanced manufacturing technologies and business practices includinglean manufacturing, ISO, value chain management, and strategic repositioning services for manufacturers and manufacturing facilities located in Wisconsin.