Which way do you lean?
I was at a networking talk recently on Lean techniques and how they can be applied to non-manufacturing processes. Manufacturing companies, following the thinking of people such as W. Edwards Deming and Eliyahu Goldratt, realised a long time ago that costs can be taken out of systems by ensuring that waste is kept to a minimum and quality is built in to the process.
Waste is a broad concept that includes everything not directly related to achieving the desired outcome such as unnecessary work, movement, scrap, cost, expenditure, research, etc. In manufacturing terms this equates to ensuring that stock and work in progress are kept to a minimum. This has some interesting side effects. For instance a common belief is that an expensive piece of equipment, a computerised (CNC) lathe for example should be working all the hours that are available; i.e. the asset should be sweated. However, if you step back a bit and think of the whole process, it becomes clear that in any process there is always one step that is the slowest in the system and that dictates the overall throughput. Once the bottleneck is identified, it can be eliminated, machines can be added, manpower can be employed etc, but the overall effect is merely to move the bottle neck somewhere else. In effect what happens is that raw materials are consumed at the rate of the fastest step in the system, partially worked materials (Work in Progress or WIP) build up at each station in the process and the system still only creates finished goods at the rate of the slowest step with the additional bonus of now lots of money is tied up in the system in the form of unfinished parts. If you also consider that if a quality failure occurs somewhere and there is a lot of WIP this will equate to a large amount of money being wasted. The lessons here are all about understanding the bottleneck and running the system at the speed of the slowest step.
How can we apply this to non manufacturing processes?
Firstly, understand the process, this is sometimes called As-Is. [SKI: in the Constraints Management world, this is called a Current Reality Tree, or CRT.] Map it out, analyse it, find the bottleneck, identify the inefficiencies, determine where the organisation supports the process and where it doesn't. Is there IT involved? Does it support or hinder the process. Where is the work in progress building up, for example is there a pile of unpaid invoices, are the contracts department struggling to match invoices to contract numbers? What does this mean in terms of your business. Especially in terms of cash flow, liquidity and staff morale.
Next determine the metrics associated with the process and actually measure them. Metrics are good for a number of reasons, firstly they allow you to determine if any changes actually make a difference, and secondly they enable you to drive behaviour by encouraging the fleshy part of the organisation to understand what constitutes "good" and to focus on achieving it. Consistently.
The next step is to create the picture of the ideal process, the To-Be state. [SKI: in the Constraints Management world, this is called a Strategic Intermediate Objectives Map, or SIO Map.] This is best done in a group, with a shared understanding of the goals of the process, the variations that occur and the peaks and troughs in demand. The key is to be pragmatic and to ensure that the process can really work in practice.
Implementation is the difficult part. Managing the change encourages and supports people to adopt the new approach and make it work. A key element of this is eliminating waste. This means taking away all the encumbrances that stop the process from working slickly and ensuring that everything needed to do the job is to hand. So, necessary files should be close to hand and easy to search. Clutter that adds nothing to the job should be removed. Where possible standards should be adopted, so that roles can be mixed and matched without a need to get to grips with someone else's way of working. Encouraging a culture that always looks for improvements will pay dividends once the initial pain is overcome. Now is the time to take another look at the metrics and trumpet the improvements. If bonuses or benefits are aligned with the metrics the performance can only improve.
The things that struck me about this approach is that it really is obvious. If a clerk costs the organisation 20,000 a year and spends 20% of their time searching for information that equates to a wastage of 5,000 that potentially could be eliminated by merely tidying the filing. Multiply that across all the processes in an organisation and the potential for savings is considerable. The approach is also very simple.
This blog post has only scratched the surface but nevertheless, think about it for a couple of minutes. How much could you save by improving your processes. Would that mean that there is more free time to do more profitable tasks? Does this let you get on with the projects that have been on the back burner? Would you get paid faster? There are any number of ways in which this type of study can very quickly hit the bottom line of your organisation.
If this has piqued your interest. Give me a call.
Chris Bryan
---- Phone: +44 1420 588172 Skype: chris.j.bryan ©2008 Chris J. Bryan. All rights reserved. Permission granted to reprint to Throughput.us LLC.