Lean Webinar Series:

Advanced Lean for Office &

Service
November 9, 2010

Company
LOGO
 Webinar Content

How and when to use takt time to balance work.

How to approach the need for load leveling.
How cross-training and co-location is an essential
step in a transformation.
The vital role and responsibilities for process
owners.
How to achieve value stream alignment.
How to translate operational metrics into financial
terms.

© 2010 Karen Martin & Associates 2

 Creating a Lean Enterprise

Initial Lean focus

 Eliminate muda – Waste
Advanced Lean
 Eliminate muri – Overburden (people or
equipment)
 Eliminate mura – Uneveness

© 2010 Karen Martin & Associates 3

 Your Instructor

 Early career as a scientist; migrated to

quality & operations design and
management in the mid-80’s.
 Launched Karen Martin & Associates in
1993.
 Specialize in Lean transformations in non-
manufacturing environments.
 Co-author of The Kaizen Event Planner;
co-developer of Metrics-Based Process Karen Martin,
Mapping: An Excel-Based Solution. Principal
Karen Martin &
 Instructor in University of California, San Associates
Diego’s Lean Enterprise program.

© 2010 Karen Martin & Associates 4

 Webinar Participants’ Experience

60

50 49%

40 39%

30

20

9%
10
3%

0
True Beginner Basic Skilled Highly Skilled
Understanding

© 2010 Karen Martin & Associates 5

 Value Stream Mapping Proficiency

60

50 48%

40 35%

30

20
12%

5%
10

0
Never created one Just learning Skilled Highly skilled

© 2010 Karen Martin & Associates 6

 Most Advanced Lean Tool(s)

None Layout/cells
Visual management Root cause analysis
A3 Metrics-based process
Value stream mapping mapping
5S Takt time
Kaizen events Critical-to-Quality Tree
Kanban PDCA and DMAIC

© 2010 Karen Martin & Associates 7

 Building a Lean Enterprise

Process
Stabilization
Tools
 Building a Lean Enterprise

Flow-
Enhancing
Tools
Building a Lean Enterprise
 Multi-Functional Workers /
Cross-Training

Eases scheduling / more flexibility

Improves employee value to organization
Greater job satisfaction
Better problem-solving and decision-making
Required for one-piece flow or a pull system to
function properly
If work is segmented, rotate frequently enough
to keep skills and satisfaction up
 Based on work volume and complexity

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Building a Lean Enterprise
 Problems with Poor Layout

Design
Sales Estimating
Engineer

Materials Purchasing Scheduling

 Internal suppliers and customers are not connected

 Difficult to solve problems
 Difficulty innovating / sharing best practices
 Difficult to find work and track progress

13
 Office Cell

Linking people and processes into the most efficient

combination to maximize value-added content while
minimizing waste.
Cross-functional
One piece flow

  Balanced -- waste removed

Cross-trained team

 Standard work
Staffed to meet demand
Forms
Shared files
In Out
More efficient communication
Single point scheduling
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 Loan Processing Flow Legend
1 (Before) Work-In-Process (WIP)
Account
Sequence Number
Executive
(AE)
2
Account UW
Under-
Manager
writer
(AM) 5
Elevators (UW)
4 & Restrooms 5

AE 6
Funder
1
(FD)
4 3
AE Set-Up
4 (SU) 6
2 2 4
1 FD
AM AM
 Loan Processing Flow
(After)

Customer
Shared Customer
Resource
1 2 Elevators 2 1
AE AM & Restrooms
AM AE

1 2 3 2 1
AE AM Set-Up AM AE
Customer

Customer
5 4 3 4 5
FD UW Set-Up UW FD
 Mortgage Application Process
Improvement Results

Metric Before After

Time to process a loan 5 Days 1.5 Days

Customer complaints 4/Loan 1/Loan

WIP 60 Loans 25 Loans

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Building a Lean Enterprise
 Pull Systems

A method of controlling the flow of work and/or

material by replenishing work/material only as it is
consumed
Types
 One-Piece Flow
 FIFO lanes (first-in-first-out)
 Visual system authorizing supplier to send next “order”
 Note: FIFO in and of itself is not a pull system
 Kanban
 Visual card system authorizing supplier to replenish
stock/supplies/parts
If flow stops at a single point (no consumption),
everything upstream stops as well (no
replenishment)
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 Pull System Flow Diagram

Closed loop

In In Verify
Enter info. Complete Completed Customer
Customer RFQ quote per
in QEF log Box Quote Box
QEF
Quote

Information Request

Document Flow

WIP Locations

© 2008 Karen Martin & Associates

 Pull Systems Concepts

If a bottleneck occurs, everything

upstream must stop!
Resource re-allocation must occur.
 Cross-trained workers are essential.
Highlights problems and makes corrective
action mandatory.

© 2008 Karen Martin & Associates

 Pull System in Admin Processes

Step A Step B Step C Step D Step E

Color coded folders or cards  quick

status of WIP at each process step
Maximum number of visual indicators
between each process  full queue
indicates resources must be re-diverted
Monitor WIP at first process to estimate
current throughput time

© 2010 Karen Martin & Associates

 Single Bin Kanban System

Cardboard
Divider

Kanban
Card

Place card on top of

parts immediately
under divider

(1) (2) (3)

Appropriate Draw Line Inside Insert Cardboard
Sized Bin Pan at Order Divider to Create
(kanban Point Level Physical Barrier
quantity fits
into one bin)
Two-Bin Color-coded System
 Tape Kanban

Do not replenish Replenish

 Before / After

Controlled inventory;
Excessive inventory; Color-coding identifies who is
Unclear who is responsible for responsible for
management/replenishment management/replenishment

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Building a Lean Enterprise
 Creating a Lean Enterprise

Eliminate muda – Waste

Eliminate muri – Overburden (people or
equipment)
Eliminate mura – Uneveness

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 Unbalanced Work
20
18
Takt Time
16
= 15 Min.
Process Cycle Time

14
12
10
8
6
4
2
0
Order Entry Sales Review Design Estimating

29
 Takt Time Application

German word being “pace” or “drumbeat”

Used for balancing work and reducing
bottlenecks (especially for high volume work)
Best when workers are dedicated to one type of
activity (even if for only a portion of the day)
 Tough to use when workers are multi-tasked
Will vary based on heavier or lower demand
periods

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 Takt Time Example:
Continuous Production

Available work time

Takt time = “Touch down”
Customer demand

480 minutes/day
Takt time = = 10.6 mins
45 new accounts

Each process step must have a process time of

10 minutes or less to avoid development of a
backlog – OR more people to perform the task.

31
 Balanced Work

20

Takt Time
15
Process Cycle Time

= 15 Min.

10

0
Order Entry & Standard Complex Estimating
Review Design Design

32
 Work Balancing Considerations

 Avoid creating excessively narrow scopes of

responsibility.
 “Production line” vs. one-stop-shop
 Assess “between work item” mental setup (switching) required –
if redundant mental setup, consider one-stop-shop
 Assess “within work item” mental setup (switching) required – if
too much, consider production line
 Assess skill requirements – can one person easily do it all?
 Who’s job is it?
 Be willing to challenge paradigms
 Segment the work when necessary

© 2010 Karen Martin & Associates 33

 Use Work Segmentation in High
Variation Environments

Segment work based on process time needed to

complete the tasks (e.g. degree of complexity).
Cross-train workers to do all levels of
complexity.
Rotate staff from team to team frequently to
keep interest and skill level high.
 Creates organizational flexibility

© 2010 Karen Martin & Associates 34

 Task-level FTE Requirements

Process Time
# FTEs Required =
Takt Time

20 mins 2 FTEs required to

# FTEs = =
10 mins meet customer demand

35
 Creating a Lean Enterprise

Eliminate muda – Waste

Eliminate muri – Overburden (people or
equipment)
Eliminate mura – Uneveness

36
 Load Leveling

Three product types: A, B, C

Weekly customer demand: 12 A’s, 9 B’s, 3 C’s
Traditional Production Model
 AAAAAAAAAAAA—BBBBBBBBB—CCC
Better
 AAAA-BBB-C-AAAA-BBB-C-AAAA-BBB-C
Best
 ACABABAB ACABABAB ACABABAB

© 2008 Karen Martin & Associates 37

 Production Smoothing
(Heijunka)

Leveling of:
Volume of production
 The same quantity is produced each “interval”
for each product family
Variety of production (product mix)
 Every (high-volume) model is produced every
“interval”

© 2010 Karen Martin & Associates

 Load Leveling Tips

 First seek the root cause!

 When external customers are creating unlevel incoming
load
 We have much more influence over external customer behavior
than we think.
 Incentives:
 Information – e.g. add peak times to ACD phone recordings
 Financial – provide discounts, etc. for making requests during certain
time periods – e.g. sunset dinner specials
 When sales team creates unlevel incoming load
 Change commission period/schedule.
 When internal department creates unlevel load, find out
why and apply a countermeasure or incentive that works
for all.
© 2010 Karen Martin & Associates 39
 Prerequisites to
Production Smoothing
1. Connect the processes where possible (cells)
2. Create pull
3. Create flow (balance the work)
4. Achieve predictability (level output produced
daily for the cell or the line)
5. Reduce work type changeover time
6. Increase number of changeovers per day so
can increase the number of each type of work
produced per day

© 2010 Karen Martin & Associates

41
Heijunka for the Office

42
43
Heijunka
Wheel

44
 Lean Management

© 2010 Karen Martin & Associates 45

 Process Ownership & Value
Stream Alignment

 Value Stream Champion / Manager

 Sole individual responsible for the performance of an entire
value stream across multiple departments or divisions.
 Often carry P & L responsibility.
 Process Owner
 Sole individual responsible for the performance of a process
across many functions, regardless of the org chart.
 Ongoing monitoring
 Ongoing improvement
 Org chart management
 Direct reporting lines for day-to-day operation
 Dotted lines to subject matter/policy expertise.

© 2010 Karen Martin & Associates 46

 Creating Lean Leaders & Culture

The improvement professional’s primary role is

to sell and teach.
 Many leaders aren’t improvement savvy.
 Help them understand the process, the resources required,
etc. – answer Why? Why? Why?
 Many individuals have been “burned” by previous
improvement approaches and are fearful in today’s
economy.
 Help them see what’s in it for them.
 Most people – from leadership to frontlines – aren’t
proficient problem solvers.
 Teach them to fish.

© 2010 Karen Martin & Associates 47

 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

© 2010 Karen Martin & Associates 48

 Translating Office/Service
Improvements into Financial Terms

(aka “Monetizing Results”)

© 2010 Karen Martin & Associates 49

 Monetizing Results –
Expense Reduction Possibilities
 Payroll
 Paid overtime
 Attrition (if flat or losing market share)
 In-sourcing previously outsourced services
 Supplies (one-time gain when implementing kanban)
 Software licenses
 Shipping expenses
 Facility-related
 Leases
 Utilities
 Borrowing expenses (due to improved cash flow)

© 2010 Karen Martin & Associates 50

 Monetizing Results –
Cost Avoidance Possibilities

Freed capacity / hiring expenses

Turnover reduction / hiring expenses
Regulatory fines
Not scrapping nonreturnable material/supplies
Not ordering duplicate material/supplies
Not having to borrow money (due to improved
cash flow)

© 2010 Karen Martin & Associates 51

 Monetizing Results – Revenue Gains, Revenue
Loss Avoidance, and Profit Gains

Freed capacity
 Ability to absorb additional work without additional
labor or equipment
 New revenue streams
Revenue gains
 Shorter time to market
 Sales team fully functional more quickly
Market share gains
Retaining high risk (“jeopardy”) accounts

© 2010 Karen Martin & Associates 52

 Monetizing Results –
Revenue Loss Possibilities

Reducing PT in T&M Environments

 Overcome by market share gains & new revenue
streams

© 2010 Karen Martin & Associates 53

 For Further Questions

7770 Regents Road #635

San Diego, CA 92122
858.677.6799
ksm@ksmartin.com

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