"A Lean Office Eliminates Waste and Saves Time" An Article By Willie L. Carter

Lean goes way beyond the shop floor:

Higher customer expectations, cost-cutting pressures, thinner margins, and shorter lead times are some of the daily challenges that organizations face. A management system built around lean processes enables companies to achieve operational excellence, while providing flexibility in the way processes are managed.

Organizations need robust, waste-free, flexible office processes that meet their customer needs and help them survive in the global marketplace. 

Considering that 60 to 80 percent of all costs related to meeting customer demand are administrative or office-related functions, it doesn’t take rocket science to conclude that applying lean principles to streamline and eliminate waste from your office and administrative processes will result in bottom-line savings. 

The benefits of a lean office

A lean office management system can affect administrative processes at all levels of your organization. 

Enterprise-level processes—The processes that touch your external customers and suppliers: order entry, customer service, accounts payable, accounts receivables, marketing/sales, research and development, product development, and distribution. Lean management tools can streamline and speed up these processes. 

Organizational-level processes—The key support processes in your organization: information technology, human resources, engineering, and purchasing. Lean will streamline these processes and improve process efficiency. 

Department-level activities—Lean reduces activities that add time but little or no value. It can help create flow at the pull of the customer, reduce hand-offs, and improve departmental quality.
Individual-level tasks—Lean can reduce the paperwork, manual entries, and errors within standardized work procedures; help improve workplace organization; and clarify individual roles and responsibilities. 

Getting started

Before applying lean tools to the office environment, we must understand the flow of work. Just as we map the value stream and focus on reducing lead time and eliminating waste in manufacturing, we must map administrative processes to better understand them and eliminate waste. 

Processes such as order entry, quoting, planning, purchasing, product development, and others are full of waste. As a matter of fact, 75 to 90 percent of the steps in service and administrative processes add no value—the lean definition of waste. These wasteful steps cause delays and customer dissatisfaction.

Because one of the key principles of lean thinking is to minimize the time between the receipt of a customer order and fulfilment of that order, it's crucial to look at the entire lead time. To see the waste in these processes, we must map them. After we identify the waste (non-value-added steps) and what needs to be worked on, we can apply the traditional lean tools such as pull systems, point-of-use storage, continuous flow, 5S, visual controls, and mistake proofing. 

Second, you must collect data. If you are like most organizations, you collect very limited data on your administrative processes. Office lean is not like manufacturing lean—it is based on data-driven decision making. For office and administrative processes, determining what data to include depends on the questions about your value stream you want answered and how you define the product or service produced by these processes. For example, if your objective is to reduce the number of engineering change orders (ECNs), it would be helpful to define ECNs as the product and identify the total number of ECNs issued, cycle time and queue time for processing, and total cycle time. From this information, you can determine where constraints most likely occur and can eliminate areas of waste in your “future state” process. 

Examples of lean office applications

A steel fabricator’s value-stream map indicated that out of a total lead time of 22 weeks, only one week was spent doing true value-added work. This steel fabricator found that a large part of the non-value-added lead time was identified as “waiting for approval.” Approvals were built into many stages of the order fulfilment process, but were the responsibility of management staff, which was often unavailable. The steel fabricator standardized the work procedures to eliminate the need for many of the approvals and reduced its lead time by two weeks. 

In reviewing the order entry process for a client, we found that a significant amount of time was used to acknowledge an order. Whenever an order was entered, an acknowledgement was automatically printed and then manually sorted and mailed to each customer. The first question we asked was, “Did the customer really want these acknowledgments; in other words, does it add value?” It turned out that only a few of their customers wanted an acknowledgement, and those that did said they would accept an e-mail response. The client changed their order processing system to code any customer seeking an acknowledgement, and then automatically acknowledged these customers via e-mail at the end of the order entry process. This resulted in freeing up overworked office staff to allow them to spend more time on value-added activities. 

A loudspeaker manufacturer discovered that much of its lead time was attributed to delays in obtaining customer approvals during the design and prototype cycle. There was no effective means of managing the customer approval process. It seemed that once the information was given to the customer, it disappeared into a "black hole.” We suggested to the client that they develop a visual management system (a centrally located schedule board) that shows the status of every job in-house. This provided visibility for every step of the process and reduced lead time in the design and prototype process by 50 percent. 

As you can see by these examples, lean solutions are surprisingly simple and don't require great capital expenditure. 

Lean is a proven, systematic approach for eliminating or minimizing waste that results in the production of goods or services at the lowest possible cost. It goes beyond the shop floor. Lean is every system, every process, and every employee in the company. ________________________________________________________________
Willie L. Carter is the president of Quantum Associates Inc., Northbrook, Illinois (USA)

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Self-Discipline and Consistent Quality are Inseparable Twins.

Self-Discipline  and Consistent Quality are Inseparable Twins.

As a quality consultant, I often hear these words:

•  “You see our business is very different, will ISO 9001 work for us?”
•  “Will Six Sigma work in our country?”
•  “Lean management might work well for Japanese firms, but will these  tools work for us?”

My answer is “Yes, if the processes are performed right, the results are surely going to be right”. So, nature of the product or nature of the business or country in which we conduct the business is not a critical issue. The focus needs to be on performing the processes correctly.

Lets consider a simple example. I have to reach office daily at 8.30 am. I know that to reach at 8.30 am, without stressful driving, I must leave my house at 7.45 am. Then, doing my process right would mean that I must wake up at 6.45 am so that I can leave my house at 7.45 am. If I want to spend 30 minutes on reading the newspaper before leaving for office, then I must wake up at 6.15 am. And, if I have to wake up early I must sleep early. (If I sleep late, I get up late, I leave my house late and there is every chance that I will reach my office late).

Another example would be of a student who is a top-performer in school. It is generally seen that such a student continues to perform well in higher studies, irrespective of whether he pursues a career in engineering or management or accountancy. Why is it so? This is because he has developed certain practices (or way of doing things) which ensure that he continues to achieve good performance till the end of is studies.

ISO 9001 or Six Sigma or Lean Management are all methodologies that help us to improve processes and standardize the ‘way of doing things’. Once we standardize a process then if we keep repeating it in the same manner, we are should get the same (consistent) results again and again. But why does this not always happen this way? Why do mistakes still occur? Does the fault lie with the ISO 9001 system or with Six Sigma or with the tools of Lean Management?

Not really! All these systems / methodologies work on building preventions in the processes and there is a definite logic in the way they work. Then where does the problem lie? Repeated studies show that the problem does not lie in finding solutions to preventing problems, nor is it really difficult to find ways to improve processes. The problem lies in sustaining the improvement.

In other words establishing a new system or improving a process is not the challenge. The real challenge lies in sustaining the improved system / process. For this reason we bring in Standard Operating Procedures (SOPs) and audits. But still, we observe non-compliance during the audits. Why does this happen?

In most cases where a set of procedures has been established, it is seen that mistakes occur mainly because “someone overlooked a step in the procedure”. Even the “best system or ideal process” could end up in mistakes if people performing the process do not adhere to the SOPs. We all understand that it is unsafe to talk on the mobile phone while driving. We also know that many car accidents do occur due to the driver speaking on the mobile phone, yet we overlook the procedure (and maybe even the law)!

If we have to sustain the performance of improved / standardized processes, what is needed most is “self-discipline”. The self-discipline that helps us to overcome the urge to adopt a short-cut in our work and the self-discipline to stick to doing things as defined in the SOP.

It is a proven fact that out of a thousand principles for success, the one quality that helps an individual to succeed is the habit of self-discipline. The same is true for organizations. Organizations run and sustain on the basis of self-discipline.

Often the cultural or political climate around us discourages us from being self-disciplined. People tend to think “when everyone else is indisciplined, why should I follow discipline?” “Everyone throws litter around, so why shouldn't I?” But, if everyone in an organization or in a country starts thinking this way where will we reach? And what is the use of standardizing processes / systems if we do not possess the self-discipline to follow them?

Toyota has been a rare example of an automobile company that made profit consistently for 50 years!! Then what has gone wrong with Toyota now? Why did they have to announce a large number of recalls?

In the words of their CEO Mr. Akio Toyoda, “Toyota's priority has traditionally been the following: First; Safety, Second; Quality, and Third; Volume. These priorities became confused, and we were not able to stop, think, and make improvements as much as we were able to before…….. We pursued growth over the speed at which we were able to develop our people and our organization, and we should sincerely be mindful of that. I regret that this has resulted in the safety issues described in the recalls we face today”.

Toyoda may express regret but the question is where did Toyota go wrong as an organization? They were very small when they started. They strictly followed the “14 Toyota Principles” for 50 years and went on to be known as the world’s best car company. But in the quest for fast results their managers and dealer network seem to have ignored some of the time-tested principles like ‘long-term philosophy’, ‘stopping to fix problems’, and ‘do not let problems remain hidden”.  The price Toyota had to pay for this ‘lack of self-discipline’ in following their established principles is anybody’s guess.

At times, I have seen people working in large reputed organizations operating under beliefs like “I am a knowledge worker, all these rules / SOPs are not meant for people like me” or  “I am a senior person, these rules / SOPs are meant for the juniors”. Also there are instances, when a senior manager suggests that “we bend the rule, just in this case”. What these persons overlook is that juniors usually consider the seniors and the knowledge workers as “role models” and they very soon copy what they learn from the role models.

For example, our office / factory procedure requires that my bag is checked while entering or leaving the premises. Then I may be the CEO or the Managing Director or the Security Officer, I must stop and get my bag checked. This kind of example-setting (and respect for procedures) demonstrated by the seniors goes a long way in conveying the message to everyone else in the organization. 

It would therefore be evident that if our organization desires to deliver consistent performance on an on-going basis, the managers must create a culture for strict adherence to procedures and a strong sense of self-discipline. If Toyota could fail after 50 years of consistent performance, this could happen to any one of us!

The Japanese have referred to self-discipline as the “Fifth S” in the 5-S habits of good housekeeping. But when it comes to ensuring consistency in quality, we can say that self-discipline is the “First S” and it applies to each and every member of the organization. If we wish to achieve consistent / sustained performance over a long period of time, the foremost requirement is to create a culture of self-discipline throughout the organization.

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QUALITY ISSUES IN EDUCATION - ARTICLE 03

Anil Sharma from Kanpur was very keen to qualify as a software engineer. He was advised by the counsellor of a private university to join their four year degree course which would give him excellent opportunities in the future. Anil spent rupees five lakhs on the course fees and another four lakhs on stay and food arrangements, in Navi Mumbai, during the four years. He worked very hard and secured excellent grades. When he realised that placements were not coming forth, he started trying for admission to a post-graduate course.

He was totally disappointed to learn that he was not eligible for such admission because the private university was not a recognized one. Beena Wagh joined an autonomous MBA course of 2 years duration. Due to shortage of faculty, students (boys and girls) had no option but to attend lectures at the unearthly hours of 10.00 pm to 2.00 am! Forget the quality, even the safety of the children was not considered by the management.

Ramesh Bhatia joined a premier institute through a competitive examination. The faculty at the institute was highly qualified, but many of them failed to deliver the contents in a manner that the students could  understand. Some of the teachers were not even audible beyond the third row of the class!

Sunita Joshi joined a university recognized MCM course. Although the computer hardware was available as per the university norms, many of the required software were not available leading to gross under-utilization of the resources.

Above instances are just a few examples that show the way educational activities are being managed in India. Despite the efforts of bodies like the Education Boards, the UGC and AICTE to regulate the quality of educational activities, many schools and colleges get away with inefficient and ineffective working as demand exceeds supply.

We can define Quality as: “Achieving satisfaction of customer through giving him value for the money he spends and fulfilling all his needs and expectations”. Surprisingly many educationists still believe that students are not their customers. The attitude is one of autocratic-benevolence and the issue of trying to achieve customer satisfaction at student level is often ignored as “not applicable in our case” 

Some of the typical quality-related issues that lead to dissatisfaction of the parents and students are:

• Course contents / curriculum do not have linkage with the needs of trade and industry,
• Lack of in-depth knowledge of the subject by the faculty,
• Lack of faculty’s ability to make the student understand the subject,
• Effectiveness of the examination-system as a means of testing the student’s knowledge is questionable,
• Absence of a helpful approach by the administration,
• Transparent communication with the students and parents is missing, Ill-equipped library and laboratories,
• Infrastructure is inadequate to meet the students’ requirements,
• Institution is not recognized / accredited,
• Foreign universities that charge high fees although they do not follow any standards, nor do they enjoy any kind of reputation in their own country.
• Cumbersome process of admission,
• Need for good housekeeping and proper maintenance of records,
• Not offering guidance / assistance to students in respect of placement or career-counselling,
• Absence of a mechanism to ensure training and up-gradation of the faculty and other personnel,
• Not involving students and parents in improvement of the institution’s processes.

In the absence of focus on such quality issues, we cannot expect that the students and parents will be satisfied customers. The concept of managing quality in service businesses like  education, banking and insurance has come much later than in the manufacturing

organizations. Even in manufacturing organizations, the Americans and Europeans have adopted this concept much later than the Japanese. Indeed, the secret behind Japan’s astounding success after the 1950’s was the adoption of quality management principles of the

Quality Gurus (mostly Americans) like Dr. Deming and Dr. Juran. In the 1970’s, the Japanese company Matsushita bought a color TV plant that was earlier being run by Motorola. Prior to takeover by the Japanese management, the average rate of defects per TV, was 2.2 per year. Three years later the defect rate had dropped to an average of 0.03 per TV, per year.

What would have been the investment to achieve this change?

The major efforts put in by the Japanese management included modification of the product designs to reduce chances of field-failures, changing the manufacturing processes to reduce defect generation and sourcing components from more reliable suppliers. Matsushita did not go in for a complicated technology, nor did they change the workforce. All they did was to use the concepts of quality management propagated by Dr. W. Edwards Deming and Dr. Joseph Juran. These concepts were, years later, formalized as the eight principles of quality  management and adopted by the International Organization for Standardization (ISO) Geneva and by Motorola who developed the “Six Sigma Management System”

The Six Sigma Management System teaches us to use the process approach for managing quality. The process approach looks at every activity as management of inputs in such a manner that you can achieve the desired output. For example, a school wishes to achieve 100% pass results in the Board examinations. To achieve this output, the management must identify the key input factors that need to be managed such as capability of the teachers, hours of practice put in by the students, selection of the right books, etc. They may also study the best practices for the same process in other successful schools and adopt these to make their internal-processes more effective.

Another important principle that Six Sigma uses is based on Dr. Deming’s philosophy that every employee in the organization is responsible for quality and ultimate responsibility is that of the top management. So, in the case of an educational institution, not only the faculty and staff but also the students and the parents have a role to play in improving the quality of the institution’s processes.

Using tools like collection of data to understand processes, brainstorming in cross-functional teams to arrive at root causes of problems, building preventions in processes to minimize mistakes / defects in a proactive manner, deep involvement of senior management in identifying pain areas of the organization and a very strong commitment to achieve customer satisfaction are some of the most important elements on which a Six Sigma management system is based.

Any school / college / institute can use the concepts and tools of Six Sigma, to improve the effectiveness of their processes which would result in increased satisfaction of the children and parents and higher revenues for the organization.

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G.K.K. Singh (Nickname: GKPK) is a B.Tech and Silver Medalist (IITBombay), MBA (IIM-Calcutta), IRCA-UK Lead Auditor, Six Sigma Master Black Belt and Director of Asian Institute of Quality Management - Pune. He can reached at: director@aiqmindia.com

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Six Sigma - Lean Six Sigma Management System - ARTICLE 02

Organization’s Route to Achieving its Strategic Management and Profitability Goals The “Balanced Scorecard” approach to strategic management was developed in the early 1990's by Drs. Robert Kaplan (Harvard Business School) and David Norton. It is an effective approach that enables organizations to clarify their vision and long-term strategy and translate these into action.

It incorporates performance management dashboards that focus on four indicators (perspectives) to monitor progress in respect of achieving the organization's strategic goals. 

The four perspectives are:

• The Learning and Growth Perspective.
• The Business Process Perspective.
• The Customer Perspective.
• The Financial Perspective.

Many organizations have under-rated the Balanced Scorecard approach although the fault might lie in the manner in which it has been implemented. Blending the use of Lean Six Sigma with Balanced Scorecard can help an organization to achieve its strategic management goals by building on some key elements of Lean Six Sigma such as:

• Customer-defined quality.
• Empowering employees to work with a proactive approach.
• Encouraging employees to work in cross-functional teams to deliver value to external and internal customers.
• Measuring, improving and monitoring the parameters that are critical to process performance.
• Achieving continual improvement and breakthrough improvement in the organization’s business and technical processes.

In the recent economic slowdown, a blanket solution adopted by many organizations was to lay off employees. Although this may have resulted in short-term savings, such organizations  sacrificed their ‘only appreciating assets’ in the process.

On the other hand, following long-term gains could have been achieved by implementing lean six sigma projects in the organization’s strategic areas of business:

• Costs that the organization incurs daily due to mistakes / defects at the level of internal and external customers reduce sharply.
• Hidden costs related to loss of customer confidence and legal claims, associated with such mistakes / defects are eliminated. Needless to mention, these costs can be enormous at times.
• Employees stop hiding mistakes and learn to build “prevention” in their business and technical processes thereby improving the capability of these processes.
• Utilization of employee-wisdom and ability to work in teams leads to optimum solutions for the organization’s problems.
• People start recognizing the seven types of waste, commonly identified in “Lean Management Practices” and work towards elimination of such wastes.
• “Value Stream Processing Mapping” is used to increase efficiency of the business processes by eliminating the “non-value adding” steps.
• Organization enhances its ability to offer better products and services, delivered faster and at lower cost.

Due to these benefits, Lean Six Sigma is today being adopted by number of organizations worldwide. According to one estimate nearly 60 % of Fortune-500 companies are using Lean Six Sigma and that figure rises to 82% when we look at just the Fortune-100 companies. In fact organizations like GE (General Electric) have mandated that all management level persons have to be at least six sigma green belt qualified.

At times I come across senior managers who look at Lean Six Sigma methodologies as another set of tools to improve quality. Unfortunately, this is far from the truth. On the contrary, Lean Six Sigma is a very powerful management system that can lead the organization to achieve its strategic management goals and profitability goals on an on-going basis.

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G.K.K. Singh (Nickname: GKPK) is a B.Tech and Silver Medalist (IIT-Bombay), MBA (IIM-Calcutta), IRCA-UK Lead Auditor, Six Sigma Master Black Belt and Director of Asian Institute of Quality Management - Pune. He can reached at: director@aiqmindia.com

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SIX SIGMA BASICS - ARTICLE 01

The traditional way of looking at quality has been that “quality cannot be measured”, and “error in work is inevitable”.3FF8QH42BN88

At the end of the second world war, the quality of products manufactured in Japan was atrocious. At this juncture, the Japanese decided to change this scenario. They visited many industries in USA to study their approach to quality. They also invited experts like Dr. Deming and Dr. Juran to help them. These experts focused on enlightening the top management about their responsibility in respect of quality and training engineers on tools like statistical process control and design of experiments. Their efforts resulted in spectacular improvements and by 1980 even the American citizens preferred to buy Japanese products due to better quality offered by them at a more competitive price.

By 1985, survival became a major issue for many American organizations against the onslaught of Japanese competition. One such organization which was at great risk was Motorola. In an effort for survival, Motorola evolved and implemented the six sigma management system for the first time in the world.

This system of management-included lessons learnt from the successes achieved by Dr. Deming and Dr. Juran in Japan as also a methodology of quantifying quality. Till such time, quality was considered as “unmeasureable” and only talked of in terms of “excellent”, “world-class”, etc. The six-sigma management system makes it possible to calculate quality of each and every process in the organization. It is believed that if you want to improve any process we should first know its present level of quality. Six Sigma methodology makes this possible.

Key Themes in Six Sigma:

Every functional area (department) is viewed as a supplier to another department whose requirements must be satisfied. So, if we want to improve any process, our starting point is to find who is the customer for our process and what are his requirements from the process. This could be an internal customer for an HR process or an external customer for a logistics process.

For example, one of the internal customers for an HR Manager is the Production Manager or the Operations Manager. A critical requirement of this internal customer is that vacancies must be filled within, say, 45 days from time of placing the request. Another requirement would be that induction-training of new employees results in their settling fast on the job. If the HR Manager has identified these requirements of his internal customers, then he is more likely to fulfill them.

Each and every activity in the organization is viewed as a process represented by the function Y = f(X1, X2, X3,;;Xn), where Y is the output (result) to be achieved from that activity. The X1, X2, X3 ;;;Xn are viewed as inputs to the process. In six sigma, we use statistical methods to find out what would be the optimum values of the inputs X1, X2, X3, ;;;. Xn, which would help us to achieve the most effective result. By repeating these values for the inputs, we can be assured of the same (consistent) output from the process. In the above example, building a data bank would be an important X1 as input to the recruitment process.

In today’s environment of fierce competition, an external customer needs to be satisfied on various counts which include: providing the required specifications, giving prompt support before and after the sale, pricing the product competitively and meeting the timelines specified by the customer. All these outputs are possible only if a boundaryless cooperation exists between the different departments. Thus, six sigma lays very heavy emphasis on cross-functional cooperation without which it is very difficult to deliver value to customer.

Six Sigma methodology stresses the need to improve consistency in performance of our processes thereby reducing the defects / mistakes. This is achieved by working in a proactive manner and visualizing “what are the defects / mistakes that occur in this process”? What preventions can we build in our process so that the defects / mistakes do not occur?

“Lean management” which was developed by Toyota is now considered as a part of six sigma methodologies. It requires employees to question existing practices and ways of doing tasks, with the idea of reducing the idle-time and other wastes in the processes.

Due to this, the terminology “Lean Six Sigma” has been evolved. In short Six Sigma methodologies help us to reduce the defects / mistakes so that our process becomes more effective. Lean management helps us to reduce waste so that our process  becomes more efficient.

Six sigma implementation is always carried out in teams who work on projects with unknown solutions. Typically, the senior management selects areas of pain for the organization and these are taken up as projects by teams consisting of a Champion, a Black Belt and a number of Green Belts. (Reportedly, these titles were coined by a Motorola improvement expert with a passion for karate).

Every project must result in reduction of errors / defects, or elimination of waste, or increase of customer satisfaction ultimately ending in profit-improvement for the organization. Six Sigma methodology relies on a number of tools and technique like flow-charts, process-maps, pareto analysis, root-cause analysis, risk-assessment, risk reduction, hypothesis-testing, building prevention in processes, and establishing co-relation for a better understanding of the  organization’s process.

It uses DMAIC as a proven-framework for problem-solving and process-improvement:

Define:

• The problem statement,
• The goal statement,
• The scope of the process-improvement project,
• Form the project team,
• Finalize date-wise plan for the process-improvement project.

Measure:
You cannot improve anything that you cannot measure. To know where we want to go, we must know where we are today. So, this phase involves:

• Decide how you will measure current performance,
• Calibrate the measurement system,
• Measure current performance

Analyze: 
In this phase, we analyze the data related to current performance of the process, such as:

• Root causes that lead to occurrence of defects / mistakes,
• Causes of variation in the process – why we are not being able to achieve consistency,
• Causes that lead to waste and re-work in the process,
• Likely solutions that would help us to remove the above causes

Improve:
This phase involves:

• Brainstorming, to arrive at the best solution,
• Risk-assessment & risk-reduction in respect of the chosen solution, before  implementation,
• Implementing the chosen solution,
• Verifying and validating for the improvement.

Control:

Greatest challenge after an improvement is to sustain the improvement. Control phase is to ensure sustenance of the improvement achieved. It involves aspects like:

• Documenting the changes made in the process
• Training people on the changes
• Using Control Charts to monitor the process performance on an on-going basis.

Most six sigma projects end in profit improvement and this is one of the measurements of process-improvement because whenever we reduce defects / re-work or wastage, it should result in savings / contribution to profit-improvement.

In recent years, adoption of Six Sigma Management System has increased phenomenally. Today 53 % of Fortune-500 companies are using Six Sigma –and that figure rises to 82 % when you look at just the Fortune-100.

It is seen that if an organization invests time and money on six sigma training and implementation, it usually ends up in achieving savings, which would be 20 to 50 times of the investment made. Moreover, with reduction of defects, the frustration of internal stakeholders drops and satisfaction of external customers improves drastically.

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G.K.K. Singh (Nickname: GKPK) is a B.Tech and Silver Medalist (IIT-Bombay), MBA
(IIM-Calcutta), IRCA-UK Lead Auditor, Six Sigma Master Black Belt and Director of
Asian Institute of Quality Management - Pune. He can reached at: director@aiqmindia.com Tweet