| June is upon us and the kids will be getting out of | | | | Takeaway - Better layouts, better process flow |
| school shortly. This means summer vacations to the | | | | design and increased automation eliminates |
| beach and weekly trips to the pool. Many of us dread | | | | unnecessary motion which reduces waste and |
| the swimsuit season since we may not be as "lean" | | | | increases productivity. Take time to think about the |
| as we'd like to be. Getting lean physically means | | | | unnecessary "motion" that occurs in your business. |
| eating better, eating less and exercising more. That is | | | | Waiting - No real mystery here. Think of periods of |
| my current objective since our July trip to Myrtle | | | | inactivity while people or machines are waiting for the |
| Beach is approaching fast! | | | | next input. A great example is in the mortgage |
| This made me think about getting "lean" as it relates | | | | application process. You fill out your application with all |
| to business. You may have heard of the terms "lean | | | | the supporting information and hand it over to the |
| manufacturing" or "lean thinking" in different articles, | | | | mortgage company. They tell you it will take four to |
| seminars or books. Lean manufacturing or "lean" is a | | | | six weeks to process. |
| generic process management philosophy derived | | | | In reality, there is only 15-20 hours of actual work |
| mostly from the Toyota Production System (TPS). I | | | | done on your application to complete it. The rest of |
| know Toyota has run into some major issues | | | | the time is wasted on waiting. Work waiting for |
| recently so I don't want you to shut down mentally | | | | people (backlog), people waiting for work or people |
| at this point. The main reason that Toyota has run | | | | waiting for people. One smell test is Solitaire. If |
| into the problems is the lack of focus on lean | | | | people are playing Solitaire, then you know time is |
| principles and total quality efforts that made them so | | | | being wasted waiting for work. |
| successful in the first place. One of the keys to | | | | Takeaway- Look at processes that involve waiting |
| surviving in this economy is to do more with less and | | | | and find ways to eliminate that time. If that is not |
| having a lean mentality in your business will help you | | | | possible, add new productive activities that can be |
| get there. | | | | done during the waiting period. |
| Lean is NOT just for manufacturing! These concepts | | | | Overproduction - This ties in directly with inventory |
| apply to all types of businesses as well as back | | | | and waiting. Overproducing and waiting results in |
| office processes such as finance and human | | | | excessive inventory. A client of mine used to make |
| resources. Lean concepts can be applied to | | | | product and then package it in finished goods based |
| everything. | | | | on customer forecast. Many times when the orders |
| One lean concept relates to eliminating waste and is | | | | came in, the customer wanted different packaging |
| basically centered on the concept of "preserving | | | | than forecast so my client had to open up finished |
| value with less work." Lean thinking points to | | | | goods boxes, take the product out of packages and |
| effectively eliminating seven different types of | | | | repackage them per the customer order. A waste of |
| waste in your business processes: | | | | time, packaging materials and warehouse space as |
| 1. Transportation | | | | well as the opportunity cost of working on other |
| 2. Inventory | | | | orders. |
| 3. Motion | | | | In this case, the solution was to manufacture goods |
| 4. Waiting | | | | based on better customer forecasts (push) and then |
| 5. Overproduction | | | | package and ship based on customer order (pull). This |
| 6. Overprocessing | | | | reduced inventory and rework as well as shipping |
| 7. Defects | | | | orders more quickly. |
| Let's take a look at these and provide examples of | | | | Takeaway - look for ways to get better information |
| each. | | | | to better forecast needs and figure out ways to |
| Transportation - This involves standard transportation | | | | maximize production efficiencies so finished goods |
| from suppliers and to customers as well as the | | | | can be shipped immediately upon completion. |
| internal transport of information. UPS discovered the | | | | Overprocessing - This is usually an issue when one |
| waste involved in transportation when it explored the | | | | sub-process is much more efficient than other |
| simple concept of its trucks waiting at stop lights or | | | | sub-processes. For example, you run the payment |
| stop signs to make a left turn. Significant amounts of | | | | processing section for a credit card operation. You |
| time and gas were being wasted waiting to make | | | | decided to buy a high speed envelope opener that |
| left turns. | | | | opens 60 envelopes/minute. Sounds great except for |
| UPS rewrote their software programs to maximize | | | | the fact that your staff can only process 30 |
| the number of right turns when delivering packages. | | | | payments per minute. The increased speed in letter |
| In 2006, this resulted in saving over three million | | | | opening does not increase the throughput at the end |
| gallons of gas, increased deliveries per truck and | | | | of the process. The money spent on this machine is |
| reduced CO2 emissions by 31,000 metric tons. | | | | wasted if it does not result in increased throughput |
| Takeaway - waste is everywhere if you look at | | | | for the whole process. |
| things differently. Also, simple concepts can deliver | | | | Takeaway - you must look at an entire process and |
| huge results. Don't outthink yourself. There is brilliance | | | | measure it from beginning to end. Increased speed in |
| in simplicity. | | | | one sub-process does not necessarily result in better |
| Inventory - This involves storing and maintaining "just | | | | total results. A processes' throughput is only as good |
| in case" inventory versus "just in time" inventory. | | | | as its biggest bottleneck! |
| Inventory that is made or purchased without orders | | | | Defects - We've all heard the phrase, "do it right the |
| or immediate use limits floor space, increases storage | | | | first time" and that is the essence of this element. |
| costs, reduces cash flow, etc. In its original model, | | | | Defects in outputs (products, documents, |
| Dell Computer had this mastered. Customer's | | | | deliverables, etc.) that causes the output to be |
| computer orders were placed online or over the | | | | disposed of or to need rework results in wasted |
| phone. The computers were then put together with | | | | materials, time and scheduling as well as missing |
| on hand supplier parts that did not become Dell | | | | customer delivery dates or client due dates. |
| inventory until it was added to the computer on | | | | I had a client that had a large department devoted |
| order. | | | | entirely to back office error correction based on |
| The customer paid for the computer when it was | | | | incomplete or inaccurate data that was input by |
| shipped and then Dell paid the suppliers for the parts | | | | customers via the web. By making some web form |
| inventory on 60 day terms after the shipment. How's | | | | adjustments that required data to be input a certain |
| that for a cash flow model! Customer payment 60 | | | | way and rejecting customer submissions unless they |
| days before I have to pay my supplier and I hold no | | | | were complete and accurate, we eliminated the |
| inventory. Wouldn't we all love that model! | | | | "waste" of error correction by eliminating the problem |
| Takeaway- Think of inventory as a liability, not an | | | | at the source. |
| asset and ask yourself the question, "How do I fulfill | | | | Takeaway - build quality into your processes so no |
| customer orders with little or no inventory?" | | | | rework is required. Determine the root cause of |
| Motion - Think of wasted motion as extra steps | | | | defects and eliminate the problem at the source and |
| taken by employees based on an inefficient layout. | | | | refuse to implement "band aid" solutions related to |
| There is significant waste related to motion in back | | | | the symptoms. |
| office processes. For example, the expenditure | | | | I have found that by intentionally looking for waste |
| process involves purchasing, receiving, vouching, | | | | based on these seven elements, I see waste |
| approval and payment. Wouldn't it make sense to | | | | everywhere. It's like putting on different glasses and |
| have these functions as close to each other as | | | | seeing a different world in front of you. For the next |
| possible as well as maximizing the automation of the | | | | week, I challenge you take the seven elements |
| workflow? | | | | (acronym is TIM WOOD for memory purposes) and |
| Many times these functions are on different floors, in | | | | look for them intentionally in all that you do. |
| different buildings and are not automated. People | | | | I believe you will be amazed at how many wasteful |
| move up and down floors, send emails, drop off | | | | things you will see through the course of the week |
| paperwork.........you get the idea. This results in delays | | | | and it will inspire you to get more "lean" in all that you |
| in approval, delays in processing, the scheduling of | | | | do. Different lenses show you different things. Please |
| unnecessary meetings (Talk about waste!) and | | | | let me know what you see! |
| increases in cycle times. | | | | |