The Complete Lean Enterprise

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Information about The Complete Lean Enterprise

Published on June 26, 2009

Author: yucika.kalvari

Source: slideshare.net

the complete lean enterprise Value Stream Mapping for Administrative and Office Processes Author: Beau Keyte, Drew Locher Publisher: Productivity Press, New Yorkk

Applying Value Stream Mapping Throughout the Enterprise C H A P T E R 1

Value Stream – Definitions (Womack & Jones, 1996) The set of all specific actions required to bring a specific product through the three critical management tasks of any business: Problem solving (e.g., design) Information Management (e.g., order processing and other non-production activities) Physical Transformation (e.g., converting raw material to finished product)

The set of all specific actions required to bring a specific product through the three critical management tasks of any business:

Problem solving (e.g., design)

Information Management (e.g., order processing and other non-production activities)

Physical Transformation (e.g., converting raw material to finished product)

“P” in Deming’s PDCA Cycle Plan Act Check Do

Steps for Success In Value Stream Management Identify the need to change the organization from top-level management to one driven by strategic needs Understand and support the basics of a lean strategy at all levels of the organization Identify and select a value stream manager for each major value stream Create lean metrics that drive and support lean behavior in creating value, eliminating waste, and monitoring the financial and operating course to strategic success Implement future-state value stream design Communicate top level management’s continued leadership in focusing on the organization’s pursuit of a competitive operating strategy by using lean tools and techniques throughout the enterprise

Identify the need to change the organization from top-level management to one driven by strategic needs

Understand and support the basics of a lean strategy at all levels of the organization

Identify and select a value stream manager for each major value stream

Create lean metrics that drive and support lean behavior in creating value, eliminating waste, and monitoring the financial and operating course to strategic success

Implement future-state value stream design

Communicate top level management’s continued leadership in focusing on the organization’s pursuit of a competitive operating strategy by using lean tools and techniques throughout the enterprise

Applying Value Stream Mapping to Non-production Areas How can takt time and takt image be applied to administrative areas? Are there really opportunities to apply the concepts of continues flow and pull? What about mix and volume leveling: Don’t these concepts only apply to the production processes? What meaningful lean metrics can you use to understand the value stream performance?

How can takt time and takt image be applied to administrative areas?

Are there really opportunities to apply the concepts of continues flow and pull?

What about mix and volume leveling: Don’t these concepts only apply to the production processes?

What meaningful lean metrics can you use to understand the value stream performance?

Office Value Streams Series of activities or processes supporting the daily production needs of the enterprise Many, but not all, directly affect the information flow to the shop floor Include all activities, both create value and add no value, required to complete the service defined by value stream Sales Customer Service Engineering Purchasing Customer Value Stream

Series of activities or processes supporting the daily production needs of the enterprise

Many, but not all, directly affect the information flow to the shop floor

Include all activities, both create value and add no value, required to complete the service defined by value stream

Getting Started: Mapping Office Value Streams C H A P T E R 2

Function The mapping tools is designed to capture the way work is organized and progresses throughout an organization (or series of organizations) to enable management to: Visualize the process Point to problems Focus the direction of its lean transformation

The mapping tools is designed to capture the way work is organized and progresses throughout an organization (or series of organizations) to enable management to:

Visualize the process

Point to problems

Focus the direction of its lean transformation

Differences between the office and the shop floor Material flow is the actual flow data that takes place to complete a service  Information flow : the scheduling or sequencing mechanism that triggers the next task occurs in the production and office systems Information flows in office systems are loosely structured and use informal scheduling Rarely contained in a single department. However companies typically fail to see the interaction and integration of the work activities involving multiple functions and departments

Material flow is the actual flow data that takes place to complete a service  Information flow : the scheduling or sequencing mechanism that triggers the next task occurs in the production and office systems

Information flows in office systems are loosely structured and use informal scheduling

Rarely contained in a single department. However companies typically fail to see the interaction and integration of the work activities involving multiple functions and departments

Understanding VSM Basics Product/ service family Current State Drawing Future State Drawing Work Plan and Implementation Determine the practical limits of your mapping activities Understanding how things currently operate. The foundation for the future state Design a lean flow The goal of mapping!

Mapping Tip : Companies rarely design a future state that requires more than 12 months to implement , since business conditions can change. Therefore, companies must view the future state drawing as an iterative working document that they can use to drive an organization’s continues improvement effort.

Mapping Tip : Companies rarely design a future state that requires more than 12 months to implement , since business conditions can change. Therefore, companies must view the future state drawing as an iterative working document that they can use to drive an organization’s continues improvement effort.

Scoping the Selected Value Stream and Choosing the Mapping Team Select a service family Determine a manageable boundary Choose the value stream team

Select a service family

Determine a manageable boundary

Choose the value stream team

Select a service family Define the company’s product or service families A family group is a group of products and/or services that share similar processing steps-do not have to be identical Develop a matrix of products or services and processing steps

Define the company’s product or service families

A family group is a group of products and/or services that share similar processing steps-do not have to be identical

Develop a matrix of products or services and processing steps

Two types of Products/Services Matrix Matrix of Product/ Services and Processing Steps Matrix of Product/ Services and Processing Steps Showing Relationships Of Engineering Change x x x x Model D x x x x Model C x x Model B x x Model A Generate job packet Enter Order Design/ Configure Estimate/ Quote Processing Steps Product x x x x Model D x x x x Model C x x Model B x x Model A Analyze financial impact Analyze inventory impact Change bill of mat’l Change Drawing Processing Steps Engineering Change Type

Matrix of Product/ Services and Processing Steps

TEAM DISCUSSION The team’s challenge is to isolate the different families to distinguish the needs of the customer and the purposes of the transactions for each of the families.

TEAM DISCUSSION

The team’s challenge is to isolate the different families to distinguish the needs of the customer and the purposes of the transactions for each of the families.

Determine a Manageable Boundary Level of Mapping Across Companies Single/ Multiple Sites (Our Company) Design Purchase Create Drawing Cross-functional Process level Typically you begin here Order

Level of Mapping

Include all primary business functions in an enterprise Sales and marketing Order processing Design Inventory control Purchasing Production control and scheduling Accounts payable Invoicing and accounts receivable Lean Note : It is critical that companies obtain (and maintain!) the overall big-picture view of the organization before initiating process level improvement efforts. The big picture typically focuses on those functions that impact the ability of the company to deliver products to the customers. Focus on other support functions after understanding the interactions between primary business functions and the manufacturing operation

Sales and marketing

Order processing

Design

Inventory control

Purchasing

Production control and scheduling

Accounts payable

Invoicing and accounts receivable

Lean Note : It is critical that companies obtain (and maintain!) the overall big-picture view of the organization before initiating process level improvement efforts. The big picture typically focuses on those functions that impact the ability of the company to deliver products to the customers. Focus on other support functions after understanding the interactions between primary business functions and the manufacturing operation

Choose The Value Stream Team Value Stream Manager Knowledgeable Respected within the organization Have good facilitating and coaching skills Supported with political support necessary by management to enable change Team Members Cross-functional Representatives of each of the primary functional area impacted by the selected value stream Six to eight members for direct involved Other members involve on an as-needed basis

Value Stream Manager

Knowledgeable

Respected within the organization

Have good facilitating and coaching skills

Supported with political support necessary by management to enable change

Team Members

Cross-functional

Representatives of each of the primary functional area impacted by the selected value stream

Six to eight members for direct involved

Other members involve on an as-needed basis

Identifying Office Waste C H A P T E R 3

8 Wastes at the Office Limited employee authority and responsibility for basic tasks, management command and control, inadequate business tools available 8. Underutilized People People’s abilities, not their time Excessive email attachment, multiple hand-offs, multiple approvals 7. Transportation Movement of Paperwork Walking to/from copier, central filing, fax machine, other offices 6. Excess Motion Movement of People Order entry errors, design errors and engineering change orders, invoice errors, employee turnover 5. Correction Any form of defects Re-entering data, extra copies, unnecessary or excessive reports, transactions, cost accounting, expediting, labor reporting, budget processes, travel expense reporting, month-end closing activities 4. Extra Processing System downtime, system response time, approvals from others, information from customers 3. Waiting Filled in boxes (electronic and paper), office supplies, sales literature, batch processing transactions and reports 2. Inventory Any form of batch processing Printing paperwork out before it is really needed, purchasing items before they are needed, processing paperwork before the next person is ready for it 1. Overproducing Producing more, sooner or faster than required Office Examples Waste Category

Assessing the Office Current State C H A P T E R 5

Suggested Steps to Complete a Current State Map Document customer information and needs Identify main processes (in order) Select process metrics Perform value stream walk-through Establish how each processes prioritizes work Calculate system summary metrics, such as lead time versus process time, first-pass yield, cost, and/or other value stream summary measures

Document customer information and needs

Identify main processes (in order)

Select process metrics

Perform value stream walk-through

Establish how each processes prioritizes work

Calculate system summary metrics, such as lead time versus process time, first-pass yield, cost, and/or other value stream summary measures

Process Metrics Time: process time, lead time, and value-added time Changeover time Typical batch sizes or practices Demand rate Percent complete and accurate Reliability Number of people Inventory Information technology used Available times

Time: process time, lead time, and value-added time

Changeover time

Typical batch sizes or practices

Demand rate

Percent complete and accurate

Reliability

Number of people

Inventory

Information technology used

Available times

Tips for Mapping the Current State (Steps 3 to 6) Identify process boxes before performing the actual walk-through Identify the metrics that the team will collect for each process box Add other information (via visual icons or metrics) as you observe the process steps in motion Guard against making the map too unwieldy; start simply, and add boxes as necessary Estimate the performance of the current state the first time through to get a quick picture of the value stream as it exists

Identify process boxes before performing the actual walk-through

Identify the metrics that the team will collect for each process box

Add other information (via visual icons or metrics) as you observe the process steps in motion

Guard against making the map too unwieldy; start simply, and add boxes as necessary

Estimate the performance of the current state the first time through to get a quick picture of the value stream as it exists

Walk the value stream to gather the performance data associated with creating the value Ask questions regarding activities and issues you see to understand potential barriers in designing future states Map the whole value stream as a team Assign team members specific tasks to perform in the mapping process Always draw by hand and in pencil

Walk the value stream to gather the performance data associated with creating the value

Ask questions regarding activities and issues you see to understand potential barriers in designing future states

Map the whole value stream as a team

Assign team members specific tasks to perform in the mapping process

Always draw by hand and in pencil

Designing the Current State Map for ABC Design C H A P T E R 6

6 step process to complete current state map Documenting customer information and need Identifying main processes (in Order) Selecting process metrics Filling in the data boxes Establishing how each process prioritizes work Calculating system summary metrics

Documenting customer information and need

Identifying main processes (in Order)

Selecting process metrics

Filling in the data boxes

Establishing how each process prioritizes work

Calculating system summary metrics

Current State Map Reflection Discussion What do you see? Where is the process broken? Where are queues of information or material forming? Where does batch processing occur? What are some of the possible root causes? Is there any evidence of “pushing” the processing of information or materials before the next step is ready for it? Where is there a lack of standardized work, places where people perform particular activities in different ways? Are the various information technologies adequately integrated? Is the work prioritized consistently and in a way that makes sense?

What do you see?

Where is the process broken?

Where are queues of information or material forming? Where does batch processing occur? What are some of the possible root causes?

Is there any evidence of “pushing” the processing of information or materials before the next step is ready for it?

Where is there a lack of standardized work, places where people perform particular activities in different ways?

Are the various information technologies adequately integrated?

Is the work prioritized consistently and in a way that makes sense?

Thinking Lean at the Functional Level C H A P T E R 7

2 important points needs to be aware of A company can not eliminate or even reduce waste if it means jeopardizing its ability to meet customer needs and competitive advantage. Some company failed to keep this in mind Use lean tool to identify the root cause of the wastes, not the symptoms .

A company can not eliminate or even reduce waste if it means jeopardizing its ability to meet customer needs and competitive advantage. Some company failed to keep this in mind

Use lean tool to identify the root cause of the wastes, not the symptoms .

Corrections Waiting Motions Data Processing Overproduction Inventory Underutilized people Lack of training Current roles & responsibilities Office layout Performance measures No standardized works System limitation

Purchasing & Inventory Management What effect will the use of pull/kanban material replenishment systems have on the purchasing and inventory management activity? What is the value of developing strategic partnerships with vendors, as opposed to selecting suppliers solely on the basis of price? What is the impact on the value stream if you eliminate purchase orders or replace them with blanket order agreements? … (more in the books)

What effect will the use of pull/kanban material replenishment systems have on the purchasing and inventory management activity?

What is the value of developing strategic partnerships with vendors, as opposed to selecting suppliers solely on the basis of price?

What is the impact on the value stream if you eliminate purchase orders or replace them with blanket order agreements?

… (more in the books)

Scheduling and Production Control What changes will be required to existing scheduling systems (manual or computer based) to support smaller increments of work flowing through the operations? What will be the effect on scheduling the value stream if the company does not initiate work until all resources such as materials, instructions, and drawings are available? How will you simplify the scheduling and production control activities as the company reduces production lead time? … (more in the book)

What changes will be required to existing scheduling systems (manual or computer based) to support smaller increments of work flowing through the operations?

What will be the effect on scheduling the value stream if the company does not initiate work until all resources such as materials, instructions, and drawings are available?

How will you simplify the scheduling and production control activities as the company reduces production lead time?

… (more in the book)

General Accounting What is the time and effort required to perform month-end closing activities throughout the enterprise? How will more timely and accurate financial and accounting information help specific processes (e.g. periodic reports) and the organization in general? How does the batching of accounting transactions (e.g. invoices, expenses, receipts) affect the ability to manage the value stream, or the organization as a whole? … (more in the book)

What is the time and effort required to perform month-end closing activities throughout the enterprise?

How will more timely and accurate financial and accounting information help specific processes (e.g. periodic reports) and the organization in general?

How does the batching of accounting transactions (e.g. invoices, expenses, receipts) affect the ability to manage the value stream, or the organization as a whole?

… (more in the book)

Human Resources What would be the benefit of reducing the effort associated with payroll-related activities such as processing and correcting time cards? What is the cost associated with employee turnover? What is the financial benefit of improved retention? How can you change compensation practices to reinforce lean behaviors such as teamwork, standardized work, and cross-training? … (more in the book)

What would be the benefit of reducing the effort associated with payroll-related activities such as processing and correcting time cards?

What is the cost associated with employee turnover? What is the financial benefit of improved retention?

How can you change compensation practices to reinforce lean behaviors such as teamwork, standardized work, and cross-training?

… (more in the book)

More in the book…. Step by Step Exercise of Design's Lean Transformation in the Production Area, Designing Current State Map, Designing Future State Map in ABC Company Chart figures of the Value Stream Maps Practical tips and exercise… Thinking Lean at more functions (Sales, Marketing, Quality, Order Processing, etc) Using lean metrics to understand performance

Step by Step Exercise of Design's Lean Transformation in the Production Area, Designing Current State Map, Designing Future State Map in ABC Company

Chart figures of the Value Stream Maps

Practical tips and exercise…

Thinking Lean at more functions (Sales, Marketing, Quality, Order Processing, etc)

Using lean metrics to understand performance

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