We don't need any help, we are already lean!

"Lean and Six Sigma are only for manufacturing organizations!"
"Our processes/company is unique, so that won't work here!"
"We're already lean because we're working so hard and so many hours!'

What "lean" looks like to people who don't get it yet.

Have you heard these comments before? That's the first sign of a company in desperate need of process improvement. 

I'll admit, there is some difficulty in getting people in a transactional or office environment to embrace lean and six sigma concepts. The biggest issue is that they can't SEE their workflow, so they cannot easily translate a manufacturing example (often used in training materials) to their own jobs.

I'll also admit, I can lean out anyone else's process, but when I decided I needed to lean out my own work, I ran into some difficulties.

After some serious evaluation of what I actually do (when not training or consulting, those are easy), I realized that I provide "items" to my customers. Items could be book summaries, templates, training material, procedures, guidelines, reference material, examples, recommendations, graphics, just to name a few. My clients take these items, and turn them into action, which should result in an increase in value or reduction in waste or reduction in life cycle costs to their business. Therefore, I indirectly help my clients improve their processes, or directly help them (when they get stuck).

I figured out I used a very simple process to convert a request from a client into an "item".

1. Obtain needs from clients
2. Gain approval to proceed (based on cost and time frame)
3. Create draft of item
4. Review draft with colleagues/experts
5. Make revisions
6. Review revision with broader audience and client
7. Make 2nd revision
8. Release item to client
9. Follow-up with client to determine usage
10. Review success and modify process

For example, one client asked for a summary powerpoint document of basic lean tools, that they could give to their employees, to let them read through prior to a lean event. We had some of it created already, but not in one single presentation, so it needed some work.

Here is what I did:

Step 1. Discussed how many slides, what kind of detail they wanted, which tools and concepts to include, how to navigate between slides, etc.
Step 2. I came back with how long it would take, and how much it would cost. We agreed to proceed after some discussion. I also provided some sample slides, and a basic framework for the presentation.
Step 3. I created a rough draft of the training. It's easy to get 80% done, then want to start something new (get sick of working on the same thing), but this is where you need to step it up to reach 100% completion.
Step 4. I next sent it to my consultant friends and former co-workers for feedback. Some provided better slides, challenged the intent of the presentation, and gave me some ideas on what to improve.
Step 5. I made most of the revisions, and ignored those that were minor, but would add significant time.
Step 6. I next sent it out to the client and some non-expert friends, to see if they could follow along with the presentation. They would better represent my target audience.
Step 7. After getting some of their feedback, I made some final changes.
Step 8. I sent the final "item" to the client for approval, and an invoice was provided.
Step 9. After the training, I asked for feedback on how it was received, and what additional changes to make.
Step 10. If I got hung up in the process, or missed a requirement, or the item didn't get used very much, I determined what I should do better next time.

Bottom line, until you actually reach step 8 above (release product to client), you have not provided any value to your clients. You don't get "credit" or get paid until you deliver. This is my "production", which connects me back to the training material that was too "manufacturing" focused before. If you can show this connection to clients, you'll see their eyes widen, and they will start thinking of all kinds of ways to apply lean to their processes.

What I want my office to look like...

Now, in order to apply lean to this particular process, I need to gather data on the following:

1) How long does it take from step 2 to step 8 (cycle time)?
2) How many items do I complete per month (output/deliveries)?
3) How well did the item get received or used (quality)? If it was good training, I would expect it to be reused over and over again. If they never touched it again, maybe it was considered low quality. Did I have to revise the item after releasing to the client? On a 1-10 scale, how happy was the client with the item?
4) Did I complete the item when they wanted it (on-time delivery)?

Once I have this data, then I can start to apply lean and six sigma concepts to the process. Create a whiteboard and display these metrics near your desk. Include a status board for the items you are currently working on, along with a visual of which step in the process each item is located. 

When reviewing the data, if it took longer than I planned, I need to look at my other activities, to see how they impacted it. The more items I'm working on at once (work in process), the longer it will take me to deliver to my client. This has really kept me focused on working on one or two items at a time (single piece flow). I like to jump around and "multitask" but I know that slows down my process, and it takes me longer to pick up where I left off. Once I start step 2, I need to stay committed to reaching step 8, so I can minimize the time between customer request to delivery to customer without any errors. This is the heart of lean.

Quality can be a little difficult to measure in the office. I mentioned some approaches above. When I go to step 9, and look at how often my items are being used, I feel this is a true measure of how good the item is. If I send out a well-written book review, but no one reads it, then did I actually provide value that the client could take and convert into improvements to their business? If not, then I didn't succeed in my task. If I create a template, and it gets sent around the company, and 50+ employees use the template, then I feel like that item was higher quality than the book review.

In summary, making the connection between lean and the office environment can be difficult and you should expect to get push back when discussing it. However, you can practice learning how to apply lean to the office by reviewing this article, and looking at the work you currently do today. It will be easier to convince others how lean directly relates to them when you can give specific examples on how you apply it to your own work. What has worked well for you when dealing with office processes?

Cost savings from process improvements can be misleading

I've been to many conferences, and have seen lots of companies claim cost savings and metric improvements that are very impressive. However, the more experienced I get, the more skeptical I get of these claims.

First off, let's define what process improvement savings should be. It should be the elimination of waste in a process (removing non-value added work), improving quality to the internal and external customers, reducing the time to complete value added tasks, or redesigning a process to provide more value to a customer.

Savings should not be the outsourcing of processes to another country to save money, or cutting heads and expecting them to "be lean" in order to make up the gap in resources. These are usually short-sighted decisions that end up costing the company more money in the long run, and risk negatively impacting the customer. But for this discussion, we will focus on one more incorrect savings: when the bottom line benefits do not actually exist.

Let's talk about one scenario that I've seen. Short term savings.

Let's say the process is tracking the Work in process (WIP) for approving charge numbers, so employees can start work on a new program or project.

Refer to the table below

Starting at Day 15, the number of charge numbers waiting for approval is 108 (red line). Each day, that total grows larger, as the amount of time available to complete these approvals is not sufficient to keep up with the new requests. This means the process will never be able to cut into the existing WIP. At some point, shown at Day 40, the management gets too many complaints about charge numbers not being available, and they work overtime, and add more resources to complete a bunch of them over the next couple days. They complete 350, 400 and 75 over the three days (blue line), compared to a typical day of around 20-30.

If we were to capture the savings from bringing the total number of charge number requests from 772 to 71 by Day 42, you could conclude a huge reduction of 90%, or 601 requests. If we determine that each request is $1000 per day in lost productivity, then on Day 39, we have around $772,000 tied up in the process, and it is reducted to $71,000. A savings of $601,000!

However, we didn't do anything "lean" since we spent additional money on labor to get the number down. We haven't actually addressed the time available or cycle time per request. Of course, the extra labor should be subtracted out of the savings, so we'll take out $10,000 for the extra labor/resources.

Next, we assume that this is actual bottom-line savings. In order to claim this as savings or growth, we would have to assume that all employees are not using any other charge numbers, and are charging to an overhead number, and therefore the company is losing money by employing them without work to do. This is highly unlikely. Let's be conservative and assume that 10% of the employees would be in that situation, so we'll claim around $60,000 in additional sales/work, not $600,000.

The next assumption is that the 772 open requests would have stayed at that level for an extended period of time. It does appear that this number was continuing to climb, so the number of new requests would have to be reviewed, to see if that was true assumption for the future. If the requests drop off, then they might have been able to catch up on their own.

Finally, we must assume that they can maintain the savings at the low level of around 70 requests for an extended period of time. If we look at the data in the future, you can see that the requests climb back up again. Again, this shouldn't be a surprise, since we didn't do anything to address the original problem, that we cannot keep up with the request demand for charge numbers.

Let's assume that they actually "lean" out the process and are able to keep up with the demand now. One final problem with cost savings is the impact of the improvements to the bottom-line financials of the company. For example, if the process was able to keep up with demand, and a resource was able to be freed up to do some other work, then if that resource isn't actually given value-added work, the savings won't actually show up in the bottom-line. You should be able to see an increase in output or work as a result of the freeing up of the resource, which is where the true savings hit the financials. This step is critical, and should be verified after any claimed improvement.

So next time you see some cost savings presented, think about these key points:

1) Did the baseline data represent the true situation if no action was taken, or was it an unusual time period and not representative of the typical situation for that process?

2) Was waste taken out of the process to improve it, or were more resources and cost thrown at it?

3) Were the improvements maintained over a long period of time (6-12 months)?

4) Did the savings actually flow down to the bottom line?

So be careful what you read about lean or six sigma cost savings, and be diligent if you are involved in a project or event to report the correct and most accurate numbers you can.