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Acora: In the knowApplying LEAN principles in the Enterprise

Applying LEAN principles in the EnterpriseLEAN principles - not just for manufacturingThe use of LEAN within the manufacturing arena has seen reduced inventory, improved lead times, quality improvements, optimised processes and a reduction in non-value added overhead. Within the back office functions, the enterprise, there are equivalent wastes and process inefficiencies. Yet few organisations have taken the LEAN principles and applied them to their enterprise functions. Some feel that they are only for a manufacturing environment and that there is no way to apply them in the enterprise. In some cases the wastes are harder to see or the processes deemed “too complicated”. People also forget that there is an internal customer demand that must be met on time and to requirement – both in terms of content and quality.

What does it mean to be LEAN?In simple terms it is the application of thinking and tools to optimise processes through the removal of waste. Within a manufacturing environment these wastes are usually reasonably easy to see – a large amount of parts stacked up on a bench, parts being moved around

a factory, rework piles, a lot of finished goods inventory sat in the warehouse. So, where can it be used?Anywhere. Wherever there is a set of actions (processes) that are required to move a product or service along the value chain. Typical examples of enterprise areas that have shown benefit in applying LEAN principles are quoting, complex product sales order entry, engineer to order, customer/supplier on-boarding, program/project management, HR and approval processes.

These areas tend to require participation of different teams with multiple handovers and authorisations.

Value add vs non-value add Most businesses can split their activities into value-add (usually through direct activities relating to the product or service), non-value add but necessary (e.g. safety and legal) and non-value add and not necessary. This last category is usually the largest. Customers will not view their back office functions as necessarily adding value. LEAN Enterprise is intended to remove the non-value added processes and minimise those that are non-value added but necessary.

Enterprise processes are ripe for LEAN thinkingThe fact remains that it is the enterprise

processes that probably contain the highest proportion of non-value add/non-necessary activity. In businesses with a high proportion of knowledge workers/indirects this has a significant impact on a wide range of business metrics.

Given that these enterprise processes have seldom received the same level of attention as the processes on the shop floor, they are ripe for the application of LEAN thinking and the associated reduction in waste, and improvements in the proportion of value add across the business.

The wastes in the enterprise can come in many forms and can be very hard to see. The “inventory” of these processes, e.g. email enquiries to answer or orders to process, is usually hidden within mail servers or ERP order management systems. Multiple cross-functional handoffs add to the process time and increases in rework and a drop in quality.

Eliminating the wastesBy utilising the LEAN principles you will learn to see these wastes, and by applying the tools that you need from the LEAN tool box you will be able to

© Copyright 2012 Acora. All rights reserved

Acora - Head OfficeAcora House, Albert Drive, Burgess Hill, West Sussex, RH15 9TN T: +44 (0) 844 264 2222 W: acora.com E: sales@acora.com

Acora: In the knowApplying LEAN principles in the Enterprise

eliminate them. By building a culture of continuous improvement these gains will be stabilised and then built on.

LEAN Enterprise can be applied in any business of any size. Its use will allow the business to focus on the high priority areas for improvement and thus generate the best return on the LEAN Enterprise transformation event. The generation of current state value stream maps will highlight the possible bottlenecks and high waste areas within your business and provide a base against which to target transformation events and to measure the improvements. It is important to remember that the outcome of a LEAN Enterprise event is a quantifiable improvement, not a “feeling”.

Applying LEAN enterprise principles in a bespoke electrical control systems value streamAs an example of this process LEAN thinking and principles were applied to the “order to acknowledgement” process in a bespoke electrical control systems value stream. The event was sponsored by the business general manager as the length of time to return an acknowledged order was determined to be an issue in competiveness in that particular market. After the initial pre-work was completed a 3 day transformation event was held.

This resulted in a 70% reduction in lead time, 40% reduction in process time, increases in quality, reduction of handovers and rework alongside a range of other improvements. All of these were delivered, and tracked to be shown to be sustainable, after the initial 90 day implementation plan for the improvements identified in the event.

Benefits for business leadersLEAN Enterprise transformations allow the business leadership and other stakeholders to spend time working on the business challenges – both immediate and future. By designing

processes that can scale as demand and mix varies the correct capacity can be applied, all the time ensuring that the service or product is still delivered to customer demand.

By looking at the current business processes through a new “lens” opportunities for truly transformational activities will be revealed. The structure and discipline of the LEAN Enterprise framework not only guides but ensures consistency of application.

ConclusionLEAN Enterprise is intended to remove the non-value added processes and minimise those that are non-value added but necessary (through optimisation, automation etc). By robustly challenging the non-value added activities the core competence (the value add) of the business is clearly highlighted and the non-core identified e.g. does your customer pay the business to answer its internal service desk tickets, quote or create sales orders? It is highly unlikely. Yet all of the customer transactions carry that overhead. That impacts profitability – and as profitable growth is a key business principle it needs addressing. LEAN Enterprise can help you with this.

At Acora we focus on outcomes, not incomes. Acora delivers outsourced IT services to visionary mid-market business leaders who need stra-tegic agility without the shackles of high-risk IT. We provide the freedom to flex further, and adapt faster – fully supported by an expertly managed, outcomes-fo-cussed IT strategy. Because true service is about flexibility, we meet our clients’ ever-changing strategic needs with outsourcing services delivered at whatever level feels right for them. When our clients talk, we listen. No error, no confu-sion. Just singular, dynamic service that drives new business value at every level in a new and uncertain economy.Further information

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