Bringing Lean Concepts Back to the Office Midwest User Group – September 24.13 1.

Bringing Lean Concepts Back to the Office

Midwest User Group – September 24.13

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The following is intended to outline QAD’s general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QAD’s products remains at the sole discretion of QAD.

Safe Harbor StatementMidwest User Group – September 24.13

Agenda

▪The Effective Enterprise▪Continuous Improvement to Date▪Indirect Success?▪Working Together▪The Right Project … Customer Credit Example▪Mueller▪Benefits of Continuous Improvement/BPM▪Questions


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The Effective Enterprise


The Effective Enterprise

▪A journey of continuous improvement

▪Exact value the customer wants, when, economically, & efficiently

▪Aligned to strategic goals


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Value

Any product or service that the customer would be prepared to pay for that adds value to the product.

- Customer defines - Value-adding activities transform product to customer wants.

- Non-value activity is waste.


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Continuous Improvement to Date


▪Many titles:

- JIT- Lean- TQM- Six Sigma- Toyota Production System

Continuous ImprovementMidwest User Group – September 24.13

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Mission

Goals &Objectives

Targets & Measures of

Success

AssessmentResults

Use ofResults &Planning

Administration

"Administrative processes are often a bottleneck -- a huge source of inefficiency and

waste, not to mention a hindrance to the revenue-producing components of the

business.“

-- Bill Peterson, University of Tennessee


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Overhead Activities

▪Overhead activities:- supposed to serve as levers- enable production to more easily operate.

▪Often, the servant becomes master, and administrative processes bog everything down

▪If processes are made better, other operations improve.


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Lean … Fokker Aerotron“ The surprise is that the lean process improvements were focused not on the shop floor, but rather on the company's

administrative processes.”

"When we started our lean adventure, we had a lot of processes that existed simply because we had always done

them that way.“

"When we sought to improve our on-time delivery, we typically looked to the manufacturing end -- how could we push our technicians to turn the wrenches faster? It had never occurred to us that we could improve the entire operation by improving things in the office. Now, we've

proven it several times over.“

Note: Content taken from Industry Week Magazine, March 2010


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Indirect Success?Midwest User Group – September 24.13

Continuous Improvement

Solves problems logically

TraditionalLean Manufacturing

Product Design& Release

Supply Side

Demand Side

Supporting Functions

Identifies patterns easily


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Traditional Lean

▪36 percent of U.S. manufacturers and 70 percent of U.K. manufacturers are using lean as their primary improvement methodology *

▪Nothing dramatically new in lean manufacturing since its inception nearly 60 years ago from its roots in the Toyota Production System.

▪No more than 10 percent of companies have moved lean beyond the four walls of the plant *

* Arc Advisory Group, 2004


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Why Not Lean to Indirect?

▪Concrete, replicable approaches for non-manufacturing areas are rare

▪Skepticism whether manufacturing-based lean tools and techniques can be translated and sustained in service or administration

▪Impetus for success is enormous:- Administrative expenses are a large part of organizational cost- Average overhead expenses have risen from 10% to more than 50%

of cost since early days of manufacturing.


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Difficulty Fitting Together

▪Organizations divided into multiple business units, with their own sales, delivery, and billing departments, processes, and systems.

▪Rigid department-level boundaries

▪Identifying key administrative wastes and the constraints limiting performance

▪Employees are uncommitted


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Keys

▪Which processes are the sources of differentiation and how do they fit into the business system?

▪Recognizing where organizational structure gets in the way or adds unnecessary costs

▪Looking closely at business processes as they cross organizational boundaries

▪Establishing KPIs that measure the system (versus the department or function alone)

▪Highly specialized teams may have their own methods & terminologies. Need to learn to communicate.

▪Appreciating that IT is usually understaffed with sizeable project backlogs


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Working Together


Lean Thinking

▪Provides a way to specify value, line up value-creating actions in the best sequence (the value stream), conduct these activities without interruption, and perform them more and more effectively

▪System-level KPIs, and constraints- “You cannot improve what you do not measure”

▪Meaningful real-time and historical data- See the flow of work as it crosses departmental

boundaries ▪Workers often improve their own performance-given

feedback


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Lean, Six Sigma & BPM Competing?- Six Sigma is usually focused on improving an activity or group of steps

- Lean is focused on a few activities at a time and looks at what may not provide enough value

- BPM focuses on process and the workflow within organization units that together make up processes. - Cross functional process approach looks at entire organization - Provides structure and links to operation for performance

measurement and management across the operation or process


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Innovate

Standardize

Measure

Assess

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Continuous Improvement Process


Innovate

Standardize

Measure

Assess

ProcessModel

Process Implement

Process Monitor

ProcessAnalysis

BPMProcess

ContinuousImproveme

ntProcess

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BPM Support

▪Provides framework for change in its process and workflow models.

▪Provides proof of needed participation and inclusion by showing who is involved in any process or workflow, what that involvement produces, and how the product(s) are used.

▪Changes nature of business and IT partnership.▪Often means embracing the use of technology throughout

the improvement and design cycle, rather than keeping it at arm’s length


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▪Delivers the models and information on the business, the rules, the performance, the applications, and the data flow

▪Context for Lean use, and through simulation an immediate evaluation of the benefits of any proposed change.

▪Complete view of the activities being measured, a way to measure flow and performance at any activity in the process and the anchor points for Six Sigma statistical measurements.

▪Speed of designing and implementing change allows both Lean and Six Sigma to be implemented in a timely manner with immediate impact.


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▪Each methodology uses iterative techniques to deliver financial and performance benefits through better managed and optimized processes.

▪Provides lean tangible synergy acting as a delivery or tactical mechanism. - Monitor, evaluate and control processes and optimization initiatives at a higher level across various technologies and applications


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The Right Project… A Customer Credit Example


Credit Approval ProcessMidwest User Group – September 24.13

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Approval DifficultiesMidwest User Group – September 24.13

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Process Review by Duration

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Processes by Duration

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Process Duration by Date

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Process Details

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Corrective Action

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Criterion

▪Project selection should have a clear and direct linkage to executive management objectives:- Increasing revenue- Increasing revenue from new products and services

- Decreasing cost of sales- Improving customer satisfaction or retention

▪Consider value of process to the business and its health.


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▪Focusing on increasing effectiveness or efficiency of a function is dangerous

- Customers rarely interact with one function- Place an order, pay for it, receive it, and interact with the

company during use

▪Unless focus is on eliminating a key system constraint, an immediate result is not visible


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▪Constraints often found at departmental boundaries or where a handoff occurs. - queues or backlogs- communication failures- inspections- data is retyped from one application to another

▪Constraints move within a process or vary in intensity

▪Many processes include multiple technology touch points, system interactions, or message flows


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Mueller


▪ Plumbing Products (Wholesale & Retail)

Standard Products DivisionMidwest User Group – September 24.13

■ Wholesale – “Commodity”- Manufacture, Distribute

■ Retail – Breadth of Offering- Mfg, Buy/Sell, Distribute

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▪Multiple Businesses / Customer Types▪Many Process Variations▪Different Rules▪Multiple Process Owners

▪Mueller was looking for ways to embed process differences into their QAD toolset and trying to minimize customization

Why BPM at Mueller?Midwest User Group – September 24.13

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▪Helped engage all levels of users into work flow

▪Provided work flow visibility▪Gave the ability to develop and implement JIT/Lean concepts to the back office

▪Process Modeler was an easy to use tool which enhanced documentation & training

▪QAD installation and support was/continues to be outstanding

BPM Benefits at MuellerMidwest User Group – September 24.13

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▪Implementation of Retail New Part process eliminated waste by delivering tasks to the responsible party along with providing them the ability to go directly into QAD where needed. There is no delay for the internal mail delivery .

▪Putting correct validation in, can help ensure quality of work task being passed on. Incomplete or incorrect data must be fixed prior to moving forward, thus helping achieve first time quality. Validation can also direct process away from areas where it is not needed.

▪Overall process visibility provided by Process Modeler can be likened to the cellular concept in manufacturing. Visibility of the entire process all the time so that bottlenecks can be identified and expedited as soon as possible.

▪ I would imagine lead times to complete tasks would be able to be reduced significantly across the organization…. Improved Quality, Reduced Costs, Better Service.

Mueller FeedbackMidwest User Group – September 24.13

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Continuous Improvement/BPM Benefits


▪"I used to spend a good part of my day literally walking invoices around in circles, not being as productive as I could have been, because we had so much wasted motion in our processes.”

▪An invoicing example: - 3.1 days of processing; - 80 steps in the invoicing process, including 30 handoffs among

employees and 12 trips to the printer;- 1,080 feet of travel per invoice, with 17,540 feet (3.3 miles!)

▪Now: one day to process an invoice, requiring half the steps and one-third the number of handoffs.

▪30% of the total invoicing paperwork volume for customer parts was not needed at all.

Note: Content taken from Industry Week Magazine, March 2010


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Fokker Aerotron

▪Automated workflows and business rules can be used to eliminate information bottlenecks, cut process cycle time, improve decision-making, and minimize errors and rework:

- Capture information early- Check data as it is entered- Present it consistently throughout the process- Retrieve data quickly from existing source


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Calculating the Benefits of BPM

ROI

BusinessValue

TechnicalValue

Cost ofImplementati

on

Cost ofOperations

StrategicChange

BusinessInnovation

ProcessOptimization


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When Stop Continuous Improvement?

Never:

“Company, people, systems, products, services, and ultimately the whole world, is

changing, is evolving, is dynamic.”


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Bringing Lean Concepts Back to the Office Midwest User Group – September 24.13 1.

Documents

Transcript of Bringing Lean Concepts Back to the Office Midwest User Group – September 24.13 1.