Lean Administration - diva-portal.org326839/FULLTEXT01.pdf · production. Lean is nothing new, it...

[Type text]

Lean Administration

– How can Lean be implemented in an

administrative section?

Södertörn University | School of Business Studies

Master thesis 30 ECTS | Organization | Spring semester 2010

Master of Science in Business and Economics

Author: Annika Kristoffersen

Mentor: Cheick Wagué and Karl Gratzer

Examiner: Erik Borg

Lean Administration Kristoffersen

2

”To get the theories into the head is not the problem. The problem is to remember them

in the body, to act upon them instinctively, to have the strength to endure the training

needed along the road to victory in the competition.”1

Taiichi Ohno

1 www.his.se/PageFiles/31164/F%C3%B6rb%C3%A4ttringsarbete%20lean.pdf (2010-02-28).

Lean Administration Kristoffersen Sammanfattning

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Sammanfattning

Den här uppsatsen behandlar Lean i en administrativ miljö, istället för produktion. Lean

är inget nytt påfund, utan har sina rötter tillbaka till 1930-talet hos grundarna av Toyota.

Lean handlar om att minska slöseri och att visualisera flöden inom företag. Lean

används för att identifiera värden och värdeflöden, skapa flöden utan slöserier och

implementera dessa flöden mer effektivt genom kontinuerliga förbättringar.

Syftet med uppsatsen är att se hur Lean kan implementeras i en administrativ avdelning

för att minska slöseri, ledtider och standardisera arbetsprocesserna. Vidare kommer en

grund läggas till en modell för vidare implementering av Lean i andra administrativa

avdelningar.

Genom utförda intervjuer, följda ordrar och genom studerade dokument har det blivit

klart att Lean går att använda sig av och implementera i en administrativ avdelning.

Arbetsprocesserna blir mer synliga vilket gör att processerna kan standardiseras och på

så sätt kan slöseri minskas och därmed ledtider minska. Standardisering av arbetet kan

ske genom att skapa en prisdatabas, prismodell och synliggöras genom visuell

planering.

Modellen som skapats är en pyramid som är uppdelad i fem olika steg. Grunden i

pyramiden är att de anställda måste ta ansvar för sitt eget arbete. Nästa nivå i pyramiden

är att engagera de anställda. Tredje steget är att visualisera flödet, aktiviteterna och de

problem som existerar. Nästa steg är att förenkla flödet, och toppen av pyramiden är att

kontinuerligt förbättra flödet.

Slutsatsen av denna studie är att Lean är ett sätt att arbeta som grundar sig i sunt och

gemensamt förnuft. Lean kan implementeras i en avdelning genom att göra flödena

synliga och identifiera problem, slöseri och förbättrings möjligheter. Vidare kan inte

Lean implementeras i en avdelning om inte de anställda tar ansvar för sitt arbete eller

om det inte finns ett tydligt ledarskap.

Nyckelord: Lean, administration, slöseri, förbättringsarbeten, standardisering och

visuella flöden.

Lean Administration Kristoffersen Abstract

4

Abstract

This Master thesis is concerning Lean in an administrative section, instead of

production. Lean is nothing new, it has its roots back to the 1930s with the founders of

Toyota. Lean is about reducing waste and visualizing flows in companies. Lean is used

to find values and value streams in the business, creating flows without waste and to

implement these flows more efficiently by continuously work with improvements.

The purpose of this Master thesis is to study how Lean can be implemented in a section

of a company where the processes are related to administration, not production, to

reduce waste, lead time and structuralize the work process. Further a foundation will be

created for a model to implement Lean in other administrative sections.

Through interviews, following orders in the flow and by studying documents it has been

established that Lean can be used and implemented in an administrative section. By

using Lean work processes can be made more visual, which makes it possible to

standardize the process and in that way reduce waste and lead time. This can be made

by creating a price database, price model and by using visual planning.

The model created is a pyramid divided into five steps. The foundation is to take

responsibility for ones own work, and to inform the employees and give them meaning

with changes. The next level is to engage the employees. Third step is to visualize the

flow, activities and the problems. The next step is to simplify the flow, and the top of

the pyramid is to continuously improve the flow.

The conclusions of the Master thesis are that Lean is a way of working with good and

common sense. Lean can be implemented in a section by making the flows visual and

then identifying problems, waste and improvements. Further Lean cannot be

implemented in a section if the employees do not take responsibility of their own work,

or if there is not a visual leadership.

Key words: Lean, administration, waste, improvement work, standardization and visual

flows.

Lean Administration Kristoffersen Acknowledgment

5

Acknowledgment

During this spring semester when I have written my Master thesis I have learned a lot

about the reality in companies, processes, people and most of all met a lot of amazing

persons. Therefore I would like to thank all people who have come in my way and

helped me, because there are many! To thank all by name would be a thesis itself, but

there are some persons that must have a personal thank you.

First of all I would like to thank Ali for the opportunity and all support he has given me,

and most of all for believing in me.

Further I would like to thank the employees at Ilenio Evoteam. Most of all I would like

to thank Sofia for all support, and Martin for the initial contact.

I would also like to thank the sections employees for the help to conduct this Master

thesis.

At last I would like to thank my family for the endless support they have given me.

Annika Kristoffersen

Stockholm, 2010-05-28

Lean Administration Kristoffersen Tables

6

Table of contents 1. Introduction ............................................................................................................................... 11

1.1 Context .................................................................................................................................... 11

1.2 Problem discussion .................................................................................................................. 12

1.3 Purpose .................................................................................................................................... 13

1.4 Outline ..................................................................................................................................... 14

2. Method ....................................................................................................................................... 15

2.1 Survey level ............................................................................................................................. 15

2.2 Study implementation .............................................................................................................. 15

2.2.1 Pilot study ............................................................................................................................. 15

2.2.2 Primary and secondary data .................................................................................................. 15

2.2.3 Implementation ..................................................................................................................... 17

2.3 Research approach ................................................................................................................... 17

2.3.1 Abductive approach .............................................................................................................. 17

2.3.2 Qualitative and quantitative data .......................................................................................... 17

2.4 Validity and reliability ............................................................................................................. 18

2.5 Source criticism ....................................................................................................................... 19

2.6 Summary of method ................................................................................................................ 20

3. Theory ........................................................................................................................................ 21

3.1 Previous research concerning Lean ......................................................................................... 21

3.1.1 Lean as a philosophy and a long-term method ..................................................................... 21

3.1.2 Previous criticism of Lean .................................................................................................... 23

3.2 New possibilities to research ................................................................................................... 25

3.3 Approach to previous research ................................................................................................ 25

3.4 Value ........................................................................................................................................ 26

3.5 Lean ......................................................................................................................................... 26

3.5.1 Key performance indicators in Lean administration ............................................................ 29

3.5.2 Product family ...................................................................................................................... 30

3.5.3 Toyotas 14 principles (4P) .................................................................................................... 30

3.5.4 The Lean house ..................................................................................................................... 32

3.5.5 The 7 (8) wasting .................................................................................................................. 32

3.6 Summary of theory .................................................................................................................. 34

4. Empirics ..................................................................................................................................... 35

4.1 Interviews ................................................................................................................................ 35

4.1.1 The section ............................................................................................................................ 36

4.1.2 Data collected from interviews to explain order managing .................................................. 36

4.1.3 Data collected from interviews to explain purchase ............................................................. 38

4.1.4 Data collected from interviews to explain delivery and invoice .......................................... 39

4.1.5 Data collected from interviews concerning remake ............................................................. 40

4.1.6 Data collected from interviews concerning recurrent meetings ........................................... 41

4.1.7 Data collected from interviews to explain the sections context ........................................... 41

4.1.8 Improvement possibilities in the section .............................................................................. 42

4.2 Quantities in the work flow ..................................................................................................... 43

4.3 Time in the work flow ............................................................................................................. 44

4.3.1 Time per activity ................................................................................................................... 44

4.3.2 Waiting time ......................................................................................................................... 44

4.4 Secondary data ......................................................................................................................... 44


7

4.4.1 Field of responsibility ........................................................................................................... 44

4.4.2 Histogram of lead time ......................................................................................................... 45

4.5 Summary of empirics .............................................................................................................. 45

5. Analysis ..................................................................................................................................... 46

5.1 Product family ......................................................................................................................... 46

5.2 Waste in the section ................................................................................................................. 46

5.3 Key performance indicators in the section .............................................................................. 47

5.4 Value stream mapping ............................................................................................................. 49

5.5 Proposals for improvements in the section .............................................................................. 50

5.6 Correlation to Lean .................................................................................................................. 54

5.6.1 Lean ...................................................................................................................................... 54

5.6.2 Correlation to Toyotas 14 principles (4P) ............................................................................ 54

5.6.3 Correlation to the house of Lean .......................................................................................... 55

5.7 Correlation to previous research .............................................................................................. 56

5.8 Model for further implementations of Lean ............................................................................ 58

5.9 Summary of analysis ............................................................................................................... 60

6. Discussion .................................................................................................................................. 61

6.1 Summary of discussion ............................................................................................................ 63

7. Conclusions ............................................................................................................................... 64

7.1 Further research ....................................................................................................................... 65

7.2 Summary of conclusions ......................................................................................................... 66

8. Criticism concerning the study .................................................................................................. 67

8.1 Criticism concerning the method ............................................................................................. 67

8.2 Criticism concerning the studied section ................................................................................. 67

8.3 Summary of criticism of the study .......................................................................................... 67

9. References ................................................................................................................................. 68

9.1 Printed references .................................................................................................................... 68

9.1.1 Books .................................................................................................................................... 68

9.1.2 Articles ................................................................................................................................. 68

9.2 Internet ..................................................................................................................................... 70

9.2.1 Articles ................................................................................................................................. 71

9.2.2 Master thesis ......................................................................................................................... 71

9.3 Verbal references ..................................................................................................................... 72

10. Appendix ................................................................................................................................. 73

10.1 Price database ........................................................................................................................ 73

10.2 Price model ............................................................................................................................ 73

10.3 Visual Management System (VMS) ...................................................................................... 73

10.4 Interview questions ................................................................................................................ 74

10.5 Interview questions for interview number two ...................................................................... 75


8

Table of figures Figure 1. Five principles in Lean. ............................................................................................... 27 Figure 2. Value adding activity and non value adding activity. ................................................. 28

Figure 3. The Lean house. .......................................................................................................... 32 Figure 4. Histogram of spread of number of orders in days. ...................................................... 45 Figure 5. Histogram of spread of orders from delivery to invoice. ............................................ 45 Figure 6. First part of the sections works flow. ......................................................................... 49 Figure 7. Second part of the sections work flow. ....................................................................... 49

Figure 8. Third part of the sections works flow. ........................................................................ 49

Figure 9. Pyramid for further implementations of Lean. ............................................................ 58

Table of Tables Table 1. Table of how many interviews that has been carried out with the employees. ............ 16 Table 2. Table of respondents who have been interviewed. ....................................................... 35

Table 3. Time per activity in the work flow. .............................................................................. 44 Table 4. Waiting times between activities in the work flow. ..................................................... 44

Table 5. Lead time. ..................................................................................................................... 48 Table 6. Stocks of orders in the work flow. ............................................................................... 48

Lean Administration Kristoffersen Abbreviations

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List of abbreviations

Administration - The employees who work with the administrative functions within a

company2.

BS – Business System. A system used for financial tracking and managing supply

chains.

FIFO – First In First Out is a principle used in Lean to prioritize incoming orders.

HR – Human Resources.

JR – Job Reporting. System used to report time to specific orders.

Just In Time - Do the right part in the right quantity at the right time. Which means

planning time, creating a continuous flow, allowing demand to control the flow and be

able to adapt to quick changes.

Kanban cards – Is used in flows with pulling demand. A method to draw attention to the

lack of materials or that it is soon needed more materials. When materials are missing

there is a card sent back to the production in order to highlight the shortage.

Lean - A theory that is used to reduce wastage in the company. Wastage is reduced by

finding values, value streams, creating flows without waiting or overproduction and to

implement these flows more frequently and more efficiently.

Muda - The Japanese word for waste. Muda means more specifically human activities

that uses resources but does not create value.

OM - Order of Magnitude. Quotation to customer.

OMS – Order Management System.

PDB – Product Data-Base. Computer system that is showing the various components.

PS – Purchase System. Internal program for purchase.

SS – Supplier System. Computer system of approved suppliers.

2 http://www.ne.se/land/administration/108403 (2010-02-08).

Lean Administration Kristoffersen Abbreviations

10

Value – The customer-perceived value.

VMS – Visual Management System. A method to visualize work activities and/or flows

in a section.

WS – Computer system that handle internal orders, another sections equivalent of OM.

Lean Administration Kristoffersen Introduction

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1. Introduction

The introductory chapter presents the context of the study, the study’s question at issue

and purpose.

1.1 Context

Lean is nothing new, it has its roots back to the 1930s with the Toyoda family, founders

of the car company Toyota. Back then Ford was the ideal for other companies

concerning mass production, and the Toyoda family became interested in studying Ford.

The Toyoda family made their first visit to Ford in 1929.3 By studying Ford, Toyoda

wanted to learn how Toyota could be more competitive in the car industry. They

quickly realized that Toyota did not have sufficient production to mass-produce like

Ford, instead they had to develop an efficient production of smaller manufacturing

volumes.4 During the 1950s, Eiji Toyoda and Taiichi Ohno from Toyota went to the

U.S. to study the car industry when Toyota's sales fell dramatically in the late 1940s and

early 1950s5. What fascinated Ohno in U.S was how food stores was built – the

customer assumes that the store has what he/she wants, when the customer wants it and

that a kanban card was used to know when it was time to replenish. Ohno took this

knowledge back to Toyota to support the Just In Time philosophy.6 During the 1970s,

Toyotas thinking about production began to spread around the world, and it was in the

U.S. the term Lean Production was established. In the 1980s Lean was as well known in

the car industry as mass production was in the 1920s.7

Muda is a Japanese word for waste and means, more specifically, human activities that

uses resources but does not create any value. Ohno looked at the waste in Toyota and

was able to identify seven different types of waste, which today has become eight. Lean

has become the cure against waste in companies. Lean is used to find values and value

streams in the business, creating flows without waste and to implement these flows

more efficiently. By making use of Lean the idea is that the company will need to use

fewer resources to create more. In this way, the company will come closer to the

customer by offering exactly what the customer demands. Finally Lean gives companies

the ability to create jobs instead of taking away jobs when they want to be more

3 Womack, Ross & Jones. The machine that changed the world. The story of Lean production. New York. Harper Perennial.

1991. P 48. 4 Tapping & Dunn. Lean Office. Demystified. MCS Media, Inc. 2006. P 5.

5 Womack, Ross & Jones. 1991. P 48.

6 Tapping & Dunn. 2006. P 5.

7 Womack, Ross & Jones. 1991. P 68.


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effective.8 There are many companies that have given Lean a try, but failed when they

only tried to reduce waste in one process within the company instead of distinguish the

whole flow and its waste. This had the result that some parts of the flow improved, but

for the entire flow the expected results was not achieved.9

Today, Lean has become well established in other business areas such as service,

healthcare and administration10

. However, there has been little literature written on Lean

Administration11

. In order to use Lean in other areas than production, tools and

approaches for implementation must be tailored to specific companies, which requires

knowledge and experience to succeed.12

By implementing Lean in a business with administrative processes it can be

streamlined13

. The use of Lean in administrative sections is based on making the

process visible to the employees14

. This can be performed through a mapping of

processes and visual boards15

. Lean in administrative sections is also based on engaging

employees. Thus, the employees will make suggestions for change and carry the change

out, the leader just follow the change to see if it gets implemented. By getting the

employees involved and aware of the work carried out, less data will be put through the

net that no one takes responsibility for.16

1.2 Problem discussion

As mentioned, Lean is spreading from the production business to business with high

administrative function, as support function for production but also for businesses with

administrative work as the main function. Lean can be used in administrative sections to

improve the work flow and make it visible.17

It is not Lean in itself that makes the

business work better, it is how Lean gets translated to fit a specific business. Lean

cannot be implemented in the same way in all businesses, but Lean thinking can be used

in all businesses more or less.18

8 Womack & Jones. Lean thinking. Banish waste and create wealth in your organization. London. Free press business. 2003. P

15. 9 Ivarsson. Värdeflödesanalys på Ericsson AB Katrineholm. Katrineholm. Luleå tekniska universitet. 2006. P 1.

10 Tapping & Dunn. P 7.

11 Larsson. Pp 17-18.

12 Ahlqvist. Lean Service. En studie i hur Lean-filosofin används inom svenska tjänsteorganisationer. Stockholm. Kungliga

tekniska högskolan. 2008. P 55. 13

Larsson & Johansson . Lean i administrativa processer. Göteborg. Handelshögskolan vid Göteborg universitet. 2009. P 47. 14

http://www.chef.se/dynamisk/index.php/index/artikel/vi-jagade-bort-tidstjuvarna/#lasmera (2010-02-25). 15

Larsson & Johansson . 2009. P 47. 16

http://www.chef.se/dynamisk/index.php/index/artikel/vi-jagade-bort-tidstjuvarna/#lasmera (2010-02-25). 17

Larsson & Johansson. 2009. P 41. 18

http://cio.idg.se/2.1782/1.196736 (2010-04-18).


13

Lean is describes to streamline and reduce the waste is a section19

. This leads to many

questions, how can Lean be used in an administrative section? What can work flow look

like in an administrative section? What is wastage in an administrative section? How

can an administrative section make it all visible?

To analyze Lean in an administrative section and to answer the purpose of this study

five questions are asked.

- Which flows exists in an administrative section?

- How can lead times be reduced in these flows by using Lean?

- How can work processes in the section be standardized by using Lean?

- What value-creating processes exists in an administrative section?

- What kind of wastage is there in an administrative section?

1.3 Purpose

The purpose of this study is to explore how Lean can be implemented in an

administrative section to standardize the work processes, reduce waste and lead time.

Further a foundation will be created for a model to implement Lean in other

administrative sections.

19

The new improvement frontier: Developing Lean administration. Strategic Direction. Vol. 21: Issue 11. 2005. Pp 33-35.


14

1.4 Outline

This Master thesis approach

The collected data

This Master thesis contribution

Lean Administration Kristoffersen Method

15

2. Method

This chapter presents the study limitations and survey level. Thereafter a description

and justification of the implementation is described. Finally, the validity and reliability,

and source criticism will be presented.

2.1 Survey level

The study will be performed at micro level, where a section of a multinational company

will be studied. The study will be based on the employees' perspective on the work they

perform, as they have knowledge and transparency of the work processes. The company

is chosen by convenience.

2.2 Study implementation

2.2.1 Pilot study

To get a better understanding of Lean Administration I was given the opportunity to

join as an observant in a course in Lean Administration for a selected group from the

business were the studied section is included. The course was given on the days 3-5

February 2010, however I could only participate in the first two days of the course. The

course was held by Christian Foklin Svensson and Martin Larsson from the company

Ilenio Evoteam. The course introduced and presented the basic thinking of Lean and

how the theory could be used in a company with high administrative function. The

course also included a practical group exercise for the understanding of how streams

and works can be affected in the administrative processes. The last two days a workshop

was held where the group was able to discuss problems and relate to their everyday

lives at their work. This gave a good basic knowledge to understand the employees in

the company, and the problems they encounter every day. The course also provided an

understanding of how they want to make use of Lean Administration in the future and

what their expectations are.

2.2.2 Primary and secondary data

This study will be based on a method triangulation. The three corners in the triangle will

be interviews, observations by following orders, and documents and reports.

Primary data in this study will be conducted through interviews with the sections

employees. This is to identify the processes that exist within the section to analyze and


16

understand them. These processes cannot be observed as they are not visible in the

administrative unit as compared to production processes that are clearly visible.20

To get

as relevant information and as accurate as possible during the interviews, the questions

are semi-structured. This is to give respondents an opportunity to talk openly about their

work processes and to be able to explain their problems and situation in the section, but

also present the positive things. The interviews will be performed in person at the

section to make the informants feel more comfortable.21

The first interviews were

conducted through the days 9-12 March 2010. Interview number two and following

orders were followed through the days of 15-26 March 2010. The interviews were

conducted with one person at time, face to face in the section, and the lengths of the

interviews were between twenty to forty five minutes.

Table 1. Table of how many interviews that has been carried out with the employees.

*Interview has not been performed as the respondent was on vacation.

To understand the processes in depth, a number of different orders are to be followed in

the flow. By following orders means to choose one order and follow it through the

different activities it passes. The orders have been chosen by chance when orders that

have been followed arrived at the time when orders where to be followed. The followed

orders are also chosen by strategic when both large and small orders where followed.

Three different orders have been followed with order managers. Two orders have been

followed with purchasers. Further the work flow has been followed from the end to the

beginning to identify quantities of orders. To see if Lean had impact on the sections lead

time, data concerning lead time will also be studied. As secondary data, documents will

be studied. The documents that have been studied are related to the sections processes,

the sections goals and function that the company has complied. Statistics in forms of

reports in OMS from 2009, when an order is received until it is delivered and invoiced,

is to be studied. This is to gain a deeper understanding of the sections work.

20

Björklund & Paulsson. Seminarieboken – att skriva, presentera och opponera. Studentlitteratur. 2008. First edition. P 69. 21

Ibid. P 68 and 70.

Employees Number of interviews

Fredrik, Order manager 2

Göran, Order manager 2

Anna, Order manager 1

Erik, Order preparation 1

Elsa, Purchaser 2

Tina, Purchaser 1

Krister, Purchaser 0*

Johan, Project purchaser 1

Mikael, Cost follow up 2

Andreas, Manager 1


17

The company and the sections employees names will be anonymous when they have

requested that. Therefore the names in this Mater thesis are constructed.

2.2.3 Implementation

In order to identify the flows that exist within the section, the interviews will be

combined with following the handling of orders within the section. This will then be

supplemented by a study of the sections own documents. From Lean theories and the

collected data, flows will then be identified. Following the identification of the different

processes an evaluation of what can be improved based on Lean will be done. By

identifying which processes exists be able to standardized the work, improvements can

then be implemented to see if Lean has an impact on the administrative process. This

analysis will then form the basis for a model of how implementation of Lean can be

performed in the administrative sections.

2.3 Research approach

2.3.1 Abductive approach

This study will be based on both reality and theory. The reality in this study is the

section and the theory is Lean. Therefore, the approach for this study is abduction when

data are frequently exchanged between reality and theory.22

2.3.2 Qualitative and quantitative data

In this master thesis the method is not divided into qualitative or quantitative methods, it

is the data that have been gathered that is divided into quantitative or qualitative. As

Åsberg argues methods cannot be divided into quantitative or qualitative, it is the

characteristics of the collected data that can be divided into different categories23

.

This study is based on the understanding of a process and its meaning. The reality and

in this study the section, is understood through the theory Lean. The study will be based

on interviews to get an understanding of the section which will produce results that are

difficult to measure and evaluate numerically, qualitative data. These results will also be

difficult to generalize as each company and section is unique. Therefore, the

implementation of Lean will take different forms because the flows within companies

22

Björklund & Paulsson. 2008. P 62. 23

Åsberg. Det finns inga kvalitativa metoder – och inga kvantitativa heller för den delen. Pedagogisk Forskning i Sverige. Vol.

6: Issue 4. Pp 270-292. 2001.


18

are different. However, some generalizations will be made in ways to identify flow

processes, bottlenecks and problems, and how a solution can be suggested.24

However the qualitative data is supplemented with quantitative data by studying

documents and reports that provide hard data. These hard data can be divided into two

parts analysis, statistical and interpretive. The statistics are based solely on the

calculation of data as lead time, waiting time and time per activity, and the interpretive

component is based on putting data in a larger context. The larger context of this study

is to combine the quantitative data with the qualitative data.25

In this study, to understand the processes in deep, it has been necessary to combine

qualitative and quantitative data. Without combining these two data it would have been

harder to understand the process. Further it can be discussed if the study should be

called qualitative and quantitative. The importance is not the name, it is that the data

collected from interviews and following orders have been combined with data from

documents and reports to create as accurate picture as possible. Therefore it can be hard

to separate qualitative and quantitative data, when the collected data together creates the

foundation for the analysis.

2.4 Validity and reliability

The validity is how relevant the collected data is to respond to the questions of the study

and the generalization of the results of the study26

. The validity of this study is

considered high when method triangulation has been used. This means that data has

been collected from different sources with different views, in this study through

interviews, following orders and documents. Further reference triangulation has been

used, which means that different persons have been interviewed which has different

relations to what is studied.27

The external validity is generalization from the selected

section to all companies28

. The external validity is medium, depending of that every

business and section is unique. Therefore some parts of this study can be used in other

business and sections, but some parts are unique. This study shows how a section can

apply and use Lean to improve their work. The Lean thinking has high generalizations

for companies, if they just take the time to reflect over their work and continuously

improve.

24

Björklund & Paulsson. 2008. P 63. 25

Johannessen & Tufte. Introduktion till samhällsvetenskaplig metod. Liber AB. Malmö. 2003. P 72. 26

Ibid. Pp 47-48. 27

http://infovoice.se/fou/bok/10000035.htm (2010-04-20). 28

Johannessen & Tufte. 2003. Pp 240-241.


19

The reliability of this study is considered high because data has been collected through

interviews with the employees who perform the work, orders have been followed and

secondary data has been collected in forms of documents. To ensure a high reliability

the employees have been following the study to avoid misunderstandings.

2.5 Source criticism

First it can be said that all data collected through interviews, following orders and

documents has been collected from one company. Therefore the data cannot be verified

from another source, which depends on that no other external company has data

concerning the business processes and internal activities. To prevent that the data is

only one point of view interviews has been combined with following orders and

documents.

By not using a recorder when performing interviews some information could have been

lost. In another way, by not using a recorder it makes the respondents feel less

uncomfortable and therefore have been more open about their work, problems and

thoughts. Misunderstanding through the interviews can have occurred when there from

the beginning was little understanding for the sections work, however that has been

avoided by presenting the findings for the employees. By presenting the collected data

reinterpretation has been avoided, which easily could have happened otherwise.

The reports that have been studied in OMS can be misleading because there is not

reported the cause of lead time. One example of misleading lead time can have occurred

when there has not been a mark in OMS that the order is delivered, but the order has

been delivered. Further the data concerning time, collected from interviews, can be

misleading when employees values time different and what activities a process

involves.

By only following a few orders it can be misleading when the quantities can be different

from day to day, but to confirm that the observation is near reality interview strengthens

the credibility.

One employee has not been interviewed when he was on vacation. This do not affect the

study too much, even if there is a loss of information, when there have been eight other

respondents and thirteen interviews conducted. The employee that was not interviewed

have taken part of the information of the study after the interviews were conducted, to

see if he agreed with the interviews which he did.

The theory Lean, and its sources are biased when the authors are mostly positive to

Lean. Therefore some critic concerning Lean will be shown, that Lean is not only


20

positive and works in all companies at all times. Some authors show different aspects of

Lean, for example Key performance indicators, but there are no analyzing of how they

work or criticism concerning them. The authors that have been writing concerning Lean

give a solution that Lean can be usable, but they do not show how to implement. They

focus on the positive part, and if they write something analyzing or criticizing they just

write something shortly concerning it. Further, Lean is an abstract theory and therefore

can be hard to embrace and understand.

2.6 Summary of method

- This study will be performed at micro level.

- The section that will be studied have been chosen by convenience.

- Primary data in this study is interviews with the employees in the section and also

following orders. Secondary data is documents and reports.

- This study will have an abduction approach, when it is based on both the reality and

theory.

- The validity is high, but the external validity is medium and the reliability is also

considered high.

Lean Administration Kristoffersen Theory

21

3. Theory

This chapter presents previous research on Lean, as well as criticism of Lean. Further

this chapter presents the theory of Lean that will be used in this study.

3.1 Previous research concerning Lean

Lean has become well established in the production industry as a way to eliminate

waste and create value. However, there are problems with waste and creating value in

other business areas than production. The administrative sections are in great need to

reduce waste and operate more efficiently by reducing lead times in the flows. While

Lean is now a well-known theory, there is still little understanding of how Lean can be

implemented in other areas than production. This because the roots of Lean are in

production processes, however, all human functions are based on processes of various

kinds. Therefore, there is no restriction to use Lean in administrative sections. The

biggest problem with implementing Lean in an administrative section is that the

processes are not visible in the same manner as in production. In order to make the

processes more apparent value stream mapping could be used.29

3.1.1 Lean as a philosophy and a long-term method

Bhasin & Burcher argues that Lean should be appropriate to use in an administrative

section, as Lean is considered a way of thinking, a philosophy, and not a process. If a

business sees Lean as a process, they will stop using Lean, and does not implement it in

their thinking and working. That is why many companies fail to implement Lean.

Companies often lack the goals for what they want to achieve and a plan of how to

perform the implementation of Lean. There is not lack of knowledge of how Lean could

be implemented that is missing.30

Maleyeff means that all businesses, including

administrative sections, are creating services to internal or external customers which

affect the whole flow. Examples of administrative sections of a company can be Human

Resources (HR), marketing, research and development. The five lean principles of

value, value processes, flow, demand and continuous improvements are implemented in

increasing amount of service providers to deliver the correct information to the right

29

The new improvement frontier: Developing Lean administration. Strategic Direction. Vol. 21: Issue 11. 2005. Pp 33-35. 30

Bhasin & Burcher. Lean viewed as a philosophy. Journal of Manufacturing Technology Management. Vol. 17: Issue 1.

2006. Pp 56-72.


22

customer efficiently. The five principles are not always easy to understand or to see how

they should be used.31

Higgins explains that an administrative section as HR has during the last twenty years

evolved from being a relatively simple section to be a complex section that can take

care of ninety three activities. Such a section can identify value by maintaining or

improving company performance by offering HR services through their distribution

channels. For an administrative section like HR it is important to be able to sustain its

performance and efficiency. Lean is therefore a good method to implement in

administrative sections. In order to implement Lean in an administrative section eight

main functions has to be defined in order to put Lean in a context. These eight functions

are governance, value, structure, processes, technology, people, measurement and

financial intelligence. By using Lean, a picture of what the company creates and deliver

can be made clear. This in turn leads the section to work more efficiently and manage

the company, rather than lag behind.32

Hicks believe that Lean can be implemented to create value in the processes concerning

information. Value can be created by how the flows are organized, visible and

represented in the work. This is by letting the information, which may be the value

itself, flowing to the end customer through processes of exchange and cooperation. To

achieve this, waste is identified and the five lean principles are implemented in the

work.33

However, not only can Lean be selected as an approach to be implemented in

the company, but it must be a long-term work. The entire company must be involved

and understand the implementation of Lean to make it succeed. Scherrers-Rathje, Boyle

& Deflorin argues for the implementation of Lean to be successful, management of the

company has to lead and be willing to change the approach, to thereby set a good

example for the rest of the company. For implementation to succeed the company also

need a broad understanding of how the employees work. This is because it is the

employees who carry out the implementation and therefore it must be adapted to their

work, to ensure that the employees are participating.34

3.1.1.1 Relevance for this study

The previous research shows that Lean could be implemented in an administrative

section. Bahsin and Burcher argues that there is not the knowledge of Lean that is

31

Maleyeff. Exploration of internal service systems using lean principle. Management Decision. Vol. 44: Issue 5. 2006. Pp

674-689. 32

Higgins. Putting Lean HR into practice. Strategic HR Review. Vol. 6: Issue 4. 2007. Pp 16-17. 33

Hicks. International Journal of Information management. Lean information management: Understanding and eliminating

waste. Vol. 27: Issue 4. 2007. Pp 233-249. 34

Scherrers-Rathje, Boyle & Deflorin. Lean, take two! Reflections from the second attempt at lean implementation. Harvard

business review. 15 januari 2008.


23

missing, it is a plan and goal of why Lean is implemented that is missing. This is

relevant for this study, to analyze if Lean is something that just has to be implemented

in companies to update and modernize the company, or if a company implements Lean

with a special goal and plan.

Maleyeff shows that the five Lean principles are important and relevant for

administrative sections. Therefore the five principles will be a part of this study and

explored in which way they can be used, and if they are as relevant as Maleyeff argues.

Higgins means that Lean can create a visual picture of the section to be more efficient.

This is relevant for this study to find out how the section is organized and if it is seen as

a complex function, and further to see if Lean can make a visual overview of the

sections work.

Hicks believes that by using Lean value can be identified in the flow. To achieve that,

waste has to be identified and eliminated, the five Lean principles have to be

implemented. The relevance for this study is to explore what waste is in an

administrative section, and how it can be eliminated to create value and flow.

Scherrer-Rathje, Boyle & Deflorin argues that to implement Lean successfully an

understanding of the employees work has to exist. For this study it is relevant to

understand how the employees are working to reflect if and how Lean can be

implemented.

3.1.2 Previous criticism of Lean

Cox and Chicksand argue that Lean may not be possible to implement in all business

areas even if there is reason to implement Lean internally within a company. Criticism

of Lean can be divided into two focus areas: the operational and commercial criticism.

The operational criticism of Lean can be divided into two branches. One is related to the

agile school, which believes that Lean is not always the most appropriate method for

dealing with internal processes and external relationships. Lean works best in a context

where high-volume are produced, predictable demand with safe range so that the

functional products can be created. However, at low volume with various supply chains

and innovative products Lean will not function as well. It is therefore considered that

Lean technique cannot on its own control processes that are unique and unpredictable,

and must therefore be combined with other techniques. The second area is the

operational suitability of the school which denies the universal applicability of the use

of a system in production. There is little evidence that the Lean production system is

used throughout all industries. This is because the Just In Time philosophy cannot be

maintained unless a balancing of production can take place both in-house and externally

with suppliers. There is also a school of criticism of Lean and its universal applicability


24

through a commercial approach. One criticism raised is that it is difficult to achieve a

win-win outcome where buyers have the dominant position in the supply chain. The

proponents of this school want to see a more reasonable distribution of the value chain

in between to reduce wastage and improve efficiency. This school has a less

prescriptive approach, and believes that there is never a good way. The fact that one

method would work universally is regarded as wrong. This is because business

environments constantly change and therefore, companies must be open to different

methods. Lean does not work for all companies in all situations. Therefore, companies

should choose a marketing strategy rather than an operational strategy.35

Moreover, Schonberger criticized Lean according to studies showing that it was not

going well for Toyota by using Lean. A study conducted among 1213 companies in

thirty-two countries was divided into nine regions and thirty-five different industries.

The companies were public so data from fifteen years back were studied. This study

found that Scandinavia was the best to work continuously and long-term with Lean and

Japan was the worst. The study is based on analyzing the stock turnover, which is the

annual cost of goods sold divided by the value of inventory. Toyota ranked fifty second

of fifty four spots in the automotive industry. Over the past seventeen years, Toyota's

stock turnover has not increased and during the last twelve years it has been halved. The

study also proved that sixty two percent of the companies that participated in the study

had not improved but rather worsened. At last it is to be noted that Lean can be difficult

to work with despite its great principles and competitive advantage. Questions that arise

after the study's results are:

- Do companies only apply Lean on the surface?

- Do companies only focus on what is easy to change instead of taking hold of the big

problems?

- Is the lack of one big idea, instead of many small ones, a restriction that requires

more energy to maintain?

The answer is yes to these three questions according to Schonberger.36


Cox and Chicksand believe that Lean cannot be implemented when there is a different

and unpredictable demand. This is relevant for this study as there can be differing

demands in an administrative section, and therefore it has to be explored if Lean is the

most appropriate implementation and if it can be implemented without other additional

implementations.

35

Cox & Chicksand. The limitis of Lean management thinking: Multiple retailers and food and farming supply chains.

European Management Journal. Vol. 23: No 6. 2005. Pp 648-662. 36

Schonberger. Japanese production management: An evolution – With mixed success. Journal of Operations Management.

Vol. 25. 2007. Pp 403-419.


25

Schonberg raises three questions, and these questions are relevant for this study by

exploring if Lean is something that only is used because a modern company should use

Lean. Further it is energy consuming to come up with many easy and minor changes,

instead of one big idea.

3.2 New possibilities to research

Lean in administrative sections is still a relatively unexplored area. The studies carried

out so far have been focusing on companies and organizations after they introduced

Lean. In this way, they note the problems and success factors that the companies and

organizations have had. The studies have identified that Lean is also suitable for

administrative sections. There is a relatively unexplored area on how to use Lean at the

beginning of the implementation in a company. There is a void with a lack of

identification of the flows that exist within an administrative section, how they appear

and how they can be standardized. Furthermore, there is also a void for how Lean

affects an administrative section for an extended period, if Lean is only a fad or a

philosophy that affect the section in their way of thinking.

New questions that can be posed are:

- What are the different flows in an administrative section?

- How are flows and processes standardized in the administrative sections?

- Is Lean only a fad that is superficial in the business or will Lean make a change in

thinking over a longer period?

3.3 Approach to previous research

In all business there are processes of various kinds, therefore Lean should be able to be

used in all business in different ways. With the previous research as a foundation for

this study the approach for this study is to explore Lean, with critical eyes, if it can be

implemented in administrative sections and what parts of Lean can be used. Further

researchers have been arguing that Lean is a philosophy and a way of thinking, in this

Master thesis Lean is used as a theory. Theory is something that has some

generalization level and is a simplification of the reality37

. This is how Lean is seen in

this study, it has some generalization level and is a simplification, and also something

abstract. Even when previous researchers have been studying Lean it is still abstract.

Lean, as it says, could be implemented in all companies but it is something that has to

be worked with. This study is to take the abstract theory Lean and see how it can be

used in a concrete reality of a section.

37

Johannessen & Tufte. 2003. P 29.


26

3.4 Value

Lean is focusing on value and value adding activities, that value is seen and felt by the

customer. Value is created by a dialog with customers concerning a specific product

with specific characteristics.38

Therefore it is important to define value, when it is such

an important part of Lean. Value in Lean is seen from and for the customer and can be

derived from customer-perceived value39

.

“Value can be defined simply as the ratio of perceived benefit to perceived cost.”40

Customer-perceived value is defined as perceived benefits divided with perceived

sacrifices. The perceived benefits are a combination of price, quality, the use of the

product/service in relation to physical and service characteristics, and technical support.

The perceived sacrifice concerns all costs that the customer have when performing the

purchase. Examples of cost can be the price on the product/service, repairs and

maintenance.41

Therefore when value is mentioned in this thesis further on it will refer to customer-

perceived value. This is because value is what the customer thinks give him/her benefits

when purchasing a product or service in relation to what it will cost.

3.5 Lean

Toyota’s production system is the basis for the theory of Lean. Businesses that use Lean

use fewer resources, such as small investment in materials and less labor. Something

that also characterizes Lean is that all employees should take responsibility for his/hers

job, because those who can verify the work best are the persons performing the work.

Thus, many may feel stressed when introduced to Lean, even if it comes with the

freedom to self-check their work, there is also the responsibility to account for when

something goes wrong.42

Womack and Jones have defined five principles of Lean. These five are: identify value,

identify value processes, create flow, follow the demand and continuously improve.43

38

Womack & Jones. 2003. Pp 16-19. 39

Grönroos & Ravald. The value concept and relationship marketing. European Journal of Marketing. Vol. 30: No 2. 1996. P

21. 40

Evans. Measuring and managing customer value. Work study. Vol. 51: No 3. 2002. P 134. 41

Grönroos & Ravald. 1996. Pp 21-22. 42

Womack, Ross & Jones. 1991. Pp 13-14. 43

Womack & Jones. 2003. P 15.


27

Figure 1. Five principles in Lean.

Follow the demand will not be included in this study. See 3.5.0.1 Relevance for this study p 29.

Identify value

Lean is based on value, the purpose of identifying value in a business and above all to

see where value can be created. Value is something seen and felt by the customer but is

created by the producer. It is therefore important for the company to define the values of

the company by identifying specific products with specific characteristics for a given

price by a specific dialogue with customers. To implement this in the company they

should not tell what they have or deliver today, instead they have to reflect over where

in the world they can create value and think outside the existing framework. Creating

the wrong product or service through the right way is a waste.44

Identify value processes

The next step in Lean is to identify the entire value stream for each product or service.

Value processes are specific activities that together create a product or service. By

identifying the full value of the process from beginning to end, the company may find

that a waste can be reduced or eliminated. The processes can be divided into two

categories, value-adding and non value-adding. Non value-adding processes can then be

divided into two additional categories, necessary and not value creation. The necessary

processes are those processes that do not create value, but must be performed and are

limited by the current technology. Non-value added processes are those processes that

add no value to the finished product and can be completely eliminated from the overall

value of the flow when it is a waste.45

44

Womack & Jones. 2003. Pp 16-19. 45

Ibid. Pp 19-21.


28

Figure 2. Value adding activity and non value adding activity.

For the company to use Lean fully, the company's stakeholders as suppliers and

customers are needed to be included in the work with Lean. By involving stakeholders

can an entire value chain be created by all stakeholders in the various stages where they

are refining the product. In this way, companies can create better partnerships to

become more competitive and efficient in delivering what the customer wants.46

Create flow

In order to implement Lean in a company, the company must create flows on its value

adding processes. This may be difficult and big changes for companies that are not used

to seeing flows, but previously only have seen each service or process. It is difficult to

create flows of processes which are not produced in large quantities. Lean is

implemented to refine the work of the various functions and departments so that they

together can improve value processes, and get the employees to understand that it is also

in their interest to get value processes to flow. Processes function better when the work

will focus on the product and what is needed to create value, rather than focusing on the

company's organization and tools. This creates a continuous flow through the various

processes that a product is reviewed before it reaches the customer.47

Follow the demand

When the flow is created companies has to work to create continuous flow. To create a

better flow, the customer should ask for the product from the producer instead of the

producer pressing the product to the customer. The company then has a so-called pull

46

Womack & Jones. 2003. Pp 19-21. 47

Ibid. Pp 21-24.


29

production. Customer demand becomes more stable if they know they can get the right

products at the right time.48

For the flow to be continuous, it must be regulated. This will not be achieved before the

next process of the flow demands it. The regulation may be different, but can be

visualized with a kanban card. This is based on the Just In Time, and has the advantage

that the company can produce small volumes with short lead times.49

Continuously improve

The last of the principles points to constantly improve of the four other principles. This

will enhance the constant strive to achieved perfection and constant work towards

improvements. In order to continuously improve processes and more accurate

identification of value streams processes must be transparent so that problems and new

values can be detected and improved.50


This is used as an analyze tool in this study to explore how Lean could be implemented

in an administrative section. Follow the demand step is not relevant in this study when

the section that is studied already work that way. The other four steps identify value,

identify value processes, create flow and continuously improve is going to be used in

this study.

3.5.1 Key performance indicators in Lean administration

- Processing time is the actual time it takes to perform a process. Processing time may

vary depending on the employees experience and abilities, and type of order. Is the

gap too large a study should be performed to define the causes. A cause may be

because they belong to different product families.

- Lead time is the total time it takes to perform a process. This means that the waiting

time and other waste is counted in time.

- Value-added time means the time that employees spend on creating value in the

process.

- Set-time is the time it takes for an employee to switch from one process to another.

- Demand pace shows customer requirements and this may be presented as orders per

day.

- Percent complete and accurate is a quality measure related to how much of the

information the customer receives is complete and correct.

48

Womack & Jones. 2003. Pp 24-25. 49

Ibid. 50

Ibid. Pp 25-26.


30

- Reliability is the time which means that the recourses are available when needed.

Examples of recourses can be computers and printers.

- Stock in an administrative section may be created when high-order ports or

materials that are waiting to be shipped from suppliers.

- Used IT systems that employees use to process information in the processes.

- Access time is the time the section is available and can carry out its processes.51


Key performance are in this study used as an analyze tool to identify different key

indicators in the administrative section. To estimate the different key performances

interviews will be conducted and reports will be studied. This performance shows hard

data as lead time and process time, what is not showed is the causes to the different

performance. Therefore it is combined with other analyze tools. Information in this

study is defined as order managing and purchasing.

3.5.2 Product family

In order to identify the different flows within an administrative section, different

families within the section can be distinguished. A product family is a group of different

activities with similar process steps. Process steps do not need to be completely

identical but very similar.52


The product family is used in this study as an analyze tool to identify and divide

activities into different types.

3.5.3 Toyotas 14 principles (4P)

Philosophy

The philosophy is the core of an enterprise. By understanding and living the philosophy

it creates a foundation for the other principles.

1. Decisions shall be based on long-term thinking, even if it means that the short-

term economic goals are not perceived.

51

Keyte & Locher. Leanhandboken. Värdeflödeskartläggning inom administration, service och tjänster. Malmö. Liber AB.

2008. Pp 39-46. 52

Ibid. P 23.


31

Processes

By learning mangers within the company through mentoring and experience that the

right results are being created by identifying the right values, processes and flows.

2. Bring up problems to the surface by creating flows.

3. Avoid over-production by following the demand.

4. Distribute the workload evenly.

5. Make sure that the quality is correct from the start by stopping the process when

an error occurs.

6. Standardize the processes that functions well. To standardize the work provides a

basis for continuous improvement and to get employees involved.

7. Do not allow problems to remain hidden, make the activities visual.

8. The processes and techniques used must be reliable and fit employees and

partners.

People and partners

Create value in the company by challenging employees and stakeholders to develop

themselves.

9. Develop leaders who know the company, that think and live according to Lean

and can teach others to do so.

10. Develop employees who follow the company’s philosophy.

11. Respect the stakeholders and suppliers, helping them to develop and challenge

them.

Problem solving

Constantly improve the company by constantly working on solving the basic problems

of the company.

12. To understand the situation by seeing it with own eyes.

13. Decisions shall be done by mutual agreement and be considered and taken

slowly, but they must be implemented quickly.

14. Become a learning company, do not stop reflecting and continuously improve

operations. 53


The 14 principles are used in this study as an analyze tool to understand the

administrative section, and explore if Lean is suitable and can be implemented in the

section.

53

Liker & Meier. The Toyota way fieldbook. A practical guide for implementing Toyota´s 4Ps. 2006. Pp 6-14.


32

3.5.4 The Lean house

Thoughts concerning Lean can be compiled in the so-called Lean House. The

foundation of the house consists of creating stable and standardized processes. The

foundation also includes having a visible leadership. One wall is composed of Just In

Time, which means the right part in the right quantity at the right time. Which means

plan the time, create a continuous flow, allowing demand to control and be able to act

for quick changes. The second wall is composed of quality, which means to make the

problems visible by automatic stops, make checks when the product is manufactured

and to solve basic problems in the company. The roof consists of customer focus, which

means creating the best quality at the lowest cost with the shortest lead time in a safe

and ethical way. The content of the house is continuous improvement, which is created

by reducing wastage and by the cooperation of the employees.54

Figure 3. The Lean house.


The Lean house is used in this study as an analyze tool to study how the sections

context are and where focus are, and if the section has a foundation to implement Lean.

Further to see if Lean can be implemented even if the Lean house is not completed in

the section.

3.5.5 The 7 (8) wasting

Ohno identified seven wastage within Toyota, which today has evolved into eight

wastage. Wasting implies that an activity is performed that does not provide the product

54

Liker. The Toyota way: 14 management principles from the world´s greatest manufacturer. New York. 2004. Pp 32-34.

Standardize activity

Visual leadership

Quality

Just In Time

Reduce waste

Employees

Continuous

improvements

Customer focus


33

any more value. These eight different wastes can be found in all departments within a

company, including administrative sections.55

1. Transport. Unnecessary transport that does not add something meaningful to value

processes. Within the administration, this could be the movement of paper and

unnecessarily large attachments in email.56

2. Stock. Stocks should not exist, when it's a big waste. In the administrative functions

stock can be layers of documents, such as order and quote, and boxes overflowing

with documents both on paper and in emails.57

3. Unnecessary movements. Much of the time spent on processes is unnecessary

movement that does not add any value. Examples in administrative sections are to

have a large central archive or the printer far away, and to have other employees in

the office that frequently have to be contacted far away.58

4. Waiting. Many believe that waiting is the most dangerous waste. However waiting

can be better than other wastes, such as overproduction. The wait can act differently

in administrative sections, including the lack of information from customers and

approval from another section or person.59

5. Overproduction. This is the most dangerous of all wastes. This is because

overproduction often leads to many other wastes too. Included are activities that

produce more than needed, earlier or faster than what is needed and accomplished.

Within the administration it may be to print paper early.60

6. Rework. It includes all forms of failure. Examples can be wrong in the quote to the

customer and employee turnover.61

7. Over work. Examples of administrative work can be too many extra copies,

comprehensive and detailed reporting and so on.62

8. Wastage of unused skills/creative. Examples can be that limited responsibilities and

powers stifle creativity, but also management, command and control.63

Within an administrative section, there are four main activities that will lead to wastage.

These are information management, administrative support processes, landscape and the

office staff.64

55

Liker & Meier. 2006. Pp 33-34. 56

Keyte & Locher. 2008. P 31. 57

Ibid. 58

Ibid. 59

Ibid. 60

Liker & Meier. 2006. Pp 34-36. 61

Keyte & Locher. 2008. P 31. 62

Ibid. 63

Ibid. 64

Larsson. 2008. P 142.


34


The wastage is used to identify different kinds of waste in the administrative section.

Transport, over work and overproduction will not be relevant in this study when the

information in this section is not working with information in that way. Further in this

study focus is on the office staff and information management.

3.6 Summary of theory

- Previous researcher argues that Lean can be used in an administrative section by

using Lean as a philosophy instead of a process. Further value can be created by

using the five Lean principles. The whole company, from management to

employees, must be involved to succeed with Lean in a long-term view.

- Previous researcher have given Lean some critic when they do not believe that Lean

can be implemented everywhere at every time in all business. A previous study

shows that Toyota has failed using Lean, and that must companies only implement

Lean on the surface and focus on what is easy to change.

- In this study Lean will be used as a theory to explore how Lean can be implemented

in an administrative section.

- Lean has its foundation in the five Lean principles identify value, identify value

processes, create flow, follow the demand and continuously improve.

- Key performance indicators will be used to understand the flow in depth.

- A sections work can be divided into different product families by studying the

activities and the various flows.

- Toyota has created 14 principles that build on 4 P, philosophy, processes, people

and partners, and problem solving. Will be used as a analyze tool to understand the

sections suitability for Lean.

- The Lean house shows the different components that are important for Lean, and are

in this study used to see how the context affects the implementation work.

- The seven (eight) wastages shows what different wastage there can be in an

administrative section, but in this study only five of them will be used. Transport,

over work and overproduction is not relevant in this study.

Lean Administration Kristoffersen Empirics

35

4. Empirics

This chapter presents the empirical data that has been collected through interviews,

following orders and documents.

4.1 Interviews

The section that has been studied is responsible for order managing, purchase and

invoice. There have been nine respondents to these interviews. There are nine

employees and one manager in the section.

Name Position

Education Years,

working

in the

company

Mikael Cost follow

up

- 14

Fredrik Order

manager

- 3

Göran Order

manager,

consultant

Master of

Science in

Engineering

3

Anna Order

manager,

consultant

Master of

Science in

Engineering

0,25

Erik Order

perpetrator,

consultant

- 2,5

Krister Purchaser 4 years

education in

technique and

electricity

21

Elsa Purchaser - 17

Tina Purchaser,

consultant

Professional

development in

logistics

2

Johan Project

purchaser,

consultant

- 2,5

Anders Manager Master of

Science in

Engineering

2,5

Table 2. Table of respondents who have been interviewed.


36

4.1.1 The section

Through the interviews it has been clear that the section has nine employees and one

manager. Further five of the employees are taken on to the company as consultants, this

means that they are hired through a staffing company. The other four employees are

permanently employed. Of the nine employees, three are order managers, four are

purchasers, one is order perpetrator and one is responsible for the development of

processes and systems, and follows up on cost. Tina is telling that there are two of the

employees, a purchaser and an order manager, also are working with a new IT system

that will be implemented during March and April. Anders, the manager for the section,

explains that the sections role is responsibility for customer contact, planning, purchase

and delivery. This can be verified with a company document concerning the sections

function where it says that the specific tasks of the section are filling orders, office

processing, customer project management, procurement, purchasing and project

planning. The section receives orders from around the world both from external and

internal customers, explains Elsa.

Mikael informs that an employee at the section cost eight hundred and thirty SEK per

hour. Further the time available for the employees in the section is about seven and a

half hours per day, lunches and coffee breaks are excluded.

Mikael explains that the section currently uses several different IT systems to perform

their work.

- To handle the orders the section use Order of Magnitude (OM) and the system

Order Management System (OMS).

- MSProject and Excel are also used to plan the order and its purchase.

- In order to identify the various components to be ordered the section use the system

PDB. The sections Encyclopedia of components.

- Another software program, SS, is used to locate suppliers.

- Job Reporting (JR) is used to identify the time to certain client accounts.

- WS are an internal program at another section, which is equivalent to OMS. This

section can lay orders for purchase in WS to another section.

- To make purchases the program Purchase System (PS) is used.

- Finally, there is a system called Business System (BS) which contains financial

tracking and is managing supply chains.

4.1.2 Data collected from interviews to explain order managing

Through the interviews it has been clear that there are three employees who work full

time with order managing. Mikael explains that he spends about ten percent of the time

on order managing. Further Erik, one of the order managers, tell that he is a so called

order perpetrator which is taking care of more complicated orders.


37

Fredrik explains that the customer places an order or a request by mail or in the order

system OMS. An order received via email gets entered into OMS by creating an order

number, which is a way to number the order and then be able to document and follow

orders. Orders then are viewed to identify what the customer really wants. If it is a

complex order, then order preparation gets contacted. Erik, the order perpetrator, tells

that his work means that he reads through the order, verifies the type of order,

establishes if the order is simple or complicated and tries to understand the order by

studying various documents. If it is not possible to complete the order, the customer

then will be contacted to clarify the requirements and try to complete the order. Further

Anna explains that once the order is defined, the price, delivery time and production

time will be estimated. In some cases suppliers has to be contacted to provide the

customer with these answers. Purchase contacts suppliers. When the price, delivery time

and production time is estimated an internal quotation is created. This is then transferred

to an OM for the client. The customer accepts or declines the OM. When OM is

approved by the customer an account for orders gets created.

The accounts are described by Mikael as the accounts are divided into three different

kinds: internal, A1 and A2. The internal accounts are accounts that affect internal

departments within the company. Orders that are under 20 000 SEK are called A1

accounts. To get these accounts the section Business Control are contacted to create the

account. The A2 accounts are orders over 20 000 SEK. These accounts are given out by

the section Asset Management. When the order has an account it is time to split the

order. When the order has been split the order arrives in a list in OMS to purchase,

explains Fredrik.

Fredrik declares that he is handling the incoming mails. In the inbox there can be orders,

price inquiries and changes of orders. If there is an order that has a request of a change

Fredrik has to locate the order number in OMS to find out who is managing the order.

Then the email is forwarded to the right order manager.

Through interviews the employees explains that there are two different kinds of orders,

but they are named different. Some name them small and large orders, other say simply

and complex orders, and some say industrialized and unique orders. Anna explains that

orders that can be given a quick answer is called industrialized orders, because there

have been similar products produced before. This can be achieved by experience and

also by going through old orders with similar components. Old orders can give

estimation of price and delivery time. However, this price and delivery time can be

misleading when the previous orders may have had problems during the process and

therefore have become more expensive. Further Fredrik explains that unique orders

require more handling time before an answer can be given to the customer. To estimate

price and delivery time, information is collected from suppliers, purchase and


38

production. This gives the customer a response of an order from an hour up to fifteen

days. The customer demand, tells Andreas, is to get an answer the same day, but that is

not possible in all cases, therefore the goal is set at five days because it seems more

realistic. Today the customers are not satisfied with the lead time as it can exceed five

days.

The order managers are also those who plan the order process, says Göran. They

prioritize orders, to determine which the most important and least important orders are.

Further they plan when the orders should be delivered.

4.1.3 Data collected from interviews to explain purchase

There are three purchasers and a project purchaser, explains Johan. When orders have

been split they arrive in a list in OMS. An order that arrives in the list gets priority from

order managers which send out an e-mail once a week to purchase, explains Elsa.

Further she informs that those orders who take a short time to go through may lay in the

list for a while and then be quickly viewed before a meeting, after lunch or when there

is no time to start to process a large order. The order is divided into smaller parts to see

which the minor components of the order are. To localize the various components that

are ordered the program PDB is used. Furthermore, purchaser use Excel to create a

sheet with a list of components of the order, and OMS is also used to see what the

customers want and what past orders has contained. Elsa points out that all purchasers

use their own Excel sheet, so there is no standardized form. From this review it is then

time to decide what is needed for the order from external suppliers and what is needed

to be produced internally. There is a system, SS, which show suppliers that are proved

to purchase from. Another program used in this activity is WS. Further SAP, BS and PS

are other programs that are used in this activity to be able to locate which and where

purchases are to be done.

When an item list is made of what is needed to be purchased, it is then performed in PS

and highlighted in OMS. Fredrik explains that this marker is something that often is

forgotten which makes it difficult for order managers to update the customer with new

information. Tina tells that when a purchase is made it must be endorsed by the

manager before it is sent to the supplier. Andreas, the manager, explains that he has the

authority to attest purchases up to 50 000 SEK. Further he explains that attestation is

performed daily and sometimes several times a day for not letting purchase be waiting.

Purchase over 50 000 SEK go on to the manager of the department to attest, and even

larger purchases goes to the manager of the unit to attest. A large valued order also

passes through the section source, and an even larger valued order passes through the

financial section to be attested.


39

Tina informs that purchasers are those who have contact with suppliers, and transmit the

delivery date to order managers. Is the delivery date changed due to problems with the

supply of components it also has to be transmitted to the order managers. This is

something that rarely happens, explains Fredrik. Often the order managers have to ask

how the purchase is going on with a particular order, and may be told that order is going

well. Then when it is almost time for delivery order managers find out that the delivery

date is moved forward two weeks. The customer then has to be contacted and presented

a new delivery date, only a few days before the planned delivery date. The customer

could have been alerted earlier if the purchasers would have informed the order

managers in time.

Up until now, the work flow for purchasers have been quite similar but will now be

different, explains Tina. When components are received, they are passing through goods

reception to verify that the right components in the right amount are delivered against

the packing slip. All the components in a box or on a pallet are gathered and passed on

to production. However this is only performed by Elsa, and Tina explains that she will

not be engaged in this activity due to that she costs too much. In reality Tina is engaged

in this activity due to problems with delivery of components. Further differences are

that Elsa has all the information about stocks of components in her head, because she is

often in production department which gives her an advantage, explains Tina. Because

Elsa has all the information in her head it creates problems if she is sick or away for

other reasons, this is a problem when a stock system does not exist. Elsa informs that

there is a difference in process time between the purchasers. For Elsa it takes between

ten minutes to three hours, but for Tina it can take between thirty minutes to three days.

Tina explains that this depends on the knowledge and experience that Elsa has.

4.1.4 Data collected from interviews to explain delivery and invoice

When production is finished, purchase receives a message that the order is completed.

(See 4.4.2 Histogram of lead time, Figure 4, p 49). If it is a small order, purchasers can

send the order themselves. However, if there is a large order, for example a test cabinet,

then the order will be delivered with help of a transport system, tells Tina. After the

orders are shipped the order is marked as delivered in OMS, and when this is performed

the next step is to invoice the order. Mikael explains that this mark sometimes is

forgotten, which leads to no invoice can be sent until it is noticed that this mark is

missing. The order is recalculated after the order has been delivered to establish if any

price changes has been made. However this is rarely achieved due to lack of time,

explains Fredrik, but should be performed by the order managers. Further invoice work

has to be performed to locate hidden costs in the order, if there are any. When that has

been completed the invoice can then be sent to Business control, which sends the

invoice to the customer, explains Mikael. Andreas explains that the goal for sending an


40

invoice is in four weeks, which is hard to achieve when the suppliers invoice has to be

received before the orders invoice can be sent to customer. Mikael explains that there

are problems in handling the invoices. (See 4.4.2 Histogram of lead time, Figure 5, p

49). This depends on different reasons, someone has ordered it but no one wants to pay

for it. Further can components be missing to the order, invoices from suppliers are

missing and the time reported on orders has been too high which have made the order to

costly. Another reason for long lead times concerning invoices is when they have been

sent, but Business Control have forgotten to mark in OMS that the invoices have been

sent.

4.1.5 Data collected from interviews concerning remake

There are time points during the work flow when remake is needed, explains Andreas.

When a task is not performed in the right way, or when a customer changes the order or

when components has been forgotten to be purchased remake is needed. In order

managers work there is the time from an OM is created and sent to the client that

revision takes place. This is when the customer is not completely satisfied with price,

production or delivery time. This discussion can take place over several days to define

what the customer wants in realistic terms of time and price, explains Fredrik. One

problem raised by this is that this debate between order managers and customers drags

the total flow time, informs Anna. This is because the order managers do not handle

over the order to purchasers before everything is okay with the customer, even if there

are only small details to be discussed and purchasers would be able to purchase the

components for the order.

Within purchasers work there are more stages of remake. The first is when a purchase is

attested by Andreas. Usually the purchase is correct, but sometimes there is one

purchase that has been made in a wrong way. A faulty purchase can be written using the

wrong currency, explains Mikael. The purchase then goes back to who performed the

purchase to do the necessary corrections. Furthermore tells Tina, it is reviewed when the

order came to production and they discover there are missing components. Purchasers

must then view what is missing, take a decision whether it should be ordered internally

or externally and then make a purchase. The above mentioned remaking does not occur

every day, but even if they are not commonly occurring they still appear so often that

they can create problems in the work flow.

To improve the sections work the employees can suggest improvements through a work

system called Continuously improvements. An employee suggests an improvement and

at the weekly section meeting it is then reviewed and discussed for implementation or

not. This system makes it easier to affect problems that occur in the work flow, but

although many ideas exist, not all of them are discussed, explains Andreas. The


41

employees do not have the strength and willingness to perform and drive a change,

therefore they just implement the change for themselves. This leads to even more

different ways of working, and no sharing of good ideas, explains Anders.

4.1.6 Data collected from interviews concerning recurrent meetings

Tina informs that there are three regular meetings each week for the entire section. Once

a week they have a production planning meeting where purchasers and order managers

together go through and prioritize when to start production of certain orders. The

purchasers and order managers have once a week an order meeting where they go

through the delivery dates for orders that lack dates. Additionally the orders are verified

that everything is correct. The section has a meeting once a week where a record is kept

of what is happening within the unit and department.

Further Elsa tells that every week order managers and one of the purchasers has a

meeting with a factory in Sweden, which is a big internal customer. This meeting is set

to match the orders to what the factory have requested and what they expect to be

delivered. Furthermore explains Göran that the order managers once a week have a

phone meeting with a factory in China and another factory in Sweden. The order

managers also have a meeting once a week to follow up the finances of the orders. The

manager of the section has a weekly supply meeting with the order managers. At last

the order managers have a meeting together to go through orders in OMS and distribute

jobs between them.

Purchasers have every week a short meeting with the production section to coordinate

production and delivery dates, tells Tina. The order managers also have several

recurring meetings each month. They have a unit meeting to follow the order status.

Furthermore they have two different kinds of forecasts meetings. The order managers

also have an operational meeting and a production capacity meeting, explains Göran.

4.1.7 Data collected from interviews to explain the sections context

Through interviews it has become obvious that the sections context is affecting the

improvement work. Today the employees are tiered of improvement and process work

when earlier work has not been implemented. Therefore they are missing the motivation

and willingness to improve and change the section and its work. Further there have not

been goals and plans of why changes are made. The focus have not been on long-term

decisions, focuses have been on solving small problems instead of the big problems that

are affecting the long term goals. The sections leading have not been motivated to

change either, and improvements have therefore not been implemented.


42

It is hard to follow the flow in the section, and there is no understanding for the whole

flow and how the processes are related. Therefore it is hard for the employees to

understand each others work. The employees want to be unique as they are afraid of

losing their job. There is also a problem when some of the employees are consultants

and some are permanently employees. Some of the employees are against Visual

Management System (VMS) when problems are becoming visual and the one

responsible for the work has to take responsibility for it. Today it is easier to see others

problem instead of focusing on oneself and ones responsibility.

4.1.8 Improvement possibilities in the section

The section wants to implement Lean to work more efficient to reduce lead time and

variations for customers. Below is a list of areas that could be improved in the section,

which has been established through interviews where problems have been discussed.

- Communication. Poor communication affects the customers. Order managers cannot

determine whether the order will be delayed. Order managers only know the

purchaser has placed an order for components or if the order is completely finished,

and they may not know the status of the order when it becomes large delays. The

customer does not find out until the delivery when the product does not show up. In

the absence of clear goals confusion is created. This in turn means that the

employees do not really know what they are working towards. Better

communication is needed to let the employees know the goal.

- Roles. The employees do not know what roles they have in the section. They know

their own role, but it is unclear what the others in the section are doing. Many

employees believe that others are doing “unnecessary” activities that do not belong

to their duties. The employee performing the activity thinks that it belongs to

hers/his specific role.

- Implementation. It has been developed process maps, suggestions for changes as

templates for order processing and so on. These have not been implemented but

instead been forgotten which have made the employees lose interest in supporting

the process work when their views have not been acknowledged.

- Different approaches although the same process. Orders received by the section can

be divided into two categories: industrial and unique. For the unique order it is

difficult to assess the cost and time because the suppliers, purchasers and production

must be contacted in order to be able to estimate. The industrialized orders have

been manufactured earlier so order managers know how much they will cost and

how long it will approximately take. The order managers can study old orders to


43

ensure cost and time for industrial orders. It has however created problems while

previous orders may have been protracted, or there has become an error which will

lead to higher costs and longer lead time. Therefore the previous orders may not be

true for the customer who places a new order. The new customer can have a higher

cost and longer lead time planned than necessary because there does not exist

standard cost and schedule.

- Standardized cost models. When an order is established there is an expense account

created in which each employee who is working with an order has to input the

amount of time spent with the order. This account then form the basis of how much

the customer will pay. However, there is a problem with this. Depending on who

performs the work differences in cost will occur for the orders. An example can be,

if an experienced buyer gets the order he/she uses three hours but a less experienced

might put down eight hours on the same kind of order. It is a relatively big

difference to the customer who has to pay for this difference. Furthermore, there is

no reasonable price for small orders. The order will be handled in the same way as

big orders with cost accounts. This can lead to an order of a cable costing twelve

SEK can end up on a final price of three thousand. This is not reasonable and long-

term customers can be lost when they find better and cheaper suppliers.

- Updated price database. Today the section has a price database, but it is not used. It

should be updated four times per year, but it is not done due to the order managers

think that there is no time to perform the updates. Therefore the price database is not

updated, and furthermore it is hard to find components in the database. There is no

concise way in saving prices in the database. It is hard to find prices on components

when the employees do not know what to search for. This when the search function

is very sensitive to different commandos as space or not between signs.

4.2 Quantities in the work flow

By studying reports in OMS it has been clear that the section receives between two to

seven orders or requests for quotes per day. To estimate the quantities of orders in the

work flow the flow was followed from the end to the beginning. When this study was

conducted there was one order which was expected to be viewed in OMS. Furthermore

there were nine orders waiting for responses from suppliers, and to estimate price and

delivery date. Orders that were lying in a list in OMS for purchasers to handle were

thirty. Five orders were waiting for components to be purchased. The manager had

twenty orders that were waiting to be attested. There were ninety orders waiting for

components which have been purchased to be delivered. Twelve orders were waiting for

the production to start. In the end of the flow there were two hundred orders that were

delivered, but no invoice was sent to the customer.


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4.3 Time in the work flow

The work flow in this section is divided into two parts: the time an activity takes and

waiting between activities. Therefore there are two tables that are viewed. One table

shows how long activities take and the other one shows the waiting time between

activities. The time for activities has been established through interviews with the

employees, except activity order to delivery which has been established through reports

in OMS. The waiting time between activities has been established through studying

reports in OMS but also in interviews with the employees.

4.3.1 Time per activity

Table confidential.

Table 3. Time per activity in the work flow.

4.3.2 Waiting time

Table confidential.

Table 4. Waiting times between activities in the work flow.

4.4 Secondary data

4.4.1 Field of responsibility

By studying the section document “Functional description of the section” it is clear that

the section has responsibility for:

- Receive orders from internal and external customers.

- Have customer contact.

- Make financial monitoring of manufactured products.

- Validation of documentation.

- Manage major production projects.

- Purchase materials for new projects, and assisting with component choice in new

projects.

- Plan production.

- Ensure that necessary skills are available to solve the organization’s commitments.

- Preparing forecasts and investment base.

- Requirements to design units.


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4.4.2 Histogram of lead time

By studying reports in OMS the total time for orders from income to delivery has been

established that it can vary between zero to three hundred thirty eight days. The extreme

values from the right in the histogram depend on the orders being projects, which means

that the planned delivery date is a year later. Further long lead times to delivery can

depend on problems of delivery from suppliers.

Figure confidential.

Figure 4. Histogram of spread of number of orders in days.

The total time for orders from delivery to invoice is zero to four hundred twenty six

days, which has been established by studying reports in OMS. The extreme values from

the right depend on missing invoices from suppliers, the administration cost is too high

and the managers have not taken a decision on how to handle the problem. Other

problems that exist are missing parts and the customer is unknown.


Figure 5. Histogram of spread of orders from delivery to invoice.

4.5 Summary of empirics

- The section that has been studied is managing orders and its purchase. There are

nine employees and a manager at the section.

- An order that arrives to the section goes through activities concerning order

managing, purchase, delivery and invoice.

- There are some reworks made in the section, for example when a customer changes

the order requirements or when a component has been forgotten to purchase.

- A lot of the time working the employees is in meetings.

- The context of the section is affecting the improvement work when the willingness

to change has disappeared.

- There are some improvements possibilities in the section concerning the

communication, roles, implementation, way of working, cost models and price

database.

- There are variations in both lead time and process time. From order arrives to it is

delivered it can vary between zero to three hundred thirty eight days. It is also,

especially between the purchasers, difference in process time. A activity can

difference in time between two and a half day.

Lean Administration Kristoffersen Analysis

46

5. Analysis

In this chapter, an analysis of empirical data will be made based on the theory of Lean.

5.1 Product family

Most of the orders that the section is managing are unique, seen from the employees

view. This is true in one way, but not in another way not. The orders are unique in that

there is a unique customer that wants a unique end product, but the components to the

end product is not unique in most orders. Therefore the orders can be standardized in

some ways and divided into two different product families. There are those that are

industrialized, which employees can manage in a simple manner when they recognize

the order by knowing how much it will cost and approximately how long the lead time

will be. The industrialized orders are orders that do not need supply contact to create a

quotation, if there exists an updated price database.

Then there are unique orders that the employees have not handled before. The order

managers do not know how much the orders will cost or how the long lead time will be.

Therefore the order managers must contact the suppliers, purchasers and production for

estimation of cost and time. These are the real unique orders.

5.2 Waste in the section

In this study the waste is produced through the employees and also the information

management. The employees do not work in a team, therefore the work is less effective

and waste in form of lost information is created. There is no structure on how the

information flow is manage, therefore waste is created.

- Stocks. There are different kinds of stocks in the section. Stocks exist when there

are orders waiting to be taken care of in a process. (See Table 5 in 5.3, p 48).

Furthermore there are stocks in the section in forms of documents concerning

processes and orders. The section has a large stock of documentation concerning

orders and quotes from suppliers. The problem is that no one of the employees

knows where these documents are kept or where they should look for them. This

problem occurs because the employees each have their own way of working, and no

standardized way of working exists.


47

- Unnecessary movement. The cause of unnecessary movement in the section is when

both order managers and purchasers are involved in production to solve problems

concerning the orders.

- Waiting time. In the section there are different kinds of waiting time. For the order

managers there is a waiting time to get answers from the purchasers who has

contacted the suppliers to get answers about price and delivery time. Another

waiting time for the order managers is to get an acceptance from the customer

concerning the OM. For the purchasers the largest waiting time is to wait for the

ordered components to arrive. The largest waiting time in the whole work flow is

from an order is delivered until it is invoiced.

- Rework. When the customer isn’t satisfied with the OM the order managers have to

rework the order. Further rework can occur when purchasers have performed a

purchase and an error is detected when it is being attested. An error can for example

be a purchase in the wrong currency. The purchase must then be redone. Another

rework can be performed when production discovers that components are missing to

the order. The purchasers then have to go through the order once more to find out

what is missing, which suppliers can be used and purchase the missing components.

Further rework has to be made when suppliers delivers wrong components or

missing components.

- Waste of untapped skills /creativity. The section has a system called “Continuously

improvements” where they can propose improvements, which means that the

employees can use their ideas. The problem is that the system is not used by

everybody, and many of the employees have good ideas but does not present them

when they are tired of earlier suggestions improvements that have not been

implemented.

5.3 Key performance indicators in the section

- Processing time for the employees in the section varies depending on experience

and the complexity of the order. For order managers their process takes between

fifty minutes and sixteen days before they handle over the order to purchasers. For

the purchasers the process time varies between ten minutes to three days before a

purchase is performed.


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- Lead time:

Table confidential.

Table 5. Lead time.

- Value-added time. Many processes in the work flow are value adding, but there are

also many activities related to the processes that are not value adding. The value

adding processes are directly related to the value for the customer, an example is to

create a quote or perform a purchase. The major cause for non value adding is

waiting time between activities. A lot of the working time for the employees is spent

on meetings. The meetings could be value adding activities as many meetings are

regarding order planning, prioritizing and customer contact. However too much time

is spent on these meetings instead of working with other direct value adding

activities. Further rework in the section is not adding value to the customer. (See

Rework 5.2 Waste in the section, p 47).

- Set-up time for an employee is a few minutes to understand the order, what has to be

done and what has been done before.

- Demand rate is between two to seven orders per day for the section.

- Percent complete and accurate, of which there is no exact statistics. An example of

this is when the purchaser is not updating the order managers concerning the

delivery time if the order gets delayed.

- Reliability in the section is great when every employee has a personal computer that

is available when needed. There are also several printers which do not create

problems if one is broken, except that the route to the printer becomes longer.

- Stocks in the section can be of different kinds. There are stocks consisting of orders

waiting to be handled in different activities.

Table confidential.

Table 6. Stocks of orders in the work flow.

A further stock exists when components are purchased but have not been delivered from

suppliers.

- IT-systems used in the section are OMS, PDB, WS, SS, BS, Excel, MSProject and

PS.


49

- Access time in the section is seven and a half hours per day. This can vary

depending on how many meetings are conducted each day.

5.4 Value stream mapping

Below is the work flow of the section showed based on the collected data. The flow

chart shows how an order passes within the section through various activities. In the

flow chart is also shown how long activities takes and waiting time between activities,

in parentheses is the average time. The green boxes and arrows mean that the order

passes through smoothly, yellow boxes indicate that there are some problems, and red

boxes and arrows indicate bottlenecks in the work flow. Grey triangles show stocks of

orders in the work flow. The times at the bottom of the flows are waiting time and

process time. These times are identified through interviews and by studying reports. The

words in smaller font at the bottom of the boxes explain which system is used to

perform the activity.

The flow shows that the lead time can vary a lot and where the bottlenecks are in the

flow.


Figure 6. First part of the sections works flow.


Figure 7. Second part of the sections work flow.


Figure 8. Third part of the sections works flow.

Bottlenecks in the work flow are when orders get halted. In the sections work flow there

are three bottlenecks.

- Order managers estimating price, delivery time and production time. This is a

bottleneck because the lack of standardized prices leads to problems in estimating

price, delivery time and production time. It also halts the order when order managers

have to ask purchasers to contact suppliers to get information concerning price,

delivery time and process time.

- Order arrives to purchasers. This is a bottleneck when the purchasers cannot keep up

with the number of incoming orders. The purchasers cannot keep up with the

incoming orders because the purchasers are doing activities that are not related to

the actual purchasing, an example is when they are performing goods reception. The


50

purchasers cannot keep up with the incoming orders when there is coming in two to

seven orders each day. Therefore it should leave two to seven orders each day.

Assume that the average is five orders each day, and then there is one order every

one and a half hour. Then the purchasers cannot keep up with the incomings orders

when the large orders take between three hours to three days to complete.

- Send invoice to customer. This is a bottleneck because of several reasons. One

reason is that purchasers forget to fill in a box in OMS that highlights that order has

been delivered. If this box does not get ticked an invoice cannot be sent because the

order is not recorded as delivered. Furthermore there is a problem for the section

when they have to wait for their invoices from suppliers before they can send the

orders invoice to the customer. Another reason for this to be a bottleneck is because

they have to verify the invoice. This in itself is not a problem. The problem is an

often occurring difference between the OM and the invoice. When there is a

difference further work has to be performed to detect why there is a difference.

5.5 Proposals for improvements in the section

By using Lean to visualize the flow and problems, proposal for improvements can be

created. Underneath are proposals for improvements in the sections work presented. The

improvements are created with the foundation in Lean to shorten the lead time and

standardize the work. The proposals are a translation of how Lean can be implemented

to improve the section.

- Divide orders into two product families.

The orders are of two types: industrialized and unique. These two types have

differences in lead time. The unique is more complex and takes longer time to

complete. Furthermore there are differences in the process of the two order types.

The unique orders are harder to estimate price and time, therefore suppliers often

has to be contacted. Therefore orders should be divided into different product

families with two different goals. The goals should be suited for industrial and

unique orders. Industrial orders may have a goal for five days, as it is today, from an

order arrives to the customer has received a response to the order. The unique orders

may have a goal set at ten days, as suppliers often has to be contacted to estimate

price and delivery time.

By dividing orders into different types, different ways of working could be

established. The orders can be divided into two different work flows by contacting

suppliers or not to estimate price and time.


51

- Standardize the sections processes.

Today the employees in the section are working in different ways, even when they

have the same position. This difference in work is making variations in price for the

customer. One way to standardize the work is to define and implement roles and

work processes in the section. This is not only for the customer, it is also important

for the employees. Today it is unclear what roles the employees have and how the

working processes are formed. Therefore the employees are unique, and this creates

problem when this employee is not at work.

Review the organization to have the right person with the right knowledge in the

right activity. Today the employees do everything, instead of seeing what

qualification is needed in which activity to create a better flow by having the right

person at the right activity. The order managers create a relationship to the customer,

and therefore are more bound to the specific work with a specific customer. By

document the order managing step by step it would be easier to follow the order, and

thereby easier for another order manager to handle the order and customer contact if

the original order manager would be away.

For purchasers it makes the work easier by having good knowledge about the

components, but if there would exist a system of stocks, suppliers and components

the work would be easier for everybody. If these systems did exist and work in a

good way, the specific person bound knowledge would not be needed, and therefore

could purchases be performed independent on person.

Further goods reception and handle over order to production do not necessary need to

be handled by the purchasers, the activity could be performed by another section and

persons. The same is for delivery orders, small orders do not need purchasers to

deliver. Small orders can also be delivered by the ones delivering the large orders.

Actual cost calculations should be performed by the order manager who is managing

the order. The order manager has the best knowledge of the order, why everything

cost as much as it does or why there has been a difference between quotation and the

actual cost calculation.

To standardize the work process for the order managers there should only be one

way to contact them, which should be through OMS. The function to contact them

through mail should be removed.

Today purchasers lead time can vary depending on which purchaser is performing

the purchase. This is a problem for the customer and the section, when it effects


52

prioritizing of orders and work flow. To solve this there can be different solutions.

One way is to educate the purchasers so they have the same knowledge and way of

working. Further solutions can be to implement the sections purchasers in the

purchase department. The part of the flow that could be moved is from order arrived

to purchase to a purchase is performed. By having all purchasers in the same

department the result will be standardized ways of working. There will also be a

better flow in the orders which includes right prioritizing, and an understanding of

the work which leads to more employees can help if there will occur a problem.

Furthermore the purchaser would not be involved in goods reception and handle

over order to production, and not be in the production department. A solution to that

is to create a stock system, which is easier to implement in the purchase department,

to see what components that are in stock or not.

Furthermore, to make fewer variations for the customer a price model should exist.

This price model should be the foundation in creating an OM. This price model

should make it easier to estimate price for both industrialized and unique orders, but

especially industrialized orders. Today the administration can cost too much in

relation to the ordered product. Therefore by dividing orders of type fixtures and

systems into different sizes, small, medium and large, different prize models can be

created with standardized administrative costs. To take away the reporting of time

will make the employees less stressed, and the customer will get a more concise way

of price setting. Further small order as cables could be handled in another way, this

by charging extra for the administration cost. A question to be asked is if these small

orders are of value for the customer, the section and the company, and if they should

delivery so small orders.

A price database could also be created to make the work easier concerning

estimating price. The price database could be sorted on the company’s own

numbers of components, but the search function should not be sensitive to wrong

spelling or space between words and numbers. Further there could be two functions

in the database. At first it could have prices on components from quotations from

suppliers, and the other part could be on total order prices on systems and fixtures

where the administration cost is also included. By performing an actual calculation

after the order is delivered it can be used to estimate price in further orders. The

actual calculation can then be used as a quote, which leads to fewer variations in

price. This also makes the work for the order managers easier when they have an

actual calculation to base their quote on. To use an actual calculation leads to fewer

long shots in estimating price and lead time. The actual calculating will be used to

update the price-database to make the prices as contemporary and exact as they can

be. The price database could have one responsible employee who updates it each

third month.


53

To spend more time on value adding activities the recurring meetings in the section

should be reviewed. Today there are many meetings which are time consuming.

The meetings could be reviewed to see how the meetings could be fewer and

performed in a less time consuming way.

- Visual communication.

To improve the communication between the order managers and the purchasers

about delivery time a morning meeting every day should be implemented in the

section. These morning meetings should not be long meetings, just about five to ten

minutes and be performed in front of a board. The meeting should be used to

improve the communication by updating if there is something new concerning

orders, if goals for the orders aren’t manageable and if there is some problems

concerning the flow of orders. For example if orders delivery date is delayed

purchasers can inform the order managers. Furthermore these morning meetings

would lead to that other meetings during the week could be removed. This would

lead to more time spent on value adding activities.

The order flow in the section is not visual, although the order can be followed in

OMS. If orders cannot be followed in a good way it affects the customer when the

order managers cannot update the customer about information concerning the order.

To make the flow visible a board can be used. The board could be divided into

different stages of where the orders are in the flow. The visual planning can be a

board in the sections office space, so called VMS board. By using a VMS board it

would also make the invoice problem visible and simplify the invoice process. A

complement to the VMS board could be a regular invoice meeting with order

managers and the manager of the section to improve the process. Today invoices can

be one hold before it gets send to customer, and this costs the section a lot in interest

rate. One reason for the invoice delay being so long before it gets send is because

the purchasers sometimes forgets to mark in OMS that the order is delivered. By

using a VMS board it will be visualized which orders are delivered, and there will

be less mistakes and forgetting.

- A consistent way of prioritizing orders.

Today there is no consistent way of prioritizing orders. There are meetings to

prioritize orders at different stages of the work flow. The order managers prioritize

the orders. Further there is a meeting where the start of the production gets planned.

In this meeting the orders get prioritized by the employee who screams the highest.

This is not a good way of prioritizing, some orders are not prioritized and then spend

time waiting for an unnecessary long period before going to production. A way to


54

avoid this is to work after the principle First In First Out (FIFO). By using FIFO as a

base model for the section, a short planning meeting once a week can be performed

to discuss if there are any orders that has to be specially prioritized, for example

orders from new customers, or it could be discussed during the morning meeting. By

using FIFO several meetings during a regular week for the employees could be

removed or shortened. Further orders will not be waiting unnecessary long, and the

one who screams the highest will not gets the order first to production. Adjustment

has to be performed to able to use FIFO. This is necessary when a part of the

sections orders have delivery date planned a year ahead.

5.6 Correlation to Lean

5.6.1 Lean

What has become obvious through this study is how much the attitude in the section

effects its improvements, and therefore Lean in itself cannot make a section work better

with less wastage. When the employees in the section are a group that do not want to

take responsibility for their work it is hard to implement Lean. Lean demands that the

employee performing the activity takes responsibility, to make the quality better and

continuously improve the work. To implement Lean successfully a visual leadership is

required. The section has not identified what value is for the customer, and all

employees have their own view of value. When there is no mutual value it is hard to

work in a common flow together. Therefore the rest of the Lean principles fall in this

section when they do not have mutual value, which leads to no common processes or

flow and therefore it cannot be improved when nothing is standardized or visual.

5.6.2 Correlation to Toyotas 14 principles (4P)

Philosophy

Today the section does not take decisions based a long-term view. The section does not

have a plan of where they want to be and therefore it is hard to work in a long-term

view. The study has made it obvious that to work with Lean as a strategy, goals has to

be clarified for the employees to achieve the expected results.

Processes

Today some of the sections employees do not want to have visual flows, because then

they have to handle the waste and problems in the work flow. They do not know where

to start working with the problems and in what way to solve them. Further the

employees want to be unique and therefore cannot help each other when they work in

different ways. Therefore the workload cannot be divided evenly over all employees, in

their work flow today. When everybody works in different ways and they have not


55

decided to standardize the work flow, problems can be hidden and improvements cannot

be made. By using Lean, the work processes could be standardized to make problems

visual and the work load evenly.

People and partners

The willingness to improve and taking responsibility in the section is low. If the

employees in the section do not want to take responsibility for their own work, it is hard

to help partners develop. If a section is afraid of problems and is avoiding

responsibility, a climate that allows ideas to come forward, finding problems and

solving them has to be created. When that is achieved partners can be helped.

Problem solving

The section has earlier been involved in creating processes and improvements, but often

these have not been implemented. Therefore the employees today are tired of

improvements, as their thoughts have not been used through the past. By using Lean to

take responsibility of their work and to standardize work processes it will make it easier

to identify problems. When the problems are visual it is easier to start thinking of

solutions, and further improvements must be implemented to show the employees that

improvements can be made.

5.6.3 Correlation to the house of Lean

The foundation of the Lean house consists of visual leadership. In order to succeed with

Lean, it has become clear through this study that, clear and visual leadership is needed.

The manager has to lead the section by making sure that the employees understand and

know the goals and the plan for the implementations. Further the manger has to make

sure that the employees share the same norms and values. Further the foundation of the

Lean house consists of stable and standardized processes. Today the section does not

have standardized processes, but by implementing Lean they can create standardized

processes.

One of the walls in the Lean house stands for Just In Time. It is hard to perform Just In

Time in this section when there are external suppliers that effect the activities by their

delivery. Just In Time could be used in this section by standardizing the work processes,

and by using FIFO in prioritizing. The problem is that FIFO will not be used when it is

not appropriate in the whole flow when for example some orders should be delivered a

year later.

The second wall is quality. Today customers are not completely happy with the result of

ordering products from this section when the lead time is too long. By focusing on what

the customer wants, the right quality can be delivered in time. Changes have to be made


56

in the sections work and systems to deliver the quality in lead time that the customer

requires.

The roof stands for customer focus, which has already been discussed. By focusing on

the customer it will show what is of value in the section, what processes are appropriate

and how to standardize them.

The content of the Lean house is continuously improvements which build on employees

teamwork and on reducing waste. To work continuously with improvements requires

that the employees take responsibility for their own work. By taking responsibility of

the work, problems are visualized and solutions can be created to reduce waste. The

environment in a section therefore requires good teamwork to let ideas come through.

5.7 Correlation to previous research

The section have had problems with implementing improvements earlier, and today

they have no trust in implementation work. Therefore it is important to have a plan of

how the implementation is going to be performed, so everybody knows the reason of the

implementation. A goal, which has to be understood of everybody, is necessary to have

something to work towards. By having a goal to work towards, everybody knows why

the improvement is implemented and what it will achieve. This is what Maleyeff argues

for, that companies do not create a plan or goals by performing an implementation and

therefore it is affecting both internal and external customers in the flow65

. Further

argues Maleyeff that the five Lean principles are important66

. In this study it has been

showed that all principles do not have to be used. In this section following the demand

have not been important to include in the analyze, when it today already is the customer

who controls the demand. The section produces when the customer asks for it. It also

can be said that it is important to know what value is and which processes are bound to

these values. By knowing the values flow can be created. When the flow is visual it is

important to constantly work with improvements, what is up to date today is history

tomorrow.

To motivate the employees to work with improvements and Lean there has to be a goal

and a plan to do this. The goal for the studied section is to reduce lead time and

variations in lead time and price. It is, as Bahsin and Burcher argues, that the knowledge

concerning Lean is not missing, the problem is that the mutual goals are missing and the

employees are working in different ways67

.

65

Maleyeff. 2006. Pp 674-689. 66

Ibid. 67

Bhasin & Burcher. 2006. Pp 56-72.


57

The section focuses on small problems instead of taking actions against the big

problems. By not having an overall solution, the effort to come up with small solutions

to a big problem is too energy-demanding. Therefore the motivation and willingness to

improve the sections work is lost. Further Lean has become fashion in companies and is

implemented, but many companies just implement it on the surface. Lean does not

become a philosophy, and this is the same for this section. It will take many years

before Lean is something natural in the section. Schonberger have pointed out that Lean

is hard to implement, even if there is a need of it68

. Many companies do not succeed

because they do not work with Lean constantly and deeply, because the employees are

just as in this section not enough motivated or willing. Further Schonberger argues that

Lean cannot be used by all companies in all situations69

. This study agrees with

Schonbergen, when it has been obvious that Lean cannot be implemented in this section

before responsibility is taken.

Lean has been criticized by Cox and Chicksand for not being universal and not work in

all business in every business environment70

. Through this study it has been realized

that Lean cannot be performed in the same way in every business, but the Lean thinking

can be used. This study has made it clear that Lean is about creating a team that help

each other forward to create a product that satisfies the customer. Lean will not look the

same way in all companies but that is what it is all about. To make your company

continuously improve, you cannot take someone else ideas or ways of working, you

have to know your own business and its problems, create your own ideas and see the

business value and work flows. Further Cox and Chicksand criticize Lean because the

business environment changes, and therefore Lean cannot be used in all situations71

. By

using Lean, which has been realized through this study, the company will change with

the environment and adopt. The company cannot use all tools in Lean at all times, but

Lean is about thinking and that will permeate the business and its employees if Lean is

accepted as a way of thinking.

There has been critic concerning Lean from Cox and Chicksand that it suits high

production volumes and predictable demand72

. This study shows that it is partly true.

Lean can always be used to identify the flow and value, and then improve the flow, but

it is much easier to implement Lean in a flow with predictable demand and standardized

products. The largest reason why Lean cannot work in a unique flow is because it

demands more work and time on implementation and adjusting Lean to the specific

company and its flow. Therefore most companies do not have the strength, willingness

and time to adjust Lean to them, and it is easier to say that it does not work than to

68

Schonberger. 2007. Pp 403-419. 69

Ibid. 70

Cox & Chicksand. 2005. Pp 648-662. 71

Ibid.. 72

Ibid. 2005. Pp 648-662.


58

adjust Lean and give it a try. Further, Lean can work even better if it is complemented

with other tools to improve the work. The important is not what the names of the

improvements are but to always strives to be better, and to work in a visual and correct

way.

By visualizing the flow and the work in the section the employees have to take

responsibility for their work. The new responsibility in visualizing the problems makes

the employees very stressed and worried, which has been seen in the studied section. As

Higgins argues for creating a visual picture of the section the work can be more

efficient73

, which this study also can agree in. Through visualization the employees sees

and understands the whole flow.

5.8 Model for further implementations of Lean

Through this study thoughts on how Lean can be implemented in an administrative

section will be gathered in a pyramid for further implementation of Lean.

Figure 9. Pyramid for further implementations of Lean.

- Take responsibility. To make an improvement and implement Lean the section has

to take responsibility for their work. The employees must take responsibility for

their own work, and the problems which comes with the work. If they cannot do

that, Lean and improvements cannot be implemented. The managers also have to

73

Higgins. 2007. Pp 16-19.


59

take responsibility to lead and motivate the employees, and be a role model to

succeed with implementations.

Information and meaning. It is important to give the employees information

concerning the sections future. By informing the employees and letting them know

the prediction concerning the nearest future, they will get more secure and commit

to their work. Further the meaning of improvements and changes has to be clear so

the employees know and understand why there is being changes implemented.

Concretization of goals and plans are also important to succeed with implementation

work.

- Engage all employees. When the employees take responsibility for their work, they

have to be engaged. Lean cannot be implemented in a section if there is no

understanding for why Lean is needed and how Lean is going to be used. Therefore

goals and plans are crucial when Lean work and improvements are introduced.

- Visualize. To make improvements and use Lean the work in the section has to be

visualized. By visualizing the employees get an understanding for the work and the

work flow in the section. When the work is visualized, problems also get visualized

and are no longer hidden. When problems are not hidden they can be discussed and

different solutions can be presented.

- Simplify. When the work and problems are visual decisions concerning solutions

can be made. The work flow should be as simple as possible to make the work go

smoother for the employees. By simplify the work, problems are easily detected.

Further a greater understanding for the work is created and therefore problem

solving can be performed in the section.

- Improve. If the work flow should continue to be visual and simple, continuously

improvement work has to be performed. The employees and the section can never

stop to improve. By always improving they can be better and better when problems

are visual and solved, and not hidden. Further by simplifying the processes the work

will be easier for the employees, even when they in the beginning will feel less

special. Goals and plans also have to be continuously updated and explained.


60

5.9 Summary of analysis

- The orders in the section can be divided into two different product families, unique

and industrialized.

- Five wastages have been identified in the section, which are stocks, unnecessary

movements, waiting time, rework and waste of untapped skills.

- One flow has been identified in the section, and in the flow there are three

bottlenecks. The three bottlenecks are when order managers have to estimate price

and time to the customer, when the order arrives to purchasers and to send invoice

to customer.

- To improve the section by implementing Lean orders can be divided into two

product families, processes can be standardized, visual communication can be used

and a consist way of prioritizing orders.

- What have become obvious through this study is that the section is not at all

working accordingly to Toyotas 14 principles. It has also been clear that the Lean

house cannot be used and stand for the context if some of the parts are missing. It is

as a real house, if the foundation, roof or the walls are missing there cannot be an

inside of the house.

- To succeed with Lean responsibility of the work and visual leadership is required.

- Previous researchers have been right that Lean could be used in an administrative

section, the problem is if there is no stable foundation with goals, plans and

responsibility nothing can be implemented or improved. Not even Lean. Therefore

criticism concerning Lean is justified, but when Lean works as it should it is

amazing what it can do for a sections work.

- A pyramid with five steps has been created on thoughts concerning implementation

of Lean. The first step is to take responsibility and give information and meaning.

The second step is to engage all employees and the third is to visualize. The fourth

step is to simplify and the last is to improve.

Lean Administration Kristoffersen Discussion

61

6. Discussion

In this chapter a discussion concerning Lean, implementation, the results of this study

and the author’s thoughts will be presented.

Through this study it has been realized that Lean is built on good sense and knowledge

of the company, its processes, employees and customers. For companies it is difficult to

work with good and common sense by themselves, it is therefore easier to use Lean

when you have good sense gathered in a model that presents how you can work with it.

It will be easier to work when all employees share the same sense. Therefore Lean has

become so popular and well spread through businesses and different business areas.

Lean is also a special way of working as it focuses on the employees. This implies that

the employees have to take responsibility for their own work, which can be stressful and

demanding in the beginning. Therefore Lean is not appropriate in all businesses if the

employees cannot take responsibility. First of all the business has to confront the

employees to take their responsibility and then Lean can be implemented, otherwise

Lean cannot be used in its proper meaning. If there is no willingness to take

responsibility for the own work Lean will fail to be implemented. Lean makes

everything visible, which used in a correct way can make the section improve. By

presenting the work flow visually it is easier to identify and implement standardizations.

When a standardization is introduced problems can be seen when they occur, which

they cannot in a not standardized work process. By visualizing what is value and waste

in the work flow it will be easier to satisfy the customer when the employees also know

what the customer demands.

To engage the employees, it is important to have a plan for the implementations and

goals. This includes both goals in short and long terms, but the focus should always be

the long term. The short term goals should be to motivate the employees to continually

work towards the long term goal. It is important that all employees know the plan and

the goals, because if the employees do not understand why they should carry out the

implementation there will not be any change. On the paper there can be a change, but in

the way of working there have not been any changes, as it is the employees who work

and make changes in companies. Therefore engaging the employees in the improvement

work is essential. The employees know their own work best and have the best solutions

for improvements, and know what would be best to achieve.


62

The results of this study have showed that lead time can be reduced in an administrative

section by using Lean. What has been shown is how the employees affect the way of

working and the implementation work. It is easy to implement Lean skin deep by

visualizing the flow and make some improvements, but what is difficult is to constantly

work with improvements and not see Lean as a process that will have an end. Therefore

Lean can be hard to implement. It is easier to convince employees to use Lean when

high volumes are produced, but when the product or service is seen as unique it is hard

to convince the employees to use Lean. For many persons a unique product or service

cannot use a standardized way of working. This is wrong, because all processes even

those who produces unique end results have similar ways of working. Therefore

standardization processes should be used as much as possible in companies.

Standardization makes the work easier to understand and assistance can be offered to

employees as it is easier to understand the processes. Further, problems get more

visualized when something differs from the standard way of working.

Furthermore, Lean takes years to implement and demands continuous work to improve.

Many companies do not have the strength to do so. To succeed with Lean the

employees have to take responsibility, give information, engage all employees and

make them work towards improvements at all times. This takes special kinds of persons.

Many people do not have the strength to go to work and improve every day. Therefore

Lean is hard to implement in depth in businesses, but all businesses can use Lean more

or less. Lean is a good method with good thoughts that make problems visible.

Lean can be easier to implement when there are the same persons conducting the

activities and there is a low staff turnover. To make employees work with Lean in depth

for improvements, they have to believe in the company and its products or services.

Today it is difficult to make the employees support the business and it products or

services. Therefore the employees often do not understand what they get out of by

constantly improving the work flow. They can see that Lean creates much more work

and responsibility for them.

Lean is a great method, and when everybody in the company works to continuously

improve the processes, the company will be really competitive. To work with Lean is

tough, it is difficult to engage all employees and to take Lean all the way and succeed. If

the business have that strength to continuously improve, it is worth all the tough work

for implementation. Therefore, implement Lean in your business. There is nothing to

loose. Just to win, in one way or another. Even if only solutions of superficial problems

are being visualized, improvements are going to be performed.


63

6.1 Summary of discussion

- Lean is building on good sense. The proposals of improvements have not been

revolutionized, there are proposals that are normal and could have been created

without Lean. Why Lean has become so popular is because it is a way of working

with goof sense, focusing on the employees and making the work visual. When the

work is visual it is easier to identify problems and improve the work.

- If the employees do not take responsibility of their work the implementation of Lean

fails. It also fails if there is no visual management that are engaging and motivating

the employees.

Lean Administration Kristoffersen Conclusions

68

7. Conclusions

This chapter presents the conclusions for this study. Further a discussion concerning

Lean and this study is presented. In the end there will be suggestions on what can be

studied in further researches.

Below the purpose of this Master thesis is presented again and after that the conclusion

is presented.

The purpose of this study is to explore how Lean can be implemented in an

administrative section to standardize the work processes, reduce waste and lead time.

Further a foundation will be created for a model to implement Lean in other

administrative sections.

The conclusions of this study is that Lean can be implemented in an administrative

section, by identifying value and making flows visual and processes standardized. By

standardizing processes waste can be identified and reduced, and lead time can also be

reduced. Lean can be implemented by visualizing problems and improvements to

creating a price database, price model and VMS in the studied section. These are

examples from this study how Lean can be implemented. There are no revolutionary

proposals, but they fill the Lean purpose to standardize work and therefore be able to

identify waste and reduce it.

Thoughts on how Lean can be implemented in administrative sections have been

gathered in a pyramid model with five different steps that build on each other to

succeed. The first step is to take responsibility and give information and meaning to the

employees. The second step is to engage the employees. Visualization is the third step.

The fourth step is to simplify and the last step is to improve. If one step is not fulfilled

the next step cannot be reached.

The answers to the asked questions of this study are presented below:

- Which flows exists in an administrative section?

In this administrative section that has been studied only one flow has been

identified. This flow concerns orders from quotation to invoice. The focus in this

administrative section is information flow when different kinds of information


65

concerning orders are managed. The flow could be divided into two different flows

in the future.

- How can lead times be reduced in these flows by using Lean?

Lead time in this study can be reduced by identifying what is value adding

processes for the customer and create a visual flow over the processes. Further the

processes can be standardized to identify problems and waste. By taking

responsibility of one owns work improvements can be made, and therefore lead time

can be shortened.

- How can work processes in the section be standardized by using Lean?

By using Lean flows become visual, and therefore differences in work are

discovered. To make the flow work smoother a standardized way of performing the

work has to be identified. Standardization of work can be implemented through a

price database, price model and by creating one purchase department.

- What value-creating processes exists in an administrative section?

The processes concerning orders are value creating, which means processes that

give the customer value. In the studied administrative section this is represented by

the information flow concerning orders from quotation to invoice.

- What kind of wastage is there in an administrative section?

In the studied administrative section five of the eight wastages have been

identified. These five are: stocks, unnecessary movement, waiting time, rework, and

waste of untapped skills.

7.1 Further research

For further research it would be interesting to study how Lean works in an

administrative section in a long perspective. If Lean is something that is just a skin deep

implementation, done because it is modern, just like mass production was back at Ford.

Can Lean work in the long run, or has it no effect if the company just implements it on

the surface of the company? It would also be interesting to compare Lean in production

and administrative sections. Is it easier to implement and work with Lean in one section

than the other? Is Lean more appropriate in one section than the other?


66

For further research it would also be interesting to study how Lean works through a

perspective of Michael E. Porters Value chain. A comparing study concerning Lean and

the Value chain would be of interest.

7.2 Summary of conclusions

- Lean can be implemented in an administrative section by visualizing the work, and

identifying problems and improvements. Lean is a way of working with good sense,

and the improvements are “normal” improvements that are not special for Lean.

Examples in this thesis are price database and price model.

- Lean cannot be implemented in a section if the employees do not want to take

responsibility of their own work, and if there is not visual leadership.

- Further research could be performed studying Lean in a long time perspective, and

also studying Lean in relation to Michael E. Porters Value chain.

Lean Administration Kristoffersen Criticism

67

8. Criticism concerning the study

This chapter presents criticism concerning the study, as method and studied section

effects the results and is therefore here discussed.

8.1 Criticism concerning the method

To get as much and correct data to this study interviews, following orders and studying

documents were an appropriate method. It would have been easier from the beginning

of the study if I have had a greater understanding concerning the sections work. By

having great understanding concerning the work a deeper understanding of how Lean

could be implemented would have been created. Further some information and

misunderstanding can have occurred when there from the beginning was little

understanding for the sections work. To get a deeper understanding and more accurate

data, and underlying causes concerning lead time more orders could have been followed

during a longer period. By studying more orders during a longer time period a different

comprehensive view would have been given and a broader understanding.

8.2 Criticism concerning the studied section

The study object, the section, would have given other results if another section would

have been studied. The section was of an administrative kind, which therefore was a

good example. What could have given the study another view is if the section have had

taken responsibility for their work and would have been more open to changes.

8.3 Summary of criticism of the study

- Greater understanding concerning the sections work from me could have given the

study a deeper understanding concerning Lean and how to implement it.

- By studying another section other conclusions could have been created.

Lean Administration Kristoffersen References

68

9. References

9.1 Printed references

9.1.1 Books

Björklund Maria & Paulsson Ulf. Seminarieboken – att skriva, presentera och

opponera. Lund. Studentlitteratur. 2008. First edition.

Johannessen Asbjörn & Tufte Per Arne. Introduktion till samhällsvetenskaplig metod.

Malmö. Liber AB. 2003.

Keyte Beau & Locher Drew. Leanhandboken. Värdeflödeskartläggning inom

administration, service och tjänster. Malmö. Liber AB. 2008.

Larsson Linus. Lean administration. Konsten att införa och praktisera Lean i

administrativa stödprocesser. Malmö. Liber AB. 2008.

Liker Jeffrey K. & Meier David. The Toyota way fieldbook. A practical guide for

implementing Toyota´s 4Ps. New York. McGraw-Hill. 2006.

Liker Jeffery K.. The Toyota way: 14 management principles from the world´s greatest

manufacturer. New York. McGraw-Hill. 2004.

Tapping Don & Dunn Anne. Lean Office. Demystified. Chelsea. MCS Media, Inc. 2006

Womack James P. & Jones Daniel T. Lean thinking. Banish waste and create wealth in

your organization. London. Free press business. 2003

Womack James P., Ross Daniel & Jones Daniel T. The machine that changed the world.

The story of Lean production. New York. Harper Perennial. 1991.

9.1.2 Articles

Bhasin Sanyaj & Burcher Peter. Lean viewed as a philosophy. Journal of Manufacturing

Technology Management. Vol. 17: 1. 2006. Pp 56-72.

Available:

http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=D8C88EA1F2F

FF7108E5B39B874DB8696?contentType=Article&contentId=1532807

(2010-02-11)


69

Cox Andrew & Chicksand Dan. The limits of Lean management thinking: Multiple

retailers and food and farming supply chains. European Management Journal. Vol. 23:

No 6. Pp 648-662.

Available: http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V9T-

4J2V4BS-

8&_user=10&_coverDate=12%2F31%2F2005&_rdoc=1&_fmt=high&_orig=search&_

sort=d&_docanchor=&view=c&_searchStrId=1225744140&_rerunOrigin=google&_ac

ct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=f244bd3f36b216a167

2391a6029035bf

(2010-02-25)

Hicks B.J. Lean information management: Understanding and eliminating waste.

International Journal of Information management. Vol. 27: No 4. 2007. Pp 233-249.

Available: http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VB4-

4NP3P7S-



ct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=ea5d59e71aecec0b2a

82e1ee4642c89c

(2010-02-25)

Higgins Nicholas J. Putting Lean HR into practice. Strategic HR Review. Vol. 6: No 4.

2007. Pp 16-19.

Available:

http://www.emeraldinsight.com.till.biblextern.sh.se/Insight/viewPDF.jsp?contentType=

Article&Filename=html/Output/Published/EmeraldFullTextArticle/Pdf/3720060411.pdf

(2010-02-25)

Maleyeff John. Exploration of internal service systems using lean principle.

Management Decision. Vol. 44: No 5. 2006. Pp 674-689.

Available:

http://www.emeraldinsight.com/Insight/viewContentItem.do?contentType=Article&con

tentId=1554299

(2010-02-15)


70

Grönroos Chrisitan & Ravald Annika. The value concept and relationship marketing.

European Journal of Marketing. Vol. 30: No 2. 1996. Pp 19-30.

Available:



(2010-05-20)

Scherrers-Rathje Maike, Boyle Todd A. & Deflorin Patricia. Lean, take two! Reflections

from the second attempt at lean implementation. Harvard business review. 15 januari

2008.

Available: http://hbr.org/product/lean-take-two-reflections-from-the-second-attempt-

/an/BH312-PDF-ENG?Ntt=Patricia+Deflorin

(2010-03-07)

Schonberger Richard J. Japanese production management: An evolution – With mixed

success. Journal of Operations Management. Vol. 25. 2007. Pp 403-419.

Available: http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VB7-

4K0FJVD-



ct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=b653650985d358311

a2cefa26c794c9c

(2010-02-25)

The new improvement frontier: Developing Lean administration. Strategic Direction.

Vol. 21: No 11. 2005. Pp 33-35.

Available:

http://www.emeraldinsight.com/Insight/viewContentItem.do?contentType=Article&con

tentId=1528912

(2010-02-11)

Åsberg Rodney. Det finns inga kvalitativa metoder – och inga kvantitativa heller för

den delen. Pedagogisk Forskning i Sverige. Vol. 6: Issue 4. 2001. Pp 270-292.

Available: http://www.ped.gu.se/biorn/journal/pedfo/pdf-filer/aasberg.pdf

(2010-05-06)

9.2 Internet

Nationalencyklopedin. Sökord: Administration.

Available: http://www.ne.se/lang/administration/108403

(2010-02-08)


71

Fredrik Emdén. Vi jagade bort tidstjuvarna. Chef. 2008-12-10.

Available: http://www.chef.se/dynamisk/index.php/index/artikel/vi-jagade-bort-

tidstjuvarna/#lasmera

(2010-02-25)

Lars Lychnell. Nu kommer Lean till IT-avdelning. CIO Sweden. 2008-12-01.

Available: http://cio.idg.se/2.1782/1.196736

(2010-04-18)

Ujvari Sandor. Lean. Högskolan i Skövde. 25 jan 2010.

Available :

http://www.his.se/PageFiles/31164/F%C3%B6rb%C3%A4ttringsarbete%20lean.pdf

(2010-02-28)

Validitet och reliabilitet.

Available: http://infovoice.se/fou/bok/10000035.htm

(2010-04-20)

9.2.1 Articles

Evans George. Measuring and managing customer value. Work study. Vol. 52: No 3.

2002. Pp 134-139.

Available:



(2010-05-20)

9.2.2 Master thesis

Ahlqvist Joakim. Lean Service. En studie i hur Lean-filosofin används inom svenska

tjänsteorganisationer. Kungliga Tekniska Högskolan, Stockholm. 2008.

Available: http://www.kth.se/polopoly_fs/1.18445!2008_57.pdf

(2010-02-19)

Ivarsson Anna. Värdeflödesanalys på Ericsson AB Katrineholm. Luleå tekniska

universitet. 2006.

Available:

http://epubl.ltu.se/1402-1617/2006/103/LTU-EX-06103-SE.pdf

(2010-02-18)


72

Larsson Elin & Johansson Daniel. Lean i administrativa processer. Handelshögskolan

vid Göteborgs universitet. 2009.

Available: http://gupea.ub.gu.se/dspace/handle/2077/20080

(2010-02-06)

9.3 Verbal references

Mikael, 2010-03-10 and 2010-03-15.

Fredrik, 2010-03-10 and 2010-03-17.

Göran, 2010-03-10 and 2010-03-26.

Anna, 2010-03-12.

Krister, 2010-03-12.

Elsa, 2010-03-12 and 2010-03-19.

Tina, 2010-03-11 and 2010-03-23.

Johan, 2010-03-11.

Anders, 2010-03-09.

Lean Administration Kristoffersen Appendix

73

10. Appendix

10.1 Price database

Confidential.

10.2 Price model

Confidential.

10.3 Visual Management System (VMS)

Confidential.


74

10.4 Interview questions

Lean

1. Do you know what Lean is about?

Work Flow

2. Describe your and the sections work processes.

- What processes is performed before and after your task?

3. Do you know how the section work flows look likes?

- How many orders are coming in? (For order managers)

- How many orders are in queue to purchase? (For purchase)

Key performance indicators

4. How long should your job take?

5. How long does your job really take?

6. How much time is spent switching from one job to another?

7. Is all you need for your work available when you need it?

Value

8. What do you think is value adding for the customer in your work?


75

10.5 Interview questions for interview number two

Questions to order manager Fredrik

1. How is a quote performed?

Show me by following orders.

2. What remake is done in order managers flow?

Questions to order manager Göran

1. Can you describe the recurring meetings for order managers?

Questions to purchaser Elsa

1. How is a purchase performed?

Show me by following orders.

2. Can you describe the recurring meetings for the purchasers?

Questions to purchaser Tina

1. What remake is done in purchases flow?

2. Can you describe the recurring meetings for purchasers?

Questions to cost follow up Mikael

1. How much does an employee cost?

2. What systems are used to perform the work in the section?

3. Can you explain the delays and problems with invoice?

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