Lean Solutions – Beyond the Factory FloorLean Solutions – Beyond the Factory Floor

Betsi HarrisDirector, Six Sigma and Master Black Belt

Tyco International/ADT Security Services, Inc.

WCBF 5th Annual Lean Six Sigma Summit June 24 – 25, 2009Oakbrook Marriott, Chicago

Betsi HarrisDirector, Six Sigma and Master Black Belt

Tyco International/ADT Security Services, Inc.

WCBF 5th Annual Lean Six Sigma Summit June 24 – 25, 2009Oakbrook Marriott, Chicago

ADT Security Systems, Inc. is a business unit within Tyco International

Major product lines include consumer and commercial security systems, video, access control and fire detection systems

Over 7.8 million customers worldwide rely upon ADT security monitoring systems

ADT helps protect over 80% of top 100 retailers with our electronic security and anti-theft systems

Tyco International/ ADT Security Systems Company InformationTyco International/ ADT Security Systems Company Information

Tyco International: five divisions composed of ADT, SimplexGrinnell, Tyco Safety Products, Tyco Electrical & Metal Products and Flow Control

118,000 employees in over 60 countries

FY 2008 Revenue: $20+ Billion

Strengths include the ADT brand name and global service presence

Six Sigma was implemented at ADT in 2003. The Six Sigma Academy was utilized to assist in implementation, providing training and Master Black Belt consultation

Since 2004, the program has been administered internally without the use of external consultants

Nine waves of Black Belts were trained from 2003 - 2009 and the first in-house Master Black Belt was hired in October 2003

Approximately 150 Black Belts and 240 Green Belts have been trained to date

Major Six Sigma Centers of Excellence include Field Operations, Lead to Order, Order to Cash, Central Monitoring Systems and Corporate Services

The Lean Six Sigma program focuses on customer retention, expense reduction, revenue increase and compliance

Lean Six Sigma at ADT Security SystemsLean Six Sigma at ADT Security Systems

Lean EnterpriseLean Enterprise

Structure company to maximize customer value

Eliminate non-valued activities

“Time-Based” Competition: Deliver product/service as rapidly as possible

Use less of everything compared with Mass Production

Less human effort, space, tools and capital, less time and fewer defects

Five Principles of LeanFive Principles of Lean

1. Correctly specify value from the standpoint of the customer

2. Identify the value stream and eliminate the waste/muda

3. Make the remaining steps flow

4. Let the customer pull just the value needed

5. Pursue perfection (every step adds value)

Transactional/ Service ProcessesTransactional/ Service Processes

Myth:

• “Creative work” – cannot standardize

• Tasks are not repeatable

• Time needed is unknown

• Different steps needed for each cycle

Truth:

Must standardize: repeatable and consistent inputs, process and outputs are required to reduce variability and consistently meet customer requirements

Have it Your Way Paradox: Strict adherence to standard work provides the flexibility to deliver

exception customer-centric service

Value StreamsValue Streams

Lean in service sector is no different than manufacturing

Principles of identifying value to the customer, simplified flow to minimize waste and pull demand for greater profitability applies to all business environments

First step is to develop current state Value Stream Map (VSM) of primary value streams:

Concept to Launch

Lead to Order

Order to Cash

Value Stream Map is sequence of activities to produce good or service, with the physical flow separated from the information flow

Value Stream MappingValue Stream Mapping

Value stream mapping the current state helps to see the entire process starting and ending with the customer

Separating physical flows from information flows provides insight into excess waste in the process, including handoffs, queues/ inventory and delays

Shows process efficiency and waste elimination opportunity

Information

INFORMATION FLOW

MATERIAL FLOW

CU

ST

OM

ER

VA

LU

E

R&DEngineering

Order Entry& Planning

OperationSales &Marketing

Finance

Helps to see and eliminate hidden waste in our servicing processes

Transactional WasteTransactional Waste

1. Defects - incorrect data entry

2. Over production – preparing extra reports, reports not acted upon, multiple copies in data in storage

3. Transportation – extra steps in the process, distance traveled

4. Waiting – processing monthly not as the work comes in (i. e. closings, billings, collections)

5. Inventory - transactions not processed

6. Motion – extra steps, travel from office to office desk to desk, extra data entry

7. Processing – hand-offs, multiple sign-offs, most meetings, inspection, rework

Difficulty of FlowDifficulty of Flow

Multiple handoffs between many functions / departments - each department may have own set of performance metrics

No one “owns” (and sees) customer value stream beginning to

end

Top-Down decision making - many layer of approvals

Quality is “assured” through inspections

Processes built to handle both the routine and the exceptions

Counter-intuitive to mental maps of batch processing and mass production (economies of scale)

Hallmarks of Mass ProductionHallmarks of Mass Production

Semi-skilled workers, expensive single purpose machines, standardized products at high volume

Must produce in large batches - long change-over times and high machine efficiency to achieve “economies of scale”

Goal is to reduce average unit cost by producing in large quantities

Results in long cycle times, high inventory and complex scheduling and distribution systems – MUDA!

Hallmarks of Mass ServicingHallmarks of Mass Servicing

Semi-skilled call center reps trained mile wide, inch deep handling a high volume of calls for all customer types

Low first contact resolution rate: conflicting goals of low unit cost vs. solving customer’s problem the first time

Typically the lowest paid employee yet the one customer “sees” as the company

Results in repeat contacts, escalation queues and complex scheduling systems – MUDA!

Transactional Service DeliveryTransactional Service Delivery

Distinguishing feature of transactional service delivery: high volume of employee to customer encounters, known as “moments-of-truth”

How well the brief encounter is handled determines whether the customer will want to conduct future business

Risk of losing a customer is highly correlated to the moments-of-truth

Direct interface with a customer, such as in a call center or retail store, requires near flawless execution

Difficult, if not impossible, to “rework” the transaction after it has been completed;

The damage incurred from a 20 minute queue time along with an incorrect response to a question cannot magically be undone through even the most heroic service recoveries

Mass vs. Lean ServicingMass vs. Lean Servicing

Mass servicing model of generically trained reps, butts-in-seats staffing and rush the customer off the phone to achieve a low unit cost almost guarantees errors in these critical moments-of-truth encounters

Lean Servicing!

The Answer?

Lean ServicingLean Servicing

Going back to Lean’s roots at Toyota, the concept of a work cell was instrumental in eventually what became known as the Toyota Production System

Lack of capital necessitated simple processes with low set-up time

Accomplished through a series of adjacent workstations where product was produced in a continuous flow – there was no inventory because the workstations were balanced and synchronized

Products were produced and delivered to the customer’s demand with a short lead time, minimal waste and high quality – the essence of leanLack of complexity is what made it work!

Lean Customer-Centric Work CellsLean Customer-Centric Work Cells

Simplified flow of the customer’s request through grouping all knowledge and tasks associated with servicing the customer (or customer segment) within a dedicated work cell of employees

Employees within the cell are multi-tasked and trained across several functional areas (order entry, order fulfillment, service and invoicing); the specialization is centered on the particular customer’s requirements rather than a particular function

Unlike the mass servicing goal of keeping employee utilization high in order to minimize unit cost, lean servicing goal is profitability of the customer across the total spectrum of the value stream

The wastes of hand-offs, queues, bottlenecks and lack of ownership of the entire customer experience are minimized, if not eliminated

Lean ServicingLean Servicing

One of lean’s key tenants, often forgotten or downplayed, is the relationship between salaried management and hourly employees

Unhappy employees are less likely to provide value-added service

A key lean principle is to eliminate recurring problems or requests through having the employees, who are in the best position to “see” the problems, actually fix the problem

Root cause analysis and elimination of recurring problems ensure on-going pursuit of perfection and profitability

In return, must train and truly empower employees to provide flawless service in the critical moments-of-truth

Thank you

Questions?

Thank you

Questions?