Lean Office (+14-Page PDF, +Video)
For many people, the term ‘Lean’, immediately brings to mind Lean manufacturing and images of the shop floor. While it is true that the origin of Lean certainly stems from these roots, continuous improvement principles have taken hold in the office, and are spreading at breakneck speed. The Lean office is the result of that migration of Lean into the office environment.
It was a logical and inevitable that continuous improvement would move from the assembly line to create the Lean office. Why? A significant portion of a manufacturing company costs are administrative, which creates a great opportunity for cost savings.
In fact, some estimates state that over 60% of the costs of a product or service come from administrative processes. (Tapping and Dunn 2006) Think about that…
If the focus of Lean stayed on manufacturing processes, over half of a company’s potential cost savings would never even be considered.
It just makes sense that in an increasingly competitive marketplace, company leaders would explore every new frontier of cost savings. They are constantly searching for any advantage that can launch them past the competition, so it is no surprise that the Lean office has become so popular.
And the rising popularity is not just in the administrative departments of manufacturing companies. Service organizations also needed an effective way to improve their operations as well, so they grasped onto it as well. Since then, Lean has further spread, with specialization, into healthcare, software, accounting, and other fields.
Unfortunately, some do not. Those tools need a degree of adjustment to work effectively in the Lean office. Takt time, value stream mapping, and Standard Work also must be modified for use in the Lean office.
Read more about this topic below.
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Company’s costs weren’t always skewed towards the office. Part of the reason it shifted in that direction is, in fact, due to the success of Lean on the shop floor. As Lean efforts reduced expenses, office costs accounted for an ever growing percentage of what remained.
Add in the increasing complexity of product design, IT infrastructure, processes to minimize liability, and the new marketing techniques required to stay competetive, and it is a wonder that the percentage is not even higher. That is why more and more leaders are looking for the Lean office to help reign in costs.
That explains the opportunity, but there is another force at work that is making Lean migrate to the office at an increasing pace. Human nature. Once people taste success, they don’t want to give it up. When companies make a lot of progress with Lean, they get addicted to reducing costs year after year. And it is not just people within the company that get used to big improvements. Shareholders do as well, and disappointing them means stock prices plummet.
Unfortunately, as production processes improve, it often becomes harder to continue to remove waste at the same pace. So improving the Lean office value stream helps leaders continue to feed their (and the shareholders’) desire to have the company do well.
So the ‘why?’ makes sense. The ‘how?’ is a little harder.
If Lean manufacturing is all grown up, the concept of a Lean office is only a toddler, or at most a small child. It has only really started to come into its own within the last decade (as of 2011).
In the early part of the transition, many of the Lean practitioners who worked in the office were converts. They started in Lean manufacturing, and modified their knowledge to fit into the office. Needless to say, the office is different from the shop floor (we’ll discuss more about why later), so this recycling of knowledge didn’t always go smoothly.
Now, more and more Lean experts are focusing on specific industries, and are building customized sets of Lean office tools. You can find experts on Lean in healthcare, retail, and even in fashion. There are great opportunities for the Lean office in many industries.
So what does Lean look like in the office? Probably the most noticeable change is the development of a continuous improvement culture. People take more responsibility for making improvements, and for identifying and eliminating waste.
Regardless of the Lean office tools you put to use, one thing should always guide you: The customer. Far too often, ‘improvements’ are made without considering what the customer wants. This logic works in reverse as well. People frequently choose not to make improvements because they believe, “The customer wouldn’t like it.” Surprisingly, in both cases, the customer was probably never consulted. Having a good Lean office value stream map will help make sure that teams keep the customer in mind when making changes.
Perhaps the most hotly debated aspect of customers in a Lean office is, though, is customer demand.
First off, understanding exactly what constitutes demand raises an challenging question. Imagine you are in a call center. Your boss might consider incoming phone calls as your ‘product’. But what about follow-up emails? Depending on your industry, some customer interactions might require them. Do those count toward the daily workload? Or are they just considered part of the cost of answering calls.
I recommend using this basic rule of thumb. If you want the process to increase, treat it like demand. If you want it to go down, it is the cost of doing business. In an order entry group, you want orders to go up. Demand. You want phone calls about status to go down. Cost. For an accounts receivable group, you want check processing to go up. Demand. You want collection phone calls to go down. Cost.
In practice, though, you have to account for the work, even if it is a cost. Sometimes, when the undesired work consumes a big portion of the day, you might decide to track it to be able to more effectively deal with it. You just have to keep in mind that you want it to go away. For example, the status calls mentioned above can be reduced by posting information in an online account, or even better, by eliminating the root cause of the problems causing the calls in the first place.
Once you settle on the items that make up an office’s demand, you then have to figure out how to count. If the average phone call takes five minutes and the average email takes two, you can’t count them the same. The mix would make the pace appear too variable.
The second issue about demand is that once you figure out what your demand is, you have to measure and manage it. On the shop floor, it is done with takt time. In the office, this just isn’t practical. Consider those orders again. An order with 2 line items on it certainly won’t take the same as one with fifty. You can imagine how hard it would be to stay on track with each and every order.
Instead, use a variation of takt time. Check progress in time buckets, perhaps every two hours. That way, the variations tend to be less visible—the long orders and short orders balance out to the average. It is a much better way to watch the pace. (Note: This is a function of a statistical principle called the Central Limit Theorem, in which when groups of variables are combined, they tend to create a bell curve or normal distribution.)
Tracking progress at several points in the day opens up a whole new opportunity for the team. When it falls behind, the staff can be adjusted and work can be reallocated to make sure that it can meet its targets. Life gets easier when the group works as a team.
This process of tracking progress is known as daily management, and provides an effective backdrop for using the PDCA cycle to both deal with problems during the day, and fix them permanently.
Daily management works best when demand is shared, though. If a person is pulling from an assigned pile (i.e. A-J, or the Northeast states), their pace tends to be dictated by the inflow rather than by the process. When demand is shared, the pace is more stable.
The Lean office shares the same basic philosophies as Lean on the shop floor: relentlessly attack waste, believe that any process can be improved, and focus on flow. Offices do have a few unique challenges that must be addressed, though.
In many ways, you face a much larger challenge than people on the shop floor do. You may be losing personal space. You have to be more flexible in how you apply the Lean tools. You often face software limitations that restrict your process improvements, or have to wait forever to get a change done.
Despite this, you have much to gain in Lean. The two biggest benefits you will likely see are:
Adjusting to working in a Lean office will take time. The more you embrace the change, though, the more likely you will be to get compromises on its implementation. Time and time again, I have seen resistant teams have changes forced upon them, while teams that show an openness to new processes get much more say in their own future.
Doing continuous improvement in the office takes a lot of creativity. Just remember this. Focus on Lean principles, not Lean tools. The principles are universal; tools depend far more on the workspace conditions. For example, consider signaling. Using the concept of pull will improve nearly any process, but kanban cards (a tool to manage pull) may not always be the best choice. Sometimes production carts will be more effective. Don’t try to force-fit a tool. Think of the principle first.
Most Lean office tools need to be adjusted or configured especially for the particular area they will be used in. Standard Work Sheets don’t tend to be overly useful for documenting a person sitting at a computer. Flowcharts do.
But again, if you focus on the principles—flow, eliminating batching, reducing lead time, identifying waste—those concepts can be used everywhere. Identify the relevant principal then modify the tools to suit your needs.
A final word of caution. Many employees, especially those that are resistant to Lean see having a monopoly on process information as job security. They may be reluctant to document it. But they won’t say why they are reluctant. It may take a lot of encouragement and observation to coax the information out of their brains and onto paper. Be clear about why you want the process documented, and help them see the benefits for them, not just for the company. If you don’t, you are very likely to reduce job satisfaction and create a disgruntled employee who can slow the pace of Lean progress.
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