Sunday, December 4, 2011

Lean for Administrative Processes: The Seven Wastes

by Darren Dolcemascolo

Applying lean to administrative processes is an often misunderstood concept. Many efforts at lean office are limited to 5S implementation in the office only. Such efforts often fall by the wayside since measuring improvement is nearly impossible. While 5S is a powerful tool that will improve overall efficiency within any operation, it is important to first analyze the administrative processes themselves to determine how to apply process kaizen tools such as 5S. The best way to accomplish this is to first understand how the seven wastes of manufacturing apply to administrative processes and then apply process mapping methods to the process to identify improvement opportunities.

Recall that the seven wastes of manufacturing are:
Unnecessary Inventory
Inappropriate Processing
Excess Motion

The so-called "eighth waste" has been identified as underutilized people (with respect to their minds/ideas).

How would each of these wastes apply to administrative processes, such as order processing, processing engineering change orders, purchasing, and corrective actions? Let us examine each of the wastes and learn how they might apply.

1. Overproduction. Overproduction is producing more than what is actually required by the upstream process. In manufacturing, this is often done in an attempt to keep machines running and to avoid too many changeovers. It may also be the result of historically poor quality (running more than what is needed to make up for defects). In administrative processes, overproduction may refer to things like printing paperwork out before it is needed purchasing items before they are needed, and processing paperwork before the next process is ready for it. Each of these may create a queue, which will cause the lead time for a process to increase. When administrative process lead times are high, the end customer will ultimately end up with a product later than anticipated for several possible reasons: manufacturing did not have visibility to an order quickly enough, manufacturing did not receive parts when they were needed, etc.

2. Transportation. In manufacturing, transportation refers to moving product either within or between factories. In administrative processes, transportation refers to things such as multiple paperwork hand-offs and requiring too many approvals.

3. Unnecessary Inventory. In manufacturing, inventory has a clear cost, whether it be excessive raw materials, WIP (perhaps the greatest culprit), or excessive finished goods. Holding too much inventory increases lead time and has a significant cost associated with it, usually estimated at 20% to 40% of the average value of inventory over a year. For administrative processes, things like filled in-boxes (electronic and paper), too many office supplies, and batch processing of transactions/reports. The result of unnecessary inventory in administrative processes is increased lead time.

4. Inappropriate Processing. In manufacturing, this often refers to the use of mass production equipment where leaner equipment may be used. It also refers to reworking products. In administrative processes, it may refer to re-entering/re-checking data, making extra copies distributing too many reports, making excessive transactions, management accounting activities, and adding unnecessary details in expense reports, budgets, etc.

5. Waiting. The waste of waiting in manufacturing refers to operators waiting for machinery to finish cycling. The solution is to balance the work of operators (often having one operator run multiple pieces of equipment.) In administrative processes, “system” downtime, paperwork/approval queues (waiting in someone's inbox), and waiting for information from outside sources (customer or supplier) are examples of the waste of waiting.

6. Excess Motion. Excess motion in manufacturing refers to operators having to walk around to find tools, inventory, and people. Also, it refers to ergonomic concerns in manufacturing operations. In the administrative processes, excess motion primarily refers to people having to walk to office equipment or (even more importantly) having to walk to find people.

7. Defects. In manufacturing, the waste of defects is obvious. Defects cause parts to be either thrown away or re-worked. Defects in administrative processes are often mistakes on paperwork/data entry, which increase lead time or lead to unfilled orders and other potential manufacturing issues.

8. Underutilization of Employees' Minds/Ideas. This waste applies to manufacturing and administrative processes in the same way. In order to be successful, a lean program must involve employees at all levels of the organization. Everyone must generate improvement ideas and be involved in implementation.

Darren Dolcemascolo is an internationally recognized lecturer, author, and consultant. As Sr. Partner and co-founder of EMS Consulting Group, he specializes in productivity and quality improvement through lean manufacturing. Mr. Dolcemascolo has written the book Improving the Extended Value Stream: Lean for the Entire Supply Chain, published by Productivity Press in 2006. He has also been published in several manufacturing publications and has spoken at such venues as the Lean Management Solutions Conference, Outsourcing World Summit, Biophex, APICS, and ASQ. He has a BS in Industrial Engineering from Columbia University and an MBA with Graduate Honors from San Diego State University.

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