Lean has brought about amazing changes on the factory floor. Many U.S. firms recognize that in today’s markets, the speed of response to customer demands is a key competitive advantage. These firms have worked continuously to reduce their manufacturing cycle times. By applying lean concepts, companies have transformed the factory and made considerable reductions in manufacturing throughput times; reductions in cycle time in excess of 50 percent are not uncommon.
Even after achieving these reductions in cycle times, many of these companies have discovered that their customers still perceive them as slow. Their competitors, exhibit quicker responses to customers. For example, a large industrial equipment manufacturer found that although it had sliced weeks out of its manufacturing cycle, its response time to customers was still slowed by an order entry and engineering process that took months to complete.
Speed on the factory floor is not enough. Customers care only about the total cycle time from start to finish–from need to satisfaction. They are unimpressed by short manufacturing cycles if the other parts of the value stream make response time slow. Time consumed anywhere in the “value-stream” from order entry and engineering on through to distribution and delivery is equally valuable. It follows; therefore, that time squeezed from any part of the chain has the same value to customers. To be a competitor in today’s marketplace, a firm must shrink the entire value chain by compressing time in activities that also lie outside the factory walls. These are the activities of the “administrative/service factory.”
Processes like order processing, talent management, staffing, hiring, quoting, planning, purchasing, product development and others are full of waste. As a matter of fact, 75-90% of the steps in service/administrative processes add no value—the lean definition of waste. These wasteful steps cause delays and customer dissatisfaction. Since one of the key principles of lean thinking is to minimize the time between the receipt of a customer order and fulfillment of that order (our broad definition of product includes a service offering as well as a widget). Once we identify the waste (non-value-added steps) in our office/service processes and what needs to be worked on, and then we can apply the traditional Lean tools such as pull systems, continuous flow, co-location, point of use storage, continuous flow, 5S, visual controls and mistake proofing.
So the answer to the “now what” question is if you really want to decrease customer response times you need to apply lean tools in your office and administrative processes to eliminate waste.
Willie L. Carter is the president of Quantum Associates, Inc, a process improvement consultancy. He helps managers unlock the full promise, speed, and energy of their processes. Carter certifications include, Lean Sensei, ISO 9000 Lead Assessor, Manager of Quality/Organizational Excellence. He is an experienced facilitator, coach, and author of the book “Process Improvement for Administrative Departments, The Key to Achieving Internal Customer Satisfaction.” His company helps executives optimize their business processes to minimize their costs, accelerate their cycle time while simultaneously enabling them to do more with less. He can be reached at email@example.com