Lean Six Sigma for the Office

Integrating Customer Experience for Enhanced Productivity

James William Martin

• Publisher: Productivity Press
• Year: 2021
• Print ISBN: 9780367503277
• eBook ISBN: 9781000356847
• Topic: Business
• Subtopic: Manufacturing
• Index: Business

Historically, the integration of manufacturing methodologies into the office environment has proven to be problematic. Part of the difficulty lies in the fact that process workflows tend to be globally dispersed and thus rely heavily on information technology. But in complex service systems that contain a mix of employees, consultants, and technology, standardized protocols have been shown to reduce cycle time and transactional cost as well as improve quality. The successful application of Lean methodologies to improve process workflows is an efficient way to simplify operations and prevent mistakes.

In Lean Six Sigma for the Office , Six Sigma guru James Martin presents proven modifications that can be deployed in offices, particularly those offices involved with global operations. Making use of Kaizen and Six Sigma concepts, along with Lean manufacturing principles, this book instructs managers on how they can improve operational efficiency and increase customer satisfaction.

The author brings experience gleaned from his application of these methodologies in a myriad of industries to create a practical and hands-on reference for the office environment. Using a detailed sequence of activities, including over 140 figures and tables as well as checklists and evaluation tools, he demonstrates how to realize the rapid improvement of office operations, and how to eliminate unnecessary tasks through value stream mapping (VSM). The book also emphasizes the importance of strategic alignment of Kaizen events and the impact of organizational culture on process improvement activities. Latter chapters in the book discuss key elements of a change model in the context of transitional improvements as they relate to the process owner and local work team. By applying the proven principles found in this book, effective and sustainable organizational change can be accomplished, efficiency can be improved, and mistakes can be eliminated.

This 2nd edition provides insight into the new tools and methods Lean Six Sigma process improvement professionals need to improve customer experience and increase productivity within high transaction processes across complex information technology ecosystems. It is one-stop self-contained reference for the application of Lean Six Sigma methods enhanced by powerful approaches for process improvement in highly complex service processes.

Several new leading-edge topics are integrated into this new edition, such as:
• The "voice of" customers, suppliers, employees and partners
• Design Thinking Alignment
• Ecosystems in Information Technology
• Metadata Definition and Lineage
• Information Quality Governance
• Big Data Collection and Analytics
• Mapping High Volume Transactions through Systems
• Robotic Process Automation Applications
• Automating for Solution Sustainability
• Governing Organizations
• Data Privacy (General Data Protection Regulation)

Step 1

Align Improvement Opportunities

1

Strategy Alignment

Overview

Today’s office environments consist of employees, consultants, and technologies that are integral parts of global supply chains. Digitalization, automation, and other disruptive technologies integrate these systems. Their value content has been rapidly increasing because of this automation. As an example, in a modern end-to-end quote to order to cash process, an accounts receivable team may reside in one country, but several of its core functions are performed in different locations, and many of these are global. There will be different laws, regulations, and taxing jurisdictions. Sales and marketing teams are likely to be geographically dispersed with each performing different parts of a quote to order process. There will also be differentiated markets with products and services sold to customers located in different countries. The invoicing process will be designed for customers based on language and other considerations. Process improvement strategies have adapted to focus on these virtual systems.

In global supply chains, simple and standardized operational systems have lower lead times and cost as well as higher quality than those of more complex ones. Lean tools and methods are the most direct way to simplify, standardize, and mistake-proof processes. They also focus on understanding what is important to customers, i.e., what they value. The focus is also on the voice of the customer (VOC) and customer experience when using products and services. Although the application of Lean tools and methods is straightforward, Lean deployments require hard work, patience, effective resource allocation, and significant personal involvement of employees and managers. Some organizations may have difficulty consistently applying Lean methods. Reasons include non-alignment with operational strategy and no formal deployment framework to identify and prioritize improvement projects and train team members in Lean concepts to execute them. Reporting systems must be in place to measure progress to continuously improve operations. Employee training is important because they need to use the right approach for analyzing and improving work areas. There are also several disciplines in a Lean culture. To master these, employees need extensive on-the-job training from experienced facilitators as well as practical projects. Maintenance, job set-ups, and conducting rapid improvement events require knowledge and practical experience. Lean methods are hands-on and practical and must be learned through practice.

Organizational non-alignment contributes to most Lean deployment failures. Non-alignment occurs if leadership is not engaged. There are several reasons for this situation. There may be competing priorities from other initiatives or projects. Or benefits may not be estimated or clearly communicated. Non-alignment is also exacerbated by poor project identification and prioritization, competing priorities that cause resource scarcity, reward and incentive systems that are not properly aligned to the Lean initiative, and mismanagement of performance and success measures. Poor project identification is preventable through effective research and project scoping. The goal is to create a backlog list of prioritized projects with benefits. These are represented as project charters. These can be integrated into the deployment plan considering resource requirements to make a good case for Lean, Six Sigma, or any other initiative.

The projects will vary by industry. Manufacturing organizations have a long history with Lean. There are an extensive number of manufacturing case studies that show the types of project that were done and how the tools and methods were employed for root cause analysis and solutions. Service industries also have extensive case studies available for review. Given the extensive digitization and Robotic Process Automation (RPA) being employed in every organization, there are questions of Lean’s effectiveness in highly automated environments and those in which software controls operations. There are people who believe the Agile Project Management (APM) methodology replaces Lean in these environments. But we disagree. It is synergistic to other initiatives such as Lean as shown in Figure 1.1 operating model.

Figure 1.1
Operating Model

If projects are not properly selected and aligned within an organization, it is difficult to make a case for implementing Lean. In this chapter we will show how to identify and organize projects for Lean deployments for service and supporting processes in highly automated work environments, then build these projects into strategic planning and execution. If projects provide benefits, resource requirements are easier to obtain when competing with other important initiatives and projects. In contrast, projects not strategically aligned will have a low priority, and resources will not be assigned to them. Rewards and incentive systems are also easier to align to beneficial work. Performance and success measures are needed to ensure accountability and support for a Lean deployment. It is difficult to plan and execute Lean and other improvement work such as operational assessments, rapid change events, or others if management and employees are not supportive.

Strategy Alignment

Strategy alignment is critical to ensure resources are efficiently utilized to achieve business goals. Organizations employ different initiatives to execute strategies. Lean and Six Sigma are two operational initiatives under the Operational Excellence (OPEX) umbrella. To realize benefits, projects must be successfully executed by associates trained to use the initiative’s tools and methods. Normally an operational assessment is conducted to create a portfolio of prioritized projects, which will move an initiative forward to increase productivity and to meet commitments to key stakeholders and increase shareholder value.

A productivity measure is the ratio of outputs and inputs. Outputs are sales or other sources of income that are adjusted based on exchange rates and inflation. Inputs are operating expenses such as direct labor, materials, and other expenses needed to support sales. Productivity = (Previous year’s sales/previous year’s operating costs). Organizations in the same industry with well-managed operations will have higher productivity ratios than those that are poorly managed. Stakeholders include employees, governmental regulatory agencies, suppliers, and other constituents associated with an organization.

A strategic metric flow down method is used to identify projects and starts with a return-on-equity target. This is delayered down to sales, operating income, and cash flow targets. Return-on-equity (ROE) is the rate of return earned on the book value of the owner’s equity. It is compared to the return from a safe investment such as a fixed interest asset. These high-level financial metrics are influenced by projects. The projects are evaluated, baselined, and executed to improve metrics related to expense reductions, e.g., warranty, scrap, rework, excess material, direct labor, and others; or to increase sales by reducing the lead time to market, more effective advertising, and moving the many other sales influencing projects with their metrics. The third category is asset utilization. These are activity ratios that measure the efficiency with which an organization uses its assets. Examples include inventory turns = cost of goods sold/average inventory or days’ sales outstanding = accounts receivables/(daily sales), and there are several others such as machine utilization. The concept is that projects need to be aligned to organizational strategy represented by financial metrics as well as strategic measures focused on customer experience, sustainability, diversity, and others.

Strategic goals are translated into the organization and successively communicated down through it with improvement targets for each metric. A linkage between strategy and operational execution is made through initiatives. These are aligned to financial and operational metrics based on the root cause analysis and solutions likely to close the project’s performance gaps. Initiatives have unique tools and methods that are used to identify, analyze, and eliminate specific types of root cause and align to solutions. As an example, if a process’s lead time is long, then Lean methods can be used to analyze the process and find ways to simply standardize and mistake-proof it. But if the problem is low process yields, then building a model to understand the causes for low yields would be more effective. The goal would be to build a model of yield versus several input variables (Xs)....

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• About the Author
• Introduction
• Step 1 Align Improvement Opportunities
• Step 2 Plan and Conduct the Rapid Improvement Event
• Step 3 Implementing Solutions
• Conclusion
• Index