In many companies engaged in continuous improvement efforts, the focus is on the shop floor to reduce lead time and cost while improving quality and on-time delivery. However, it's important to realize that improvement tools (such as value stream mapping, set-up reduction, poka-yoke error proofing, team-based kaizen events and the rest) are equally effective when applied to the other functions in an enterprise.
Would you like to reduce the time and cost of your new product development cycle, your order entry and approval process, the length of time it takes to recruit and hire new employees, or any of your other overhead functions? The same continuous improvement tools you apply on the shop floor to reduce non-value-added waste are just as effective in the office.
One of the biggest hurdles to overcome is putting metrics in place so you can measure and track performance in these areas. Companies have been measuring the performance of their manufacturing operations for years, so it was easier to see the results of continuous improvement efforts here than in the other functions.
There seems to be a cultural resistance in many organizations to putting performance metrics in place for traditional overhead functions, but you can't improve what you don't measure, so having metrics in place is a required first step. How many of you know the average time it takes to recruit and hire a new employee? Or how long it takes your accounting group to approve credit for a new customer, what your average time to market is for new products, how much of your sales revenue is from products that are less than X number of years old, or how long it takes for a purchase requisition to become a purchase order (and how many approvals are required)?
I recently heard the horror story of one organization where a capital purchase requisition took months and had 107 approval signatures before the equipment was ordered. All of these activities follow a business process for completion and, like your manufacturing process, these can be value stream mapped, non-value-adding waste identified and continuous improvement tools employed just like on the shop floor. Today, when so much of the cost of a business is not on the shop floor, doesn't it make sense to focus on all these other functions, and use the continuous improvement tools your organization already knows to make them more effective and less costly?
Years ago, a friend of mine told me about his frustration at spending so much time improving the operations in his company's manufacturing area, and yet having it still take over five days to ship a build-to-order product. His team had reduced the manufacturing lead time on these customized products to a matter of hours, but the administrative time for order entry, credit approval, engineering and generating shop packets took five days. This particular company produced stents that cardiologists were ordering for people with blocked coronary arteries. How would you like to wait over five days for one of these devices if you had a heart problem -- all because of ineffective administrative processes?
Ralph Keller is president of the Association for Manufacturing Excellence, an organization dedicated to cultivating understanding, analysis and exchange of productivity methods and their successful application in the pursuit of excellence. He has been an operations practitioner for the past 35 years.
