Lean in an assembly manufacturing plant tends to focus on one-piece flow, in a process or job shop it tends to focus on eliminating wait time.  The idea of eliminating wait time and defining “standard work” also applies to the office and administrative environments.  

Typically waste on the administrative side falls into categories like:
 

And the root causes of these issues often look like:

• Requirements not clear – different functional groups have differing opinions about the “real” requirements
• No “Standard Work” – often no clear definition of “best practices”
• “Turf Wars” – roles and responsibilities not clearly agreed upon
• Excessive automation – too complex and inflexible, requirements usually go into great depth, but miss what is important 

The “Requirements Not Clear” bullet above offers a clue to a fundamental root cause and possible far-reaching solution.  These problems can cause excessive analysis, excessive rework, delays in processing and confusion.  A few examples:
 

• An accounting close typically takes eight to twelve days in many companies, because a flood of transactions take place at the end of the period: journal entries, special analysis, allocations, report preparation, etc.  The excessive transactions cause accounting departments to be somewhat chaotic places at the end of the period.  Adopting lean in this world is different than a factory, but the goal is still stable amounts of work, flexible operations (within defined parameters) and methods that “pull” from the suppliers to the process. 
   
• Imagine a “purchase order” going through a process; 99% of its processing life is going to be “wait” time.  It may also have rework problems as people try to get the information right, and in terms of workload balance some purchase orders are more difficult to do than others.  Not so different from what goes on in the factory.  Many of these problems can be individually addressed using Kaizen and Lean/Process Teams. 
   
• Multiple re-inputs of information into Excel spreadsheets, Access databases, requirements generators, etc. Or consider the different languages used inside a business for the same physical product — purchasing has a different numbering scheme than engineering, which has a different numbering scheme than accounting, etc. — and someone is supposed to keep a matrix up-to-date that maps these relationships.  Now there is a value-adding activity from a customer perspective = Not!!!

An actual case.  The Credit Department in a Financial Services business had a responsibility to review credit for new and existing accounts.  An important responsibility, for sure!  They perceived their role as protecting the company’s assets, period.  They did not see their role in generating new business and in customer service.  So every time a sales person would try to open a new account, it seemed as though Credit was “reinventing” the credit process.  They would sit on information, they would ask for one document from a customer and then come back some time later and ask for more information.  When existing customers came up for review, it was as though they all were new “high risk” customers and they were marched through an inflexible, non-customer responsive process. With a new, high-risk customer everything the Credit Department did was appropriate.  Perhaps it could have been more customer-friendly, but they had to do the steps.  However, with a lower risk (especially existing) customer many of the steps were not relevant, thus distracting from the organization’s competitive capabilities, not to mention customer satisfaction and loyalty for repeat sales.  
 

Another case.  In a company that does custom work, a very similar thing to the above happened.  Engineering reviewed and spent design time on every order, as though it were custom, even though 80% of most jobs were essentially for standard products.  When lean is applied to the office and administrative processes, typically new value streams get defined.  Multiple (flexible) processes replace rigid structures. 

These two stories illustrate a common problem with many administrative processes and information systems.  They are often designed to handle the most complex transaction that could be happen.  That by itself is not the major problem.  The problem happens when all transactions get run through that system, rather than having parallel pathways for what are usually the bulk of activity.  The complicated transaction may happen 20% of the time, but typical transactions are simpler and do not need all of the hurdles and gateways.

In addition, most overhead departments and activities do not have effective metrics.  Good data and meaningful metrics are a real problem because a clear performance baseline does not exist, people are not used to having performance measures so they feel threatened by the concept, and no one is clear on what should be measured.  Standard work does not exist for most tasks, which is a key foundation element for any lean activity.  Most overhead departments would also score poorly in a 5S assessment.  
 

So now what?

Action can be taken to address these issues.  A major newspaper publisher was able to increase revenues by more than 25% following a few basic improvement steps:

1. Basic “good” project practices – appropriate sponsor, clear goals, right people on team, leadership involvement, etc.
2. Give people some time to make the improvement happen (typically 20%, one day a week), after an initial project launch.
3. Establish clear, measurable process improvement goals at the outset, and install on-going tracking measures for a few key elements. 
4. Identify the key areas for improvement.  What Joseph Juran (and Pareto) always called the “Vital Few,” using some type of an improvement methodology that includes measurement and analysis…vs. the too-often used approach to define the problem and then go fix something (Ready, Fire Aim!).
5. Run some type of a pilot project to test the changes.
6. Roll it out.
7. Incorporate the savings numbers into people’s budgets.
8. Recognize people for their accomplishment, those on the team and those impacted by the changes.

At the end of the day, it’s important to identify the leverage areas where meaningful improvement needs to happen.  The publishing company did that.  They had administrative teams in several areas that implemented significant changes.  This is just a quick list.  It could be explained in more detail.  The direct marketing group project team at the newspaper mentioned above, was able to increase their revenues by more that 25% following this model.  Doing “lean” in the office is different than a factory, because the nature of work is not physically visible.  But given that overhead costs amount to more than 50% of the non-material ‘total costs’ for most organizations, the opportunities are tremendous.
 

Note: This information is largely excerpted from an upcoming book to be published by McGraw-Hill in December, titled, “The Six Sigma Black Belt Handbook” by Bremer, McCarty, Daniels, and Gupta.  The book will focus on the practical actions anyone needs to take to create an effective business performance improvement effort, that will be better than their competition.

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