1. What are the employee benefits of Agile & Lean in the office?
2. What are the customer benefits of Agile & Lean in the office?
3. What are the financial benefits of Agile & Lean in the office?
4. What are the operational benefits of Agile & Lean in the office
5. What are the strategic benefits of Agile & Lean in the office?
Two of the primary wastes found in the office environment are
two of the seven wastes: overproduction and of waiting. Both
tend to be the result of specialization. If an employee is only
trained to do one specialized job, the chances are that on any
given day, the employee has either too much work to do or too
little. If they have too much work to do, then someone else is
waiting for that work; so they have too little to do. If an
employee has too little to do then there is a tendency to
overproduce by doing something not immediately (or ever)
required.
One of the solutions to both overproduction and waiting is
cross-functional training so that an employee is always ready to
do the next most important thing for the organization.
Cross-functional training creates more value for the customer as
well as makes the employee more valuable.
Cross-functional training also benefits employees through:
Office environments are complex systems. There can be
thousands of integration points as information flows along a
value stream. As a result it is almost impossible to understand
in detail how a change to one part of a value stream will impact
the rest of the system-wide value streams of the organization.
The Agile & Lean approach is to use a program of continuous
performance improvement. This approach does not try to
accomplish too much at once and risk complete failure, but to
make an incremental change to a value stream, what for the
system to settle down, fully understand the system-wide impact
of the changes, then decide what new change to make.
The advantages to employees from this approach is they:
Scott Adams' Dilbert cartoons are pasted on the walls of
almost every office environment. The concepts that form the
basis of most Dilbert cartoons are the wasteful practices that
employees understand and appreciate but appear to be powerless
to do anything about. Lean Office provides a way to engage
employees in eliminating the material for Dilbert's cartoons.
Rather than just pasting Dilbert on their cubicle, employees
have an increased responsibility to identify and remove the
waste from their organization. This is not employee empowerment
with a blank sheet of paper. This is a bottom-up empowerment
with a focus on removing waste from the organization. Management
retains responsibility for the value streams of the
organization; employees accept responsibility to constantly
remove the waste from those value streams.
Increasing employee responsibility for waste reduction creates a sense of employee ownership and pride for their workspace. And becomes a strong motivator for employee performance.
Lean as applied to the office environment can be a very
effective way to delineate between the roles of employees and
the roles of management. By better defining their individual
roles, there is less business friction caused by overlapping
responsibilities and unclear expectations.
Lean Office also establishes a stronger linkage between the
strategic goals and direction of the organization and the
tactical contributions each employee makes towards achieving the
defined strategies.
Employee satisfaction is increased through a better
understanding of where their contribution fits within the
system-wide value creation activities of the organization. They
are provided the visibility of how and where they contribute
value, and they are given the opportunity to find ways both to
increase that value and reduce non-value added activities. The
optimum recipe for job satisfaction.
We are moving from the age of mass production to the age of
mass customization. Agile businesses are now marketing to
customer segments of one. Agile & Lean methods help establish
flexible operational value streams designed to adjust
automatically to customer demand.
Value stream mapping is an approach, defined in the
Agile & Lean Glossary, called continuous flow to increase
the flexibility of customer offerings. Continuous flow takes
advantage of just-in-time, pull systems, and cross-functional
training to minimize the work-in-process and cycle times. This
means that the time from a customer request to the time it is
delivered can be shortened to the point where a product or
service can be developed and customized specifically for a
customer; after it is requested.
The cost of quality is free. This statement generates
controversy inside many organizations, but to a customer it is
obviously true. Customers do not want to pay more for quality.
They assume the product or service they receive provides the
benefits they requested.
Agile & Lean do not use expensive quality assurance programs
that check for defects just prior to providing the customer the
product or service. In the world of Agile & Lean, quality
assurance is a waste to be reduced as much as possible. Instead
Agile & Lean searches for waste within for all activities of the
customer value streams; from start to finish. Agile & Lean also
seeks to mistake proof processes so that defects cannot occur.
As a result customers see quality improvements from what is not
happening. And since the events causing poor quality are not
happening, quality actually costs less than free. The
organization literally gets money back.
Agile & Lean techniques reduce the time it takes to process
any customer request. Agile & Lean do this by reducing all of
the wait states that typically occur while processing a request.
Processing occurs in a continuous flow.
Take for example the processing of a sales order. By the time
the sales order has undergone multiple processing steps the
amount of time it waits in various queues can be substantial.
Eliminating this wait time can eliminate 90% of the time to
process a sales order.
As a result of this faster service, customers don't need to call
into customer service to check on the status of their order. By
the time they would call the order would already be processed.
Not only is the service faster, but both the customer and the
organization save from having to check on the service status.
Agile & Lean provide significant benefits to the organization that adopts it. Agile & Lean organizations provide greater customer value with higher quality at less cost. Agile & Lean organizations generate better returns on their investments in labor and capital. These benefits positively impact the organization's top and bottom lines.
Each of the above are internal benefits to the organization. There are external benefits to their customers as well. From a customer point of view an Agile & Lean organization provides them the product or service they need, customized to their specific requirements, with the quality they expect, in a highly responsive manner. This is an equation for happy customers; and happy customers buy more, tell other customers of their experience, and become engaged in ensuring the organization's future success.
Agile & Lean provide the means to better manage and measure
the return on labor investment. Value stream maps create
management visibility into the invisible processes of the office
environment. They provide management greater insights on how
work actually flows through the organization, where potential
bottlenecks exist that rob performance, and where labor
investments can generate the largest returns.
The quest to maximize value added work and reduce or eliminate
non-value added work also brings into clear focus how labor is
allocated to both. The direct impact of reducing non-value added
work is an increased return on labor investment.
In addition, an indirect impact of Agile & Lean on labor
investment results from the increased satisfaction of employees.
Happy motivated employees perform better than those that aren't.
Traditional operational improvement approaches (such as business process reengineering) do not take a system-wide view of how all of the organization's assets are allocated towards producing customer value. Lean Office considers all five drivers of operational performance; the five M's as defined in the Agile & Lean Glossary.
Agile & Lean techniques help to align each of the five M's to maximize customer value creation. The unrelenting hunt for waste in each of the five M's helps insure those assets are effectively and efficiently utilized.
The Agile & Lean Glossary, defines the cost of non-quality as the financial impact due to the production of waste by the organization. When most organizations measure the cost of non-quality they only measure the financial loss due to the production of errors, rework, or scrap. Each of these is a defect, which is only one of the seven wastes. There are six other wastes that are included in a hunt for non-value added activities.
Every waste discovered consumes resources of the organization. In addition to the waste itself, exception processing can represent a significant drain on the organization. Reducing or eliminating waste frees up the labor and capital used to create the waste and to later fix it; enabling these resources to be used in other value added activities and reducing the cost of non-quality.
The breakthrough thinking associated with Agile & Lean is the
unrelenting focus on maximizing the creation of customer value.
This becomes the responsibility of every employee in the
organization. Rather than just looking at top and bottom-line
performance, every set of eyes in the company is looking for the
smallest amount of waste in every activity performed in every
value stream of the company.
The results are dramatic improvements in the amount of customer
value produced by the organization. Even small reductions in
waste start to make significant contributions when multiplied by
thousands of activities. Increased customer value ultimately
increases top-line revenue. Customers are willing to pay for
value. Since the increased revenue is produced with higher
productivity and less labor and capital expense, profits also
increase. Increasing both revenues and profits is a combination
to benefit any organization.
Service time is defined in the
Agile & Lean Glossary as the wall clock time necessary to
complete one item of value. In the example of a sales order
let's assume that an organization receives 100 orders per day.
We can determine the service time of the value stream that flows
from the receipt of the order until the order is released to
fulfillment. For our example, let's assume that the average
service time for each sales order is 48 hours. Some orders will
take more and some less.
Now let's assume the work time for each order averages 1 hour.
Work time is defined in the
Agile & Lean Glossary as the wall clock time spent
performing direct value added activities within a value stream.
The 1 hour work time for a sales order includes the time spent
by various people for data entry, customer contact, quality
assurance, etc., that was performed with regards to processing
the order.
In Lean Office, the time difference between the cycle time and
the work time is waste. In our example, there are an average of
47 hours of waste for each sales order processed. Lean Office
reduces the cycle time of any value stream. In the sales order
example a typical result would be to reduce the cycle time from
48 to 2 hours or less.
Work time is defined in the Agile & Lean Glossary as the wall clock time spent performing direct value added activities within a value stream. Some of the work time associated with a value stream can be associated with non-value added work and the rest with value added work. Lean Office strives to maximize the value added work and reduce the non-value added work. Reducing the non-value added work reduces the total work time, and therefore the cost, to execute the value stream.
In many environments the primary measure of quality is
defects; the number of errors produced.
Agile & Lean Glossary expands the definition of quality to
maximizing customer value added activities while minimizing
non-value added activities. A defect is just one of the seven
categories of non-value added activities or waste. The root
cause of most defects is one or more of the six other forms of
waste. Removing or eliminating these wastes increases overall
product or service quality.
Another concept of Agile & Lean that contributes to increased
quality is "stop-the-line." Stop-the-line allows anyone to stop
processing when a defect is found and investigate its root
cause. This creates a tight feedback loop between contributors
to a value stream.
Immediately stopping the line:
Throughput is defined by the
Agile & Lean Glossary as the velocity of work performed by a
value stream. For example the number of sales orders processed
per day or the number of press releases posted per month. The
goal of increased throughput can either be 1) increase the value
produced per unit of time for the same organizational cost, or
2) maintain the same level of throughput at a reduced cost to
the organization.
Agile & Lean helps to increase throughput by tightly stringing
together the value added activity of a value stream in a
continuous flow model. As soon as one value added activity of a
value stream is completed the next is started with little or no
waiting. Eliminating or reducing non-value added activities
allows the freed up time and resources to be spent on value
added activities. Quality is increased, reducing the number of
defects, further increasing the average throughput.
Agile & Lean is all about maximizing customer value. With
Agile & Lean, the culture of the organization changes so that
everyone knows exactly the customer value being created and
their role in its creation. The Agile & Lean culture establishes
a firm foundation for then tying the strategic direction of the
organization with the tactical day-to-day value creation.
Agile & Lean techniques include an approach known as strategy
deployment. The
Agile & Lean Glossary defines strategy deployment as a top
down planning process that ties strategic direction to the vital
few tactical initiatives for realizing the desired business
outcomes. Strategy deployment is an iterative process that
starts with analysis of the organization and its market, the
formation of an initial strategy, the review of that strategy
against existing value streams, and then the feedback to start
the next iteration. This consensus building iterative process is
sometimes called catch-ball.
When completed, strategy deployment establishes clear links
between strategy and its impact on the value streams of the
organization. Since everyone in the organization knows how they
contribute to the value streams, they understand how they are
impacting strategy. This allows the organization to react as a
single interdependent system in strategic and tactical
alignment.
The Agile organization is defined in the Agile & Lean Glossary as the ability to be nimble and turn quickly in reaction to market changes. Agile organizations satisfy their customers early and often. Agile & Lean techniques help organizations become more agile by first giving them more visibility and control of their customer value producing value streams. What you can't see you can't manage. Value stream mapping and visual controls provide tools for managing agility.
Lean Production techniques were first applied by Toyota on
factory shop floors where there was consistency to the number
and types of products being produced. But soon Toyota began to
apply Lean concepts to their engineering organizations as well.
Still today, Toyota can engineer a new car in almost half the
time of an American automobile manufacturer.
An Agile & Lean approach works just as well with the repetitive
nature of sales order processing and customer service as it does
to product marketing and development. Value stream maps provide
a system-wide view to focus the work of interdisciplinary
working teams; to both align their efforts and to streamline
their results. Customer value streams that are tied directly to
strategic direction become a vehicle for communicating to all
employees customer priorities. The value stream maps become the
tools to help maximize customer value creation and eliminate
non-value added waste. And through the use of continuous flow,
the value stream maps help accelerate the time it takes to
define, build, and launch a new product or service.
Henry Ford is attributed with starting the era of mass
production in the early 1900s. Mass production enabled the mass
market to by an automobile as long as they wanted it black.
Taiichi Ohno of Toyota is attributed with starting the era of
Lean Production in the 1950s. Lean can be described as mass
customization. Lean retains the ability (if necessary) to
maintain high throughput, but also allows high customization of
the product or service.
Agile & Lean techniques allow organizations to design value
streams supporting high or low throughput that can produce
customized products or services for markets of one. This is due
to low service times, low amounts of work-in-process, cross
functional team members, and a balanced flow structure that
builds in flexibility. The system is designed for change; change
is expected, so when it occurs it does not create the same
people change management issues as a "mass production"
environment.
As a result, organizations are able to establish value streams
that provide individual customer treatment, and better leverage
existing expertise in new markets.
The continuous performance improvement of Agile & Lean allows
organizations to increase their productivity at an system-wide
average of 3-8% per year, compounded year-after-year. Because
organizations are complex systems, attempting to increase
productivity at a quicker rate dramatically increases the risk
of failure. In fact because of the higher failure rate,
organizations attempting to do so will probably perform at the
lower end of the improvement average.
Organizations that fail to adopt an Agile & Lean to continuous
performance improvement will likely see their productivity
remain flat or perhaps decrease.
Productivity improvements compound on each of the previous years
improvements due to the complex systems nature of the
organization. Making an improvement change or removing a waste
in one area sets the stage for being able to leveraging that
change for additional improvements in another area. Toyota has
been compounding productivity increases with Lean in their
organization for 50 years now and they figure they have at least
another 50 to go before the curve flattens out.
Toyota has a sustained competitive advantage over other
automobile manufacturers because they are higher up the
productivity improvement curve than their competitors. A 5%
productivity increase at Toyota produces more value than a 5%
increase at Ford. Because of this Ford, and because greater
increases are not sustainable, Ford will never catch Toyota's
productivity level.
An organization that starts a program of Agile & Lean today will
achieve the same sustained competitive advantage over their
competitors that wait that Toyota has over Ford. An organization
that allowed a competitor to start an Agile & Lean program first
had better start theirs as soon as possible, because every day
they wait increases the gap between they are their competitor
that they may never be able to overcome.