Lean for service organizations and offices _ a holistic approach for achieving operational excellenc

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Unformatted text preview: This ebook copy is owned by Datuk Razali Mahfar - [email protected] Lean for Service Organizations and Offices This ebook copy is owned by Datuk Razali Mahfar - [email protected] Also available from ASQ Quality Press: 5S for Service Organizations and Offices: A Lean Look at Improvements Debashis Sarkar Managing Service Delivery Processes: Linking Strategy to Operations Jean Harvey The Executive Guide to Understanding and Implementing Lean Six Sigma: The Financial Impact Robert M. Meisel, Steven J. Babb, Steven F. Marsh, and James P. Schlichting Transactional Six Sigma for Green Belts: Maximizing Service and Manufacturing Processes Samuel E. Windsor Managing the Customer Experience: A Measurement-Based Approach Morris Wilburn Applying the Science of Six Sigma to the Art of Sales and Marketing Michael J. Pestorius Lean Kaizen: A Simplified Approach to Process Improvements George Alukal and Anthony Manos A Lean Guide to Transforming Healthcare: How to Implement Lean Principles in Hospitals, Medical Offices, Clinics, and Other Healthcare Organizations Thomas G. Zidel Root Cause Analysis: Simplified Tools and Techniques, Second Edition Bjørn Andersen and Tom Fagerhaug Competing for Customers and Winning with Value: Breakthrough Strategies for Market Dominance R. Eric Reidenbach and Reginald W. Goeke The Certified Manager of Quality/Organizational Excellence Handbook, Third Edition Russell T. Westcott, editor Enabling Excellence: The Seven Elements Essential to Achieving Competitive Advantage Timothy A. Pine To request a complimentary catalog of ASQ Quality Press publications, call 800-248-1946, or visit our Web site at . This ebook copy is owned by Datuk Razali Mahfar - [email protected] Lean for Service Organizations and Offices A Holistic Approach for Achieving Operational Excellence and Improvements Debashis Sarkar ASQ Quality Press Milwaukee, Wisconsin This ebook copy is owned by Datuk Razali Mahfar - [email protected] American Society for Quality, Quality Press, Milwaukee 53203 © 2008 by ASQ All rights reserved. Published 2007 Printed in the United States of America 13 12 11 10 09 08 07 5 4 3 2 1 Library of Congress Cataloging-in-Publication Data Sarkar, Debashis. Lean for service organizations and offices : a holistic approach for achieving operational excellence and improvements / Debashis Sarkar. p. cm. Includes bibliographical references and index. ISBN: 978-0-87389-724-2 (soft cover : alk. paper) 1. Service industries—Management—Handbooks, manuals, etc. 2. Industrial management—Handbooks, manuals, etc. I. Title. HD 9980.65.S27 2007 65 8—dc22 2007034601 ISBN: 978-0-87389-724-2 No part of this book may be reproduced in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Publisher: William A. Tony Acquisitions Editor: Matt T. Meinholz Project Editor: Paul O’Mara Production Administrator: Randall Benson ASQ Mission: The American Society for Quality advances individual, organizational, and community excellence worldwide through learning, quality improvement, and knowledge exchange. Attention Bookstores, Wholesalers, Schools, and Corporations: ASQ Quality Press books, videotapes, audiotapes, and software are available at quantity discounts with bulk purchases for business, educational, or instructional use. For information, please contact ASQ Quality Press at 800-248-1946, or write to ASQ Quality Press, P.O. Box 3005, Milwaukee, WI 53201-3005. To place orders or to request a free copy of the ASQ Quality Press Publications Catalog, including ASQ membership information, call 800-248-1946. Visit our Web site at or . Printed in the United States of America Printed on acid-free paper This ebook copy is owned by Datuk Razali Mahfar - [email protected] To my daddy who is among the stars and the almighty whose hands silently steer all my endeavors This ebook copy is owned by Datuk Razali Mahfar - [email protected] This ebook copy is owned by Datuk Razali Mahfar - [email protected] Table of Contents List of Figures, Tables, and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Note to Readers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix xiv xvi Chapter 1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lean Thinking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lean Beyond Manufacturing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lean and Service Economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Addressing Symptoms Has Limited Value . . . . . . . . . . . . . . . . . . . . . . . . . . . Relevance of Lean to Service Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lean and Operational Excellence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The DEB-LOREX Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Philosophies That Drive the DEB-LOREX Model for Lean Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wastes Are Symptoms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Eight Wastes of Lean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Dimension of Time in Lean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The DEB-LOREX Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lessons from Lean Applications in the Service Sector. . . . . . . . . . . . . . . . . . 1 1 2 2 2 3 7 8 9 14 16 19 21 22 Chapter 2 Blueprint for Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Step 1: Leadership Alignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Step 2: Identify Value Streams for Product Families. . . . . . . . . . . . . . . . Step 3: Form Implementation Team. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Step 4: Firm Up the Implementation Charter. . . . . . . . . . . . . . . . . . . . . . Step 5: Redesign the Structure of the Organization. . . . . . . . . . . . . . . . . Step 6: Install Anchors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Step 7: List All Processes in the Value Stream . . . . . . . . . . . . . . . . . . . . Build . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Step 8: Build Relevant Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Step 9: Select the Value Stream on Which You Want to Focus . . . . . . . . 51 51 51 55 58 68 73 78 80 83 83 91 vii This ebook copy is owned by Datuk Razali Mahfar - [email protected] viii Table of Contents Step 10: Ensure That All Stakeholders of the Value Stream Are on Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Step 11: Ascertain What the Customer Values and Requires . . . . . . . . . Step 12: Map the Current State and Baseline the Process . . . . . . . . . . . . Step 13: Visualize the Future State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Step 14: Dissect Process and Carry Out Detailed Process Analysis . . . . Step 15: Deploy Lean Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assimilate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Step 16: Decide on Measurements and Dashboards. . . . . . . . . . . . . . . . . Step 17: Implement and Institutionalize the Process . . . . . . . . . . . . . . . . Sustain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Step 18: Ascertain Health of the Lean Management System and Processes Through Assessments and Audits . . . . . . . . . . . . . . . . . . . . Step 19: Launch Ongoing Improvement Regimens . . . . . . . . . . . . . . . . . 92 97 101 111 114 118 150 150 154 154 154 155 Chapter 3 Anchors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Problem Solving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Promotions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 158 166 176 178 187 Chapter 4 Lean Breakthroughs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Phase 1: Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Phase 2: Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Phase 3: Follow-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 196 197 200 Appendix A: Assessment of the Lean Management System: The DEB-LOREX Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 Appendix B: Template for Management Report after LMS Assessment Based on the DEB-LOREX Model . . . . . . . . . . . . . . . . . . . . . . 219 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 225 This ebook copy is owned by Datuk Razali Mahfar - [email protected] List of Figures, Tables, and Exhibits Table 1.1 Figure 1.1 Figure 1.2 Figure 1.3 Figure 1.4 Figure 1.5 Table 1.2 Figure 1.6 Figure 1.7 Exhibit 1.1 Figure 1.8 Figure 1.9 Figure 1.10 Table 1.3 Figure 1.11 Figure 1.12 Figure 1.13 Figure 1.14 Figure 1.15 Percentage of service sector in major economies of the world (as of 2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DEB-LOREX model of lean transformation and operational excellence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The house of lean management system or DEB-LOREX model for lean transformation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The two philosophies that comprise the DEB-LOREX model for lean transformation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cause-and-effect relationships of the DEB-LOREX model of lean transformation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Types of waste. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Treatment of process steps under lean. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Times used in lean.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current and future states of lean journey. . . . . . . . . . . . . . . . . . . . . . . . . . . Lean opportunity checklist: applicability of lean in the organization.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Local optimization creates waste within the value stream, as the focus of each of the departments is different. . . . . . . . . . . . . . . . . . . . . . . . Actual process yields versus functional yields. . . . . . . . . . . . . . . . . . . . . . . End-to-end process for resolving quality issues pertaining to deliverables not reaching the customer on time. . . . . . . . . . . . . . . . . . . . . . Characteristics of a process.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Differences between a process and a procedure. . . . . . . . . . . . . . . . . . . . . . A vehicle finance disbursement process as viewed by top management and process associates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Approach to creating flow: first create flow within departments and then take it to the value stream. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Centralization of operations in a financial services company. . . . . . . . . . . Geographical cells in an auto finance company. . . . . . . . . . . . . . . . . . . . . . ix This ebook copy is owned by Datuk Razali Mahfar - [email protected] 3 7 10 10 13 15 16 20 21 23 26 27 28 30 31 32 32 33 34 x List of Figures, Tables, and Exhibits Table 1.4 Table 1.5 Table 1.6 Figure 1.16 Table 1.7 Figure 1.17 Exhibit 1.2 Figure 1.18 Figure 2.1 Figure 2.2 Table 2.1 Table 2.2 Figure 2.3 Figure 2.4 Figure 2.5 Table 2.3 Exhibit 2.1 Exhibit 2.2 Figure 2.6 Figure 2.7 Figure 2.8 Figure 2.9 Figure 2.10 Figure 2.11 Figure 2.12 Figure 2.13 Table 2.4 Table 2.5 Figure 2.14 Skill inventory of employees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Skill summary: skill analysis of branch sales executive in a bank.. . . . . . . List of global remittance products offered by a major financial services company.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of complexity as a percentage of operating cost. . . . . . . . . . . . . . . . . . Example of an “A Day in the Life of ________.” exercise. . . . . . . . . . . . . . Checkout process from an airport in India. . . . . . . . . . . . . . . . . . . . . . . . . . Template for finding wastes and redundancies in documents.. . . . . . . . . . . Example of customer being forced to create waste and the associated customer dissatisfaction and pangs to the organization. . . . . . . Vision, culture, values, objectives, and outcomes.. . . . . . . . . . . . . . . . . . . . Role of objectives in LMS journey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Organization’s readiness assessment for implementation of lean management system. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Product family matrix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Generic value stream. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Generic value stream of a mortgage finance business. . . . . . . . . . . . . . . . . Generic value stream of a fast-moving consumer goods business. . . . . . . . Key roles of corporate and value stream councils. . . . . . . . . . . . . . . . . . . . Template of charter for LMS implementation in an organization having multiple value streams (as adopted in a financial services business). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Template of LMS charter for a value stream. . . . . . . . . . . . . . . . . . . . . . . . Organizational structure for lean management system implementation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Process of goal decomposition in an organization structured around value streams.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Organizational structure necessary for LMS implementation. . . . . . . . . . . The “firm within a firm”—value streams as independent entities. . . . . . . . Structure of retail bank before commencing on the journey of lean transformation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Value streams crafted around specific customer segments. . . . . . . . . . . . . The five P’s of the lean management system. . . . . . . . . . . . . . . . . . . . . . . . The lean management system chain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Functions of the five anchors in a lean management system. . . . . . . . . . . . Examples of value-creating, value-enabling, and support processes of a mortgage finance business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Relationship between value-creating, value-enabling, support, and management processes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . This ebook copy is owned by Datuk Razali Mahfar - [email protected] 36 36 39 40 42 43 46 47 52 53 54 56 56 57 57 66 69 71 74 75 76 76 77 77 78 79 79 81 82 List of Figures and Tables Table 2.6 List of value-creating processes in various types of businesses. . . . . . . . . . Figure 2.15 Key process loops of a value stream. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table 2.7 List of key capability-building programs required for the implementation of a lean management system. . . . . . . . . . . . . . . . . . . . . . . Table 2.8 Details of capability-building training programs. . . . . . . . . . . . . . . . . . . . . Figure 2.16 Approach for capability-building rollout during LMS implementation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 2.17 Elements of a generic value stream.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 2.18 Value stream elements of an auto finance business. . . . . . . . . . . . . . . . . . . Figure 2.19 Principal stakeholders in a value stream of an auto finance business. . . . . Figure 2.20 Principal and enabling stakeholders in a value stream of an auto finance business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 2.21 Value stream stakeholder matrix showing the four types of stakeholders.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 2.22 Example of a SIPOC–R diagram. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 2.23 Example of a SIPOC-R for a motorcycle loan disbursement process.. . . . . Figure 2.24 Icons used for value stream mapping. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 2.25 The process box yields a plethora of information. . . . . . . . . . . . . . . . . . . . . Figure 2.26 Current-state value stream map of a financial services company.. . . . . . . . Figure 2.27 Example of first-pass yield calculation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 2.28 Representation of a bundle corresponding to a pitch. . . . . . . . . . . . . . . . . . Figure 2.29 Using average demand to calculate takt time. . . . . . . . . . . . . . . . . . . . . . . . Figure 2.30 Cushion of two standard deviations for high variability in demand.. . . . . . Figure 2.31 Future-state value stream map of a financial services process.. . . . . . . . . . Figure 2.32 Phased future-state implementation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 2.3 Template for master list of processes to be taken up for future state. . . . . . Exhibit 2.4 Template for detailed implementation plan for future state. . . . . . . . . . . . . Table 2.9 Problem types and methodologies to be adopted. . . . . . . . . . . . . . . . . . . . . Exhibit 2.5 Template for time observation sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 2.6 Segregation of value-added steps from others in a process. . . . . . . . . . . . . Exhibit 2.7 Template for determining activity times for each of the process steps.. . . . Exhibit 2.8 Template for spaghetti diagram.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 2.33 Batch and queue flow in mor...
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