Acora: In the know
Applying LEAN principles in the Enterprise
Applying LEAN principles in the Enterprise
LEAN principles - not just
for manufacturing
The use of LEAN within the
manufacturing arena has seen reduced
inventory, improved lead times, quality
improvements, optimised processes
and a reduction in non-value added
overhead.
Within the back office functions, the
enterprise, there are equivalent wastes
and process inefficiencies. Yet few
organisations have taken the LEAN
principles and applied them to their
enterprise functions. Some feel that
they are only for a manufacturing
environment and that there is no way to
apply them in the enterprise. In some
cases the wastes are harder to see or the
processes deemed “too complicated”.
People also forget that there is an
internal customer demand that must be
met on time and to requirement – both
in terms of content and quality.
What does it mean to be
LEAN?
In simple terms it is the application of
thinking and tools to optimise processes
through the removal of waste. Within
a manufacturing environment these
wastes are usually reasonably easy to
see – a large amount of parts stacked up
on a bench, parts being moved around
a factory, rework piles, a lot of finished
goods inventory sat in the warehouse.
So, where can it be used?
Anywhere. Wherever there is a set of
actions (processes) that are required
to move a product or service along
the value chain. Typical examples of
enterprise areas that have shown
benefit in applying LEAN principles are
quoting, complex product sales order
entry, engineer to order, customer/
supplier on-boarding, program/
project management, HR and approval
processes.
These areas tend to require participation
of different teams with multiple
handovers and authorisations.
Value add vs non-value
add
Most businesses can split their activities
into value-add (usually through direct
activities relating to the product or
service), non-value add but necessary
(e.g. safety and legal) and non-value add
and not necessary. This last category
is usually the largest. Customers will
not view their back office functions
as necessarily adding value. LEAN
Enterprise is intended to remove
the non-value added processes and
minimise those that are non-value
added but necessary.
Enterprise processes are
ripe for LEAN thinking
The fact remains that it is the enterprise
processes that probably contain the
highest proportion of non-value add/
non-necessary activity. In businesses
with a high proportion of knowledge
workers/indirects this has a significant
impact on a wide range of business
metrics.
Given that these enterprise processes
have seldom received the same level of
attention as the processes on the shop
floor, they are ripe for the application
of LEAN thinking and the associated
reduction in waste, and improvements
in the proportion of value add across the
business.
The wastes in the enterprise can come
in many forms and can be very hard to
see. The “inventory” of these processes,
e.g. email enquiries to answer or orders
to process, is usually hidden within
mail servers or ERP order management
systems. Multiple cross-functional
handoffs add to the process time and
increases in rework and a drop in quality.
Eliminating the wastes
By utilising the LEAN principles you
will learn to see these wastes, and by
applying the tools that you need from
the LEAN tool box you will be able to
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Acora: In the know
Applying LEAN principles in the Enterprise
eliminate them. By building a culture of
continuous improvement these gains
will be stabilised and then built on.
LEAN Enterprise can be applied in any
business of any size. Its use will allow
the business to focus on the high
priority areas for improvement and
thus generate the best return on the
LEAN Enterprise transformation event.
The generation of current state value
stream maps will highlight the possible
bottlenecks and high waste areas within
your business and provide a base against
which to target transformation events
and to measure the improvements. It
is important to remember that the
outcome of a LEAN Enterprise event
is a quantifiable improvement, not a
“feeling”.
Applying LEAN enterprise
principles in a bespoke
electrical control systems
value stream
As an example of this process LEAN
thinking and principles were applied
to the “order to acknowledgement”
process in a bespoke electrical control
systems value stream. The event was
sponsored by the business general
manager as the length of time to return
an acknowledged order was determined
to be an issue in competiveness in
that particular market. After the initial
pre-work was completed a 3 day
transformation event was held.
processes that can scale as demand and
mix varies the correct capacity can be
applied, all the time ensuring that the
service or product is still delivered to
customer demand.
By looking at the current business
processes through a new “lens”
opportunities for truly transformational
activities will be revealed. The structure
and discipline of the LEAN Enterprise
framework not only guides but ensures
consistency of application.
Conclusion
LEAN Enterprise is intended to remove
the non-value added processes
and minimise those that are nonvalue added but necessary (through
optimisation, automation etc). By
robustly challenging the non-value
added activities the core competence
(the value add) of the business is
clearly highlighted and the non-core
identified e.g. does your customer
pay the business to answer its internal
service desk tickets, quote or create
sales orders? It is highly unlikely. Yet all
of the customer transactions carry that
overhead. That impacts profitability
– and as profitable growth is a key
business principle it needs addressing.
LEAN Enterprise can help you with this.
At Acora we focus on outcomes,
not incomes.
Acora delivers outsourced IT
services to visionary mid-market
business leaders who need strategic agility without the shackles
of high-risk IT. We provide the
freedom to flex further, and adapt
faster – fully supported by an
expertly managed, outcomes-focussed IT strategy. Because true
service is about flexibility, we meet
our clients’ ever-changing strategic
needs with outsourcing services
delivered at whatever level feels
right for them. When our clients
talk, we listen. No error, no confusion. Just singular, dynamic service
that drives new business value at
every level in a new and uncertain
economy.
Further information
E: [email protected]
T: +44 (0) 844 264 2222
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This resulted in a 70% reduction in
lead time, 40% reduction in process
time, increases in quality, reduction
of handovers and rework alongside a
range of other improvements. All of
these were delivered, and tracked to be
shown to be sustainable, after the initial
90 day implementation plan for the
improvements identified in the event.
Benefits for business
leaders
LEAN Enterprise transformations allow
the business leadership and other
stakeholders to spend time working
on the business challenges – both
immediate and future. By designing
© Copyright 2012 Acora. All rights reserved
Acora - Head Office
Acora House, Albert Drive, Burgess Hill, West Sussex, RH15 9TN
T: +44 (0) 844 264 2222
W: acora.com
E: [email protected]