Extending Lean Initiatives Across the Organization:

Transcription

1 A White Paper by Exact Software Extending Lean Initiatives Across the Organization: How greater efficiencies can extend beyond the manufacturing floor and back-office Business Unified

2 Executive Overview There is a need for managing the front-office with workflow processes in the same vain as managing back-office workflow for products. Companies everywhere have realized the need for greater efficiency and improved quality within the enterprise to stay productive and competitive in today s business environment. In order to obtain these efficiencies, corporations have turned to the successful model used by manufacturers for years currently known as lean, Just-in-Time (JIT) or Kaizan. The fundamental goal of lean manufacturing includes the reduction of waste, increase in productivity and improved quality. Most manufacturers launch their lean initiatives in order to maximize work flow and obtain dramatic improvements in performance. Although front-office operations are executed very differently from the manufacturing floor, the same type of complicated flow exists such as document management where services and information are being moved through various processes. Most companies, unfortunately, do not focus on improving office workflow functions with the same vigor as with their manufacturing process. There is a need for managing the front-office with workflow processes in the same vain as managing back-office workflow for production. Business processes from filling out a purchase request, interacting with business partners, to assigning documents for review and approval can only be optimized through an organizational initiative. The effectiveness of each business task determines the overall efficiency of your organization. This White Paper will address the importance of optimizing front-office initiatives, in the way that back-office initiatives are made lean, in order to help your company stay competitive and improve the bottom line. This paper will also cover the evolution of lean ; current business process issues and bottlenecks; key features of lean that address the business inefficiencies; and how business can bring the front-office into a lean operations model. The Evolution of Lean/JIT The practice of lean manufacturing originated in Japan approximately 50 years ago. Lean manufacturing encompasses a number of modern practices, including Just-In-Time inventory and delivery, Kaizen, and Kanban. Most people are familiar with Just-In-Time processes, which ensure that goods arrive when needed, rather than ending up as inventory. For the uninitiated, Kaizen is a Japanese term that refers to continuous improvement; a Kaizen strategy calls on everyone in an organization to look for ways to improve quality, cycle times, safety, and other aspects of an operation. Kanban, meaning signal in Japanese, establishes a "pull" instead of "push" system of moving goods through , Exact Holding North America, Inc. All Rights Reserved.

3 How greater efficiencies can extend beyond the manufacturing floor and back-office the factory. The idea is to create an environment driven by demand that holds only a small amount of inventory and products at any given time. In a lean-manufacturing environment, whenever finished goods are sold, the sale triggers a signal to the process one level back calling for replacements. The process works from the front to the back with each step consulting with the previous step in the chain. Although the practice of lean originated from the manufacturing floor, as companies look more closely, it is clear that this practice is vital within the front-office. By examining all of the steps that make up the whole of the business, the entire workflow methodology is analyzed. This resulted in a focus on the elements of the process (that created the product) versus the product itself, such as what occurs between each process, how multiple processes were arranged within the office, how the flow and chain of processes functioned as a whole (holistic approach) and how each employee performed a task (accountability). Logistics ERP Project Management Financials Workflow Sales Portal & Website Document Management HR The Holistic View Lean manufacturing is a philosophy that makes information about the manufacturing process readily available, so that scheduling, planning, and logistics can be conducted in a manner that increases the overall efficiency of the manufacturing process. The same theories can be applied to the front-office, where redundant tasks and processes could be streamlined by capturing and storing information on ONE database, and allowing all stakeholders to access relevant information for added efficiency. ERP Financials Project Management Portal & Website Workflow Document Management Sales HR Logistics 2

4 The Need for Lean in the Front-Office In the front-office, redundant processes and unnoticed problem areas may not show their effect immediately, but problem areas such as incorrect sales proposals, long days-of-outstanding-sales, unresponsive or overdue customer outreach all result in lost business, which eventually cuts into the bottom line. Certain bottlenecks are also apparent, however less tangible, such as wasteful documents, unnecessary meetings and/or policies, lack of definition in workflow processes, conflicting strategies and goals and specific correlations between departments and projects. In addition, accountability is more subtle and therefore more difficult to track in terms of getting a clear percentage of time wasted and a firm grasp over redundancies. The process of applying lean/jit initiatives to the front-office means that every element of the business process (employee, workflow, value chain and departments) are associated and correlated in order to identify steps in the business process that can be eliminated or accounted for, resulting in higher productivity, elimination of waste, problem-solving and increased profits. When applying lean initiatives an organization needs to focus on defining important business processes from beginning to end, POOF! 3 Traditional Approach: Most organizations currently have a one-way flow of information that can fall victim to any number of pitfalls: (1) redundant process taking place throughout the organization, (2) employees dropping the ball, and not completing tasks, (3) isolated tasks or projects that are difficult to track, (4) tasks that circulate between employees, but nothing gets done, and (5) inefficient use of resources that store away isolated information, all lead to lower productivity within an organization. Suppliers Customers Resellers Enterprise-wide Approach: Information is shared and exchanged at every level. Workflow is lean, accountable, track-able, and visible in all phases, by all stakeholders. Suppliers, customers, and customers are even able to access workflow related to them based on assigned security levels. 3 Suppliers Customers Resellers

5 including eliminating unnecessary steps, ensuring accurate information, proper prioritization and flagging bottlenecks, defects and mistakes. It is vital within the lean front-office to keep the emphasis on the whole business as well as the interdependence of its parts. Once these steps have been identified, organizations must incorporate traditional characteristics of lean/jit processes. The goal for the lean process as it applies to the front-office includes obtaining a single, centralized environment, shorter processing times, initiating highly flexible and responsive processes, and continuous flow throughout each process, while at the same time empowering and including all employees in the process. An organization must employ a Closed-Loop methodology, in which processes, people and documents are accounted for from start to finish. There are numerous examples of the need for this initiative within the day-to-day processes such as budget requests. If a budget request is associated to a project, employee and logistical item, the flow of the project as well as closing the loop of the steps is the ultimate goal. When the process goes through a workflow of management approval and assignment to Finance & Accounting, for example, closing the loop not only for sign-off on budget, but to final closure of the supplier being paid, is critical. Incorporating an enterprise-wide tool to obtain lean: When initiating a lean process, companies should incorporate an enterprise-wide tool that identifies every process, step, document, project, employee, tasks and value chain member across an entire system. By doing so, business executives can gain unparalleled visibility into each aspect of the organization with accurate and up-to-the-minute information. Such functionality enhances the decision-making process, analysis, scenario planning and ongoing management across the entire business. During the evaluation process, business leaders should be cognizant of whether or not the solutions they are evaluating provide a truly integrated and holistic view of the entire organization. These solutions ultimately provide a clear picture for major cost savings and improved operational efficiencies across all departments. It is vital within the lean front-office to keep the emphasis on the whole business as well as the interdependence of its parts. Business leaders should seek out a solution that provides complete information management by streamlining workflow tasks that are typically manual and unsecured. Many of these solutions enable users to develop and manage processes within a secure rules-based central environment. But perhaps the most important aspect of any solution is its ability to exchange and provide access to information in a real-time environment. Without a real-time component, operations will always be one step behind. Summary Today s competitive business environment dictates that organizations be nimble and agile. In order for business to operate in this capacity, and ensure the success of their lean initiatives, eliminating process inefficiencies is absolutely critical. Unfortunately, , Exact Holding North America, Inc. All Rights Reserved.

6 too many organizations have failed to adequately assess the shortcomings of front-office, and as a result, have struggled to realize the full potential of their lean initiatives. Like so many of today s business challenges, the answer lies in technology but only in those solutions that offer a holistic view of the organization. Business leaders must take longer looks at the lack of accountability and redundancies running rampant in the front-office if they are ever going to steer their business in the proper direction, especially when it comes to establishing a lean front-office. No process, however engrained in the organization, should be deemed untouchable. Gaining visibility and establishing accountability are the central themes in overcoming these hurdles. Like so many of today s business challenges, the answer lies in technology but only in those solutions that offer a holistic view of the organization. It is only in viewing the organization from such a perspective that organizations can ensure that their operations run efficiently Exact Software North America, Inc. All rights reserved. MAS1613, 6/05