The session begins with a review of the scope of the process to be improved and a review of the objectives with the team. Some training is provided on basic lean concepts, particularly the concept of value added and non-value added. The flow of a typical service kaizen workshop.
Step 1. Who is the customer? The first step in any improvement process is to have the team identify the customer’s needs and the processes that support or add value to deliver on that need. Only then can the team clearly define value and assist in noting which tasks in the process are truly value added.
This process can be more complex than you might think. I helped lead one workshop involving an entire accounting department. They had identified a number of subprocesses, such as accounts payable, accounts receivable, employee expense reimbursement, etc. In the case of employee expense reimbursement, who was the customer? Was it the employee who wanted to be reimbursed? Was it the organization that wanted a controlled procedure to prevent fraud? Was it the Internal Revenue Service, which has standards for appropriate documentation for travel expenses? As it turned out, all three were customers and we then had to consider their collective value systems.
Step 2. Analyze current state. Participants physically walk through the process (whenever possible) for purposes of genchi genbutsu. During the walk, participants should discuss the process with the employees to obtain insights on how the process works, to surface issues, and to solicit ideas for improvement. The walk-through also gives participants a better sense of the travel distances and the physical stop points in the flow of the product. Following the walk, the team can then begin a detailed analysis of the preliminary current state map. Based on the data collected on the walk-through and the knowledge of the team, the processing steps are modified and/or added as required. In addition, the team validates all data, which includes task times, wait times, quality levels, etc. The final and most important part of this step is to identify what is value added. Again, this can be quite complex and even controversial. For this step it is critical to use the three Toyota categories:
- Value Added. What is the actual transformation process core to the service that the customer is paying for? This could be an information transformation, like engineering or accounting. Or it could be a transformation in the customer, e.g., hair styling, surgery, educating the customer.
- Non-Value Added. What is pure waste? For example, all wait times are non-value added, as are walk times, rework, and unused information.
- Non-Value Added, but Required. Ohno called this “non-value added work” or, sometimes, incidental work. The question to ask is “What is required under today’s conditions even though it does not add value from the customer’s perspective?” This can include inspections, control systems to check that procedures are being followed, documentation, etc.
Using the required non-value added category can help avoid divisions and a conflicted workshop. Nobody wants to consider what they do non-value added. In the accounting example mentioned above, the whole department can be considered non-value added from the perspective of the customers of the Society of Automotive Engineers (SAE). People who pay for a professional society’s services do not think they are buying its internal accounting services. Yet accounting serves a critical function to any business. If the business goes out of business because of poor accounting, it cannot serve customers at all.
So what is the value add? It always comes back to how you define the customer. Take the process of employee reimbursement. The employee is a customer and wants to be paid fast with minimum hassle. If SAE as a business entity is a customer of internal accounting, then the policies, controls, and monitoring put in place add value from SAE’s perspective, even though employees would rather they all go away. If the IRS is a customer of SAE, then following any IRS-imposed rules and forms is part of the value added of accounting. In the employee reimbursement case, the group decided the employees being reimbursed for expenses were the first customers and SAE as a business is the second customer. The IRS is not really a customer, but filling out IRS forms is a required non-value added. Because of the complexities and challenges in determining who the customer is, it is important that people do not prematurely jump to solutions to problems during the current state analysis. You can capture any ideas for improvement on a flip chart for the future state discussion.
When analyzing the current state, you are typically following a given product through a process (e.g., a drawing, a bill, a purchase order). However, all service processes deal with varying volumes of transactions. Consequently, it is important to capture the number of transactions per period and the variety of products that flow through the process. This will help shed light on why there are delay points in the process and assist in locating the bottlenecks. Once the team has completed documenting the current state, the next step is to calculate the summary metrics of the business process. These are some common measures calculated at this stage:
- Lead time: total time the product stays in the system
- Value-added ratio: sum of value-added time divided by lead time
- Travel distance of the product
- Travel distance of people doing the work
- Productivity: people hours per transaction
- Number of handoffs
- Quality rate: percent of products that go through the process the first time with no defects
After the team calculates the metrics, it revisits the objectives that were determined in the preliminary stage to see if they are still plausible and whether they should add objectives. At this point, the team is ready to work on developing a lean future state.
Step 3. Develop future state vision. Before diving into changing the current process or sketching out a new process, it is vital to draw out all ideas for improvement from the participants. A great way to achieve this is to use group brainstorming and have participants write their ideas on sticky notes. The facilitator collects the ideas, reads them aloud, and posts them on the relevant area of the current state map. After team members post their ideas, the team evaluates each idea to see if it will help toward achieving one or more of the stated objectives. Some ideas that surface may be outside the scope of the workshop but may have merit. The team captures these ideas on a “parking lot” and forwards them to the appropriate process owners. Some of these ideas may need to be explored in another kaizen workshop. The team captures all ideas pertinent to creating the future state vision on a list and moves to the next stage of drawing the future state map of the process, incorporating lean principles. The role of the lean facilitator at this point is to challenge participants to create a future state vision that eliminates waste, improves first-time quality, and optimizes the flow through the entire process and to lay out the new flow of tasks. Afterwards, task times and wait times are calculated (or estimated) for the new tasks. The major lean concepts that should be a part of the future state vision include the following:
- Create one-piece flow. As much as possible, have information move through the system seamlessly rather than in batches.
- Arrange work centers (e.g., organizational structures) to align with value streams to support customers in a one-piece flow.
- Use cross-functional teams, co-located if possible, when needed to avoid handoffs.
- Identify a value stream or case manager who is responsible for the service from start to finish from the customer’s perspective, like the chief engineer in Toyota’s product development system.
- Level (load level) the number of transactions whenever possible to balance workloads.
- Build in quality in the process rather than inspect it (e.g., eliminate unnecessary approvals, checking, review cycles).
- Standardize the tasks and clearly document work on standardized worksheets.
- Eliminate redundant systems, such as reconciliation across different people.
- Include visual displays and controls to make work status easy to see and understand (minimize tracking).
Once the team completes the future state map, the new process metrics are calculated and compared with the current state metrics to quantify the expected savings. At this stage, the future state vision is presented to senior management and the owners of other affected processes for immediate approval. Once all have agreed upon the future state vision, the team may proceed to the next step, implementation.
Step 4. Implementation: do it! The next phase of the above shop floor kaizen workshop is to start to make the future state vision a reality. The future state map is divided into segments and participants are broken into subgroups to work on each segment. A project plan is developed with what, when, and who. Implemen-tation activities during the workshop can include:
- Re-layout of work areas to facilitate one-piece flow
- Workplace organization (5S and visual displays)
- Creation of standard work instructions
- Revision of corporate procedures
- Redesign forms and documents
- Problem-solving activities to uncover root causes of quality problems
- Specifications or even some changes for any information technology required to support the improved process
- Training people in the new process
Clearly, you may not complete some activities during a one-week kaizen workshop, such as creating a database or obtaining customer approval on changes in specifications. You capture these ongoing items in a project plan that will serve as the work plan for the sustaining team after the workshop. Each item in the plan should have a sustaining team member’s name assigned to it and a firm completion date. The sustaining team typically consists of the workshop team leader and a subgroup of the participants whose skills are needed to complete the transition to the future state vision.
Step 5. Evaluate: measuring performance. The last phase of the kaizen workshop is to establish metrics that will track progress toward the future state and ensure that gains achieved during the workshop are indeed sustained over time. Most of the metrics should be the same as those captured in the kaizen workshop. The current state metrics provide the baseline and the future state metrics provide the targets. Then you need to implement a simple tracking system that ideally should be based on the metrics data collection currently in place. You should assign a person for each metric to collect and collate the information.
You post the current and future value stream maps, process metrics, project plan, objectives, and other communications on a “lean status board” in the main work area to serve as the visual display to communicate to all employees the progress that is taking place. Data should be posted on the lean status board at least once a month (weekly is preferred). It is advisable to keep the number of metrics to a minimum. Remember that tracking metrics takes time away from people doing their work. It is also important at this stage to discuss the existing metrics and immediately eliminate ones that are superfluous or drive behaviors that are counter to the implementation of the lean future state vision.