How to apply Lean in Non-Production Functions

Toyota Production System

This is an introductory article about applying Lean to Non-Production workplaces, including Office work.  To aid in understanding I would first like to provide a short background on the origin of the term “Lean”.

What does Lean really mean

There have been many books and different understandings of what has become a highly varied application of the term “Lean”.  Some of the applications have been more effective than others, and many who have led “Lean implementations” have focused on “The Tools of Lean” (5S, Kanban, Visual Control, Problem Solving…and are applied mostly to production only).  

They often do not address from the broad scope of “The Total Culture of Lean” (The Tools plus Leadership, Management, Trust, Employee Engagement…and applied in all parts of the enterprise). 

A total culture of Lean applied across the entire Enterprise is critical to true and sustained success in achieving a Lean culture. 

Lean has become such a common buzzword that few know the origin of the word as used in business. Many say they know what it means, yet if you get ten people in a room and discuss the meaning you may well get ten different versions of Lean with a tool based common ground of understanding.  

The term Lean as applied to organizations was originated in the 1990 book, The Machine That Changed the World.  This was an MIT study of the history of the Auto Industry, that led the authors to a focus on Toyota as they saw a company with a management system delivering consistently successful results.  A company intensely focused on respect and engagement of all employees to convert all resources to maximize customer value, a company that relentlessly pursues the elimination of waste by everyone every day, a company that hates waste.  Thus, the authors developed the viewpoint:  this looks like “Lean”!

It is from this point that many began their attempts to “implement Lean”, many focusing on just the tools without any experience base for the true understanding of the comprehensive meaning including the Culture and Management System that led to Toyota’s success and the authors’ one-word descriptor: Lean!

Critical gaps in how Lean is implemented

As people worked to understand and replicate this new found Lean practice, many gravitated to the more black and white part of the total system likely because tools applied only in Production could be more easily observed and implemented.  There were, and still are to a large extent, two critical gaps in implementing Lean as an Enterprise wide total system:

1) Lean as a total Enterprise culture and

2) Lean in non-production functions of the Enterprise. 

Lean as a culture driven by Leadership behaviors and expectations is a critical part of the total system and is key to sustainability.  However, I will not talk much about that in this article but please note it is a critical element to success.  I will focus on how to apply Lean in Non-Production areas.

Accounting for differences in non-production work

Production work is easier to see, there are materials and processes to build the product, all very visible to apply the Lean tools.  The repetition of building a physical product supports the physical focus and ability to work at maximizing the Customers’ value and respecting your Staff by engaging them to constantly seek their highest work value.

However, it takes all functions thinking this same way, working to add their highest value to support the Enterprise in creating maximum Customer value. 

Non-Production work includes all functions not directly building the Product such as Human Resources, Purchasing, Production Control, Supply Chain, Finance, IT, Engineering, Quality, Marketing, Sales, Legal and others.  The same principles of Lean as applied in Production also apply to these functions.  However, there are several barriers that make it more difficult to apply Lean principles such as:

-Longer and varied work cycles

-Complex process flows

-Multiple processes for each Staff member

-Cannot see a physical product

-Fixed headcount per department

-Limited natural motivation as direct results are difficult to see

While there have been levels of success applying Lean to Production, these barriers have made it very difficult for organizations to apply Lean to Non-Production functions.

However, with a deep understanding of Lean principles and motivated, committed Leadership and Staff, there is a very practical pathway to apply Lean and achieve the benefits for all;  Staff,  Customers and the Enterprise!

The basic mindset and understanding of all Management and Staff in any workplace should be to continuously seek to maximize the value of their contribution to the organization’s purpose.  This is applicable for any type of organization and industry including manufacturing, services, healthcare, non-profits, etc.

Staff and Management of every organization can be categorized into one of two groups:

1) “Production”, those who make the product for or provide the service to their Customers

2) “Non-Production”, those who support those who make the product or provide the service

Staff in Production can see their clear value more easily as they are working directly with the Product for the Customers.

Staff in Non-Production need to know their real purpose and value to be motivated to embrace Lean principles and practices.  This is elusive as Non-Production Staff tend to come to work and get through their days, usually with a lot of hard work, stress and problems to overcome.  It is difficult for them to see what is valuable vs. wasteful work, it all runs together.

Thus, methodical continuous improvement cannot be practiced and the waste continues on. 

How to apply Lean in the office

So, what should be done?  How can Lean be applied to non-production given the many barriers listed earlier?

I will address those questions shortly, but first I want to emphasize that the term Lean has never existed inside of Toyota.  Rather, The Toyota Way consisting of the two pillars Continuous Improvement and Respect for People, backed more specifically by The Toyota Production System which includes Standardization, Jidoka (Built In Quality), Just In Time and Problem Solving for Team Members to work endlessly to deliver value to their Customers represents the company wide foundation principles which are applied to every part of the Company.  There are some differences in how these principles are applied but all functions know to work at practicing the Toyota Production System within The Toyota Way.  The Toyota Production System would be better named The Toyota Management System as it is not limited to Production in the literal sense and is the way for all to manage and improve their work value.

With that understanding, let’s get back to the questions of how to apply to Non-Production functions.  Please note that I have successfully applied this approach within Toyota North America during the early business development years as well as in recent years in coaching companies to strengthen their performance.  I know this works!

Step 1

First, each Non-Production group should define what are the Products (includes Services) they provide and list them.  What value do they deliver within the organization?  While you may think this is obvious, I have found it very interesting when you ask a Non-Production group to write this down.  In a simple exercise with one major company, there was a heated exchange over one Non-Production Product:  Supplier quality.   The heads of Purchasing and Quality each thought the other was responsible for Supplier Quality as a Service Product!  I asked them to settle it later, but it certainly demonstrated the need to clarify even at the highest levels.

There is a wide variety of Product types and values.  Some directly support Production (Engineering, Maintenance…), some indirectly support Production (Human Resources, IT…), and some must take care of Business Requirements (Legal, Accounting…). 

Products in support of Production should focus on how to help Production deliver the highest value for the Customer.  The value of the Products that address Business Requirements should be to effectively meet these important requirements but to constantly seek the most effective work methods and minimize resources since there is no Customer value created.

Step 2

Second, it is time to define Who is the Customer for each Product.  Once again this is not as easy as it may sound.  Many Customers are likely internal and there can be multiple Customers for the same Product.  Staff often perform their work as they always have and do not really think about how to deliver the highest value to their Customer.  Being clear on who is the Customer is necessary to continuously work to deliver their highest value.

It also promotes working with their Customer to truly understand their needs.

Step 3

The third step is to define the measure of success for each product.  Identify the quantifiable Key Performance Indicators (KPIs) by Product.  This is also a challenging but healthy step in developing Lean for Non-Production work.  I have worked with many who struggle with this step due to the nature of the type of work, but it drives them to think through their work and how to really measure their performance.  There is always a relevant KPI when it is thought through.  Without this there is no compass, no way to manage performance or measure the effect of continuous improvement.

Step 4

Step four is to establish a Standard Process for each Product.  This is commonly called an SOP, Standard Operating Procedure, and is an important structural component of Lean for Non-Production.  This will define the best process currently known, it will define what is normal including critical elements of quality confirmation points and time control.  It will show the connection of individual processes so members can manage the integrity of the flow from previous process to the next process throughout the total business process.  This often is written beginning with a Level 1 high process flow via a flowchart.  With a Level 2 detailing more specifically how to do each section of the Level 1 flowchart.  Then a Level 3 with forms, screenshots and tools to further support Level 2.

Good SOPs will written by and valued by the Staff as an aid to manage and improve their work.  They should not become academic exercises or detailed books created by a third party that are not practical to use, just dust collectors.

With clear SOPs, Staff can recognize abnormalities immediately within their work cycle, such as a bad data file, then contain the abnormal and problem solve at the root cause whenever possible to eliminate recurrence, the waste. 

I have experienced many situations where abnormal work is mixed with normal work and becomes a way of life.  There is no systematic way for Staff to see the abnormal then work to eliminate it at its source.  The work runs together, and the waste persists.  Staff may become frustrated as the same problems keep coming at them and there is no systematic practice in place to identify and eliminate this abnormal work.  It all becomes just the way it is in a normal workday.

A Standard Process also is key to effective training to sustain the best-known method as Staff changes over time.

Note, there are standard processes in all workplaces currently!   People do work by habits, what they consider the best way to do their work is how they do it currently.  I would encourage you to start there, do not overcomplicate it, let the Staff write the standard process flow they currently practice.  Then ask them to step back and analyze what works well, where are there chronic disruptions.  These become the opportunities to increase their value by reducing waste.  The Staff benefits first by eliminating frustrations and wasteful work.  Customers benefit by receiving greater value and the Organization benefits from the higher performance level and greater reliability in serving Customers.

After foundations are built, focus on value

With these steps completed and a solid foundation built, it is time to establish the working environment for Staff to manage their own work, continuously looking for and systematically eliminating waste.  Overall, striving for their highest value contribution to the organization thus their Customers!

Management must set the positive culture and expectations via their daily behaviors where problems are welcomed as opportunities to improve, Problem Solving is encouraged but not rushed for some quantity goal.  Support should be provided when Staff really needs the help. 

Staff then can manage their own work knowing what normal should be per the SOPs, where quality and on-time by individual process is clearly defined.  Any abnormalities such as bad quality or late work can be identified within the work cycle and contained with a mindset of solving the root cause.   Checking the quality of Non-Production work requires methods built into the SOP.  For example, how should someone check the accuracy of a data file prior to sending it to the next process, which could be in a different office location?  There is always a way, but it must be specified in the SOP for Staff to manage and execute. 

What are the criteria for on-time?  Again, this must be specified for Staff to self-manage.

Systematic Problem Solving can then be applied one at a time by each work group to solve priority problems that are chronic or high impact to ensure the problem is solved at the root cause level, thus it will never come back!  This is easy to say but requires much discipline and diligence to achieve.  Workplaces are busy and there is a natural tendency to Problem Solve quickly and declare it is solved without thoroughly checking enough work cycles to truly confirm that the Problem is Solved!

Finally, KPI data must be kept in front of the Staff using visual control boards, even in office areas.  It is their scoreboard to see that their efforts to perform and improve their work have a positive impact.  Improvement opportunities should be visually identified with Problem Solving activities posted. 

Also, this provides a good connection point for Management to engage with the Staff, but it is a key responsibility of Management to make this a positive engagement by listening and being supportive and encouraging.  Not pressuring, driving and looking to blame someone!

Lean for Non-Production is a very complex subject.  This article is a brief introduction to some key points.  I hope this serves as a thought starter and provokes some new thinking on how Lean can be applied in Non-Production workplaces!

To find out more about how to adopt Lean for Non-Production environment, attend the Masterclass “Leading the Toyota Way”.

Leading the Toyota Way

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