A New Look for Lean
Think Lean is only for the manufacturing sector? Think again. Schools, health care providers, government agencies,and nonprofits alike are now using it to trim waste and boost productivity.
BY SARA GILBERT
Not long ago, Bob Tomaschko was overwhelmed with the number of spreadsheets he had to sift through on a daily basis.
Tomaschko, the director of compensation, retirement, human resources, and IS for Land O’Lakes Inc., was dealing with thousands of spreadsheets at a time. There were upwards of 1,200 just for the company’s merit pay increase process, and another thousand or more for variable pay processes — programs that base a portion of the workforce’s compensation on employee or team performance. All of those traveled back and forth between various members of the HR department and different managers at Land O’Lakes' headquarters in Arden Hills, as well to as its other business units around the country. Although the files could be shared digitally, many were also actually printed out and examined page after page after page.
“They were just massive spreadsheets,” Tomaschko remembers. “You’d get them back in and all you could do was just roll them up. It was lots and lots of work.”
The time spent with spreadsheets was a symptom of a system that needed to be streamlined. Although the HR department had been diligent in creating processes that worked, it hadn’t been able to keep themas clean and crisp as possible. “We had established a project management process,” Tomaschko says. “But we were lacking a methodology to look at those processes and figure out what to do with them.”
Tomaschko and his team investigated several sets of tools, from Six Sigma to a front-office variation on Lean manufacturing, a process committed to identifying and eliminating waste. After surveying the options, they found themselves leaning toward Lean — which, not coincidentally, had already been applied to Land O'Lakes’ production lines.
With the help of consultants from MTI, Tomaschko and the company’s HR leadership team applied Lean tools — particularly value stream mapping, which dissects the value of every step involved in the flow of materials and information in a process — to their problem processes. Over a three-year period, they systematically knocked off one after another, from those merit pay and variable pay processes to time reporting and payroll integration. And one by one, they also knocked off the need for most of the cumbersome spreadsheets. “They’re basically gone,” Tomaschko says. “We don’t even generate a single spreadsheet for variable pay anymore, and in merit pay, we’ve gone from 1,200 or so to maybe 50.”
Productivity within HR has also increased; Tomaschko says that the department can “more rapidly and accurately transact the necessary HR business.'” Internal satisfaction has also improved, and the company has seen some hard savings as well. An open position in compensation was eliminated and the cost of outsourcing payroll integration to an outside vendor was cut completely. “It made a huge difference,” he says. “You can improve a process until you understand how it works. That’s what Lean did: It provided a disciplined approach to outlining the current state, then provided a mechanism for us to brainstorm ways to move to the desired future state.”
Lean’s reputation has been established primarily in the manufacturing arena. Since getting its start after World War II, the core attributes of the Lean philosophy — eliminate waste, improve quality, and cut production time and costs — have been used with success on production lines and manufacturing plants around the world. But in recent years, Lean tools have also been transferred to office settings and such industries as health care, education, banking, and government.
Power in the process
In fact, Lean can be applied to any placewhere processes are in place. “Lean is about process improvement,” says John Connelly, MTI’s director of product development. “It’s not about manufacturing, it’s about processes.”
Lean’s primary goal is to identify and eliminate waste. And although that waste may be most noticeable on plant floors, it exists at all levels and in every industry. Even those manufacturers that have already leaned their production lines can realize more benefits from taking those same tools to the office. “You can do a considerable amount of waste reduction in human resources, in bidding, quoting, even engineering,” says Vicki Prock, an MTI business services specialist. “You can do a tremendous amount of streamlining on the plant floor, but if your accounting or bidding processes are still lengthy and cumbersome, you still have waste in there.”
In a fiercely competitive global economy, reducing waste in every possible place may be the best way to maintain an edge over rival businesses - and not only in themanufacturing sector. "I don't know of any industry, any business unit, or any sector of the economy that hasn't been forced to ask, 'How can we be more efficient?'" Prock notes. "Everyone needs to be able to do more in less time. It just makes sense to eliminate waste."
Mary Connor, an MTI field specialist, sees Lean as the saving grace for businesses struggling to stay competitive. As it gets harder and harder to compete on commodities alone, she says, the value of services provided will become even more important to a company’s success. Lean can help free up capacity to offer more and better services. “It’s the hope for our economy,” Connor says. “This is where we are going to see the big gains. This is where the competitive edge will come.”
Tomaschko already knew about Lean when he helped introduce it to the rest of the HR department at Land O’Lakes. He had some experience with Lean tools at a previous job with Honeywell, for one thing, and since the company had already made a commitment to Lean on its production lines. It wasn’t hard to convince the HR staff that its processes could be improved through value streammapping and otherLean tools. “People realized that therewas a better way to do things,” he says. “We knew we needed to fix things here.”
Connor says it often takes a Lean “champion” to introduce it in unfamiliar environments. Once someone has seen the tools at work, either in a manufacturing setting or elsewhere, they serve as first hand witnesses to their beneficial impacts. Such is the case at the Minnesota Department of Administration, where Commissioner Dana Badgerow had seen the tools in action years earlier at a previous job. When it became obvious that the department would be facing a workforce shortage in the next decade (approximately 40 percent of its employees will reach retirement age in that time), her first response was to investigate the possibility of implementing Lean tools in a pilot project. Prock is now working with Badgerow to get that started.
“That’s a huge amount of turnover, and there aren’t huge leaps and bounds of folks coming along behind to take those jobs.” Prock says. “The department must become more efficient — if for no other reason than that it won’t have enough people to do all of the jobs. It simply won’t have enough bodies.”
At Rebuild Resources, a St. Paul nonprofit organization that helps recovering alcohol and drug addicts find meaningful employ - Vicki Prock, MTI ment, however, it took an outside suggestion to get the process started. Oakdale-based Century College was partnering with the organization to create training DVDs — but Rebuild’s training system was in such disarray that it was tough to decipher where to start. The college put Rebuild in touch with MTI to see if it could help.
Because Rebuild Resources runs two manufacturing operations — a custom apparel and promotions business aswell as a contractmanufacturing service — the application of Lean might lookmore traditional than in a nonmanufacturing environment. But because it has a nontraditional workforce that is constantly turning over, Rebuild also has some striking differences from typical manufacturing scenarios. And as a nonprofit, it wasn’t somuch driven by improvements to the bottomline.
More important to President Kevin Lynch is making the “students,” as participants are called, more employable when they finish the program. A thorough understanding of the Lean mentality — along with a signed certificate for going through the training — can certainly help. “The students are what’smost important here,” he explains. “Our goal is to make them more employable when they go out into the marketplace. Having Lean on their resume, having that certification and that background, makes them more desirable to some employers.”
There have been other benefits as well. When the organization closed a facility inBlaine and consolidated of its operations to another plant in St. Paul, MTI used Lean to help Rebuild’s management most effectively lay out the space. Now, despite cramming two operations into one location, production volume has increased. “Our production is up 30 percent,”Lynch says. “That’s with the same size staff.”
That will have a ripple effect for the organization and its students. Lynch believes that Lean will allow Rebuild Resources to work with more companies, particularly in contract manufacturing. For one thing, leaner production lines can produce more in less time. And a Lean environment may be attractive to clients looking for the best value. “Because of Lean,we’re a better business partner for these companies,” Lynch says.
Lean resistance
For all it success over the years, Lean remains a mystery to many businesses and industries. Some people outside of manufacturing still think that “Lean” is synonymouswith “layoffs,” for example. And although sometimes positions are eliminated or consolidated in the process, that’s never the sole intent. “We ask [potential clients] if their intention is to identify people to lay off,” Prock says. “If that’s the case, thenwe don’t want to be part of it. But if the intention is to streamline, to become more efficient andmore productive and to get rid of all the stupid headaches that make people crazy, then Lean can help.”
Sometimes, the language of Lean also needs to be tweaked. A term like “inventory control” may be offensive in the health care field, for example, where sometimes the “inventory” in question breathes and has a pulse. Connelly says that’s because the terms were developed, just as the concept was in relation to manufacturing. All that’s needed, he says, is an apt translation —” inventory” can easily be swapped for “patients” or “occupants” where appropriate. “The concepts apply, but the terms that are commonly used don’t,” he says. “Sowe have to change the language.”
When she was working with Rebuild Resources, Connor found it was best to talk in terms of “continuous improvement” and “operational excellence” rather than simply using Lean as the catch phrase. To the managers, many of whomcame from a social services background, and even to the students themselves, Lean was a scary term. “To them, Lean meant job cutting,” she says. “That’s not what itwas about at all.”
Identifying how Lean can help is sometimes a challenge as well. Steps that seem concrete on the plant floor are sometimes less clear in an office setting. “It’s harder to see and understand the different processes,” says David Ahlquist, an MTI field specialist. “In this case it’s about the flow of information, not the flow of a product.”
Ahlquist’s solution is to take a visual survey of an office setting. “In manufacturing, I’d look for where the widgets pile up,” he says. “In an office, I look forwhere the paperwork piles up. That’s where you see the extra inventory.”
Informational “inventory” might also pile up in e-mail inboxes or on laptops, Connor says, making it almost invisible to the untrained eye. “If you can’t see it, it’s harder to talk about,” she says. But once a process can be identified, she adds, then value streammapping canmost often be applied.
Even at home. Lean consultants love to talk about how anything and everything can be leaner, sometimes to the chagrin of those they live with. “Some Lean experts talk about how miserable they make their respective spouses,” Prock laughs. “They’re forever leaning up the kitchen. I heard one guy say, ‘My wife says that if ILean the refrigerator onemore time…’”