extending lean initiatives across the...

Extending Lean Initiatives Across the Organization:How greater efficiencies can extend beyond the manufacturing floor and back-office

Business Unified™

A White Paper by Exact Software

There is a need for

managing the front-office

with workflow processes

in the same vain as

managing back-office

workflow for products.

1 ©2005, Exact Holding North America, Inc. All Rights Reserved.

Companies everywhere have realized the need for greater efficiency and improvedquality within the enterprise to stay productive and competitive in today’s businessenvironment. 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 launchtheir lean initiatives in order to maximize work flow and obtain dramatic improvementsin performance.

Although front-office operations are executed very differently from the manufacturingfloor, the same type of complicated flow exists such as document management whereservices and information are being moved through various processes. Most companies,unfortunately, do not focus on improving office workflow functions with the same vigoras with their manufacturing process.

There is a need for managing the front-office with workflow processes in the same vainas managing back-office workflow for production. Business processes—from filling out apurchase request, interacting with business partners, to assigning documents for reviewand approval—can only be optimized through an organizational initiative. The effective-ness of each business task determines the overall efficiency of your organization.

This White Paper will address the importance of optimizing front-office initiatives, inthe way that back-office initiatives are made lean, in order to help your company staycompetitive and improve the bottom line. This paper will also cover the evolution of“lean”; current business process issues and bottlenecks; key features of lean thataddress 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. Leanmanufacturing encompasses a number of modern practices, including Just-In-Time inventoryand 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

How greater efficiencies can extend beyond the manufacturing floor and back-office

Executive Overview

ERP

Workflow

Document Management

Financials

Logistics

Sales Portal & Website

HR

Project Management

ERPFinancials

Project Management Portal & Website

WorkflowDocument Management

SalesHR

Logistics

The Holistic View…Lean manufacturing is a philosophy that makes information about themanufacturing process readily available, so that scheduling, planning,and logistics can be conducted in a manner that increases the overallefficiency of the manufacturing process. The same theories can beapplied to the front-office, where redundant tasks and processescould be streamlined by capturing and storing information on ONE database, and allowing all stakeholders to access relevantinformation for added efficiency.

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the factory. The idea is to create an environment driven by demand that holds onlya small amount of inventory and products at any given time. In a lean-manufacturingenvironment, whenever finished goods are sold, the sale triggers a signal to theprocess one level back calling for replacements. The process works from the frontto 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 lookmore closely, it is clear that this practice is vital within the front-office. By examining all ofthe steps that make up the whole of the business, the entire workflow methodology isanalyzed. 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 multipleprocesses were arranged within the office, how the flow and chain of processes functionedas a whole (holistic approach) and how each employee performed a task (accountability).


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Traditional Approach:Most organizations currently have a one-way flow ofinformation that can fall victim to any number of pitfalls:(1) redundant process taking place throughout theorganization, (2) employees dropping the ball, and notcompleting tasks, (3) isolated tasks or projects that aredifficult to track, (4) tasks that circulate between employees, but nothing gets done, and (5) inefficientuse of resources that store away isolated information, all lead to lower productivity within an organization.

Enterprise-wide Approach:Information is shared and exchanged at everylevel. 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.

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The Need for Lean in the Front-OfficeIn the front-office, redundant processes and unnoticed problem areas may not showtheir effect immediately, but problem areas such as incorrect sales proposals, longdays-of-outstanding-sales, unresponsive or overdue customer outreach all result in lost business, which eventually cuts into the bottom line. Certain bottlenecks are alsoapparent, however less tangible, such as wasteful documents, unnecessary meetingsand/or policies, lack of definition in workflow processes, conflicting strategies andgoals 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 elementof 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 organizationneeds to focus on defining important business processes from beginning to end,

4 ©2005, Exact Holding North America, Inc. All Rights Reserved.


including eliminating unnecessary steps, ensuring accurate information, proper prioritization and flagging bottlenecks, defects and mistakes.

Once these steps have been identified, organizations must incorporate traditionalcharacteristics of lean/JIT processes. The goal for the lean process as it applies to thefront-office includes obtaining a single, centralized environment, shorter processingtimes, initiating highly flexible and responsive processes, and continuous flowthroughout each process, while at the same time empowering and including allemployees 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-dayprocesses 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 thesteps is the ultimate goal. When the process goes through a workflow of managementapproval and assignment to Finance & Accounting, for example, closing the loop notonly 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 toolthat identifies every process, step, document, project, employee, tasks and value chainmember across an entire system. By doing so, business executives can gain unparal-leled visibility into each aspect of the organization with accurate and up-to-the-minuteinformation. Such functionality enhances the decision-making process, analysis, scenarioplanning and ongoing management across the entire business. During the evaluationprocess, business leaders should be cognizant of whether or not the solutions theyare evaluating provide a truly integrated and holistic view of the entire organization.These solutions ultimately provide a clear picture for major cost savings and improvedoperational efficiencies across all departments.

It is vital within the lean front-office to keep the emphasis on the whole business as wellas the interdependence of its parts. Business leaders should seek out a solution thatprovides complete information management by streamlining workflow tasks that aretypically manual and unsecured. Many of these solutions enable users to develop andmanage processes within a secure rules-based central environment. But perhaps themost important aspect of any solution is its ability to exchange and provide access toinformation in a real-time environment. Without a real-time component, operations willalways be one step behind.

SummaryToday’s competitive business environment dictates that organizations be nimble andagile. In order for business to operate in this capacity, and ensure the success of theirlean initiatives, eliminating process inefficiencies is absolutely critical. Unfortunately,

It is vital within the lean

front-office to keep the

emphasis on the whole

business as well as

the interdependence

of its parts.

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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.

Business leaders must take longer looks at the lack of accountability and redundanciesrunning rampant in the front-office if they are ever going to steer their business in theproper 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 thesehurdles. Like so many of today’s business challenges, the answer lies in technologybut only in those solutions that offer a holistic view of the organization. It is only inviewing the organization from such a perspective that organizations can ensure thattheir operations run efficiently.


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.

®2005 Exact Software North America, Inc. All rights reserved. MAS1613, 6/05

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