lean thinking in service industry

8/2/2019 Lean Thinking in Service Industry

1/72

Professor Peter Hines

Lean Enterprise Research Centre

Cardiff Business School

Lean Think ing

Applying the Lean Principles of ImprovingPerformance at less Cost to the Office and

Service Industry


2/72

Lean in the Of f ice & Serv ice Sec tor 2

AgendaAgendaProfessor Peter Hines

The Lean PrinciplesHow do they apply in the Office Environment

Examples and cases from Europe

Andrew Stewart

Examples and cases from Australia

Where do we go from here?


3/72


Lean Ent erpr ise Researc h Cent reLean Ent erpr ise Researc h Cent re

Formed in 1994 by Prof Dan Jones &

Prof Peter Hinesc. 30 staff now

Researching, applying,& communicating

lean thinking

Researching, applying,& communicating

lean thinking

Mission


4/72


Strategic

Management

Lea

n

Enterpr

ise

SixSigma

Supply Chain

Development

S A Part nersS A Part ners

Inspiring successthrough pioneering,

process-based

solutions

Working in Australia with:


5/72

The Lean Pr inc ip lesThe Lean Pr inc ip les


6/72


Lean Pr inc ip lesLean Pr inc ip les

1 Specify what does & does not

create value from the

customers perspective

not individual firms, functions

or departments


7/72

Lean Enterpr ise Research Cent re


2 Identify all the steps necessary to design, order,

& produce the product/service across the whole

value stream

to highlight non-adding value waste

OverproductionOverproduction

InventoryInventory

WaitingWaiting

Materialmovement

Materialmovement

Defectiveproducts

Defectiveproducts

Operatormovement

Operatormovement

Unnecessaryprocessing

Unnecessaryprocessing


8/72



3 Make those actions that create value flow

without interruption, detours, waiting


9/72



4 Only make/produce what is pulled by the

customer just-in-time


10/72



5 Strive for perfection

continually remove successive layers of waste as they

are uncovered


11/72


Value St ream Managem ent Fram ew orka lue St ream Managem ent Framew ork

Policy

Deploym

en

t

Cros

s-Functional

Teams

SupplyCh

ain

Integration

Lean

Pro

cess

Tool-K

it

ValueStream

Management

Shared Vision Common Goals

Tools aligned to needExtended Enterprise


12/72

Lean in an Of f ic eLean in an Of f ic e

Envi ronmentEnvi ronment


13/72


Lean in t he Of f ic e & Serv ic eLean in t he Of f ic e & Serv ic eUK is Predominantly service based economy Service sector provides 71% of Gross Value Added

79% of all jobs (National Statistics)

Significant growth of application of lean in services

Much initially concerned back office manufacturing i.e. that support manufacturing

Now spreading to pure service industries Retail, health, repair & overhaul, financial services, insurances


14/72

Tangibi l i t y Spec t rumTangibi l i t y Spec t rum

Tangible

Dominant

Salt

IntangibleDominant

SoftDrinks

Detergents

Cars

Cosmetics

Advertising

agencies

Fastfood

outlets

Fastfood

outlets

Airlines

Consulting

Teaching

Source: Shoestack (1977) in ServicesMarketing, Zeithaml & Bitner


15/72


Your Organisat ionsYour Organisat ions

In groups

Thinking about lean principles & thenature of service based organisations,consider:

What might be the challenges for applyinglean thinking principles in an office orservice organisation?

Score these challenges in terms ofimportance (1 - not very, 5, Very)


16/72


Sym pt om s o f Info rm at ion Wast eym pt om s of In form at ion Wast eBottleneck Departments

No Standard Work Practices

Errors and Rework

Long Unpredictable Lead Times

Many Validation Checks

Official/Unofficial Fast-Tracks

Ineffective Workload SchedulingNo Root-Cause Analysis


17/72

Waiting for the computer system to process the application

DELAY - When the item is waiting

Obtaining a signature to permit the next step

INSPECTION - Insuring that everything is correct

by overseeingPlease could

you sign this

The distance an

application travels

within theorganisation

TRANSPORT - Movement of an item

Customer

Store documents and records or data in a computer file

STORAGE - When the item is stored


18/72


Servic es Chal lengesServic es Chal lengesUnderstanding customer needs and expectations for

services

Tangibilising the service offering

Dealing with a myriad of people & delivery issues

Keeping promises made to customers

Variation & capacity


19/72


Nat ure o f Dem andNat ure o f Dem and

Value demand: the demand you want

Failure demand:demand caused by a failure to do something or do

something right for the customer

Mistake in treating all demand as units of productionPlanning tools developed some time ago.

Now variety of demand v different cannot see

demand


20/72

Fai lure Dem andFai lure Dem and -- ExamplesExamples

I dontunderstand theletter you send

me

The water istoo cold

You said youdrepaired the faultin my car but it

still does notwork

The goods yousent me aredamaged

Its brokendown again

Youve sentme the wrong

one

Waiter,wheres my

soup?

Sorry, I pressed2 and I thought itwould get me to

the claims

department

Ive been waitingin all morning, yousaid youd be here

where are you


21/72

The c onsequenc e o f

ex c ess fa i lure

demand?


22/72

Ex am ples f rom EuropeEx am ples f rom Europe


23/72

Sim ple CaseSim ple Case

Welsh Legal Serv ic es Com m iss ionWelsh Legal Serv ic es Com m iss ion

Mapping t he Correspondenc e Proc essMapping t he Correspondenc e Proc ess


24/72


Part o f t he Mapping TeamPart o f t he Mapping Teamnot sure about

this lean stuff,dont think it will

work here


25/72


and t he res t o f t he Lean Teamand t he res t o f t he Lean Team

Its good toinvolve everyone

and it seems to be

making sense


26/72


Financ e Phase 2A:Financ e Phase 2A:

LSC Current St at eLSC Current St at e

CustomerService Team

Finance Charge C/W Non ChargeC/W

Filing Reception SeniorFinance C/W

Standards & Comments

FinancePhase

2A

Time Reso-urce

MonicasTable

FinanceLegal/Means

Phase 2

Charge

ChargeNon

Charge

Tag

No

No

Yes

Yes

Pull

NeedFile

SkillsSkills

Get File

Yes

No

ProcessPost

ProcessPost

PostBucket

PostBucket

4 SeniorCase Work

Yes Yes

No No

Post

Bucket

2 - 7.5hrs

2 hrs

1 wk -34 wks

1 hr

3 9hrs

1 wk

13 to248days

Total

Variance depends on Case

Worker, variable location of sort

Backlog calculated using oldestdate (worst case scenario)

Not FIFO

Reception Tag & Filing

All file requests dealt with at thesame time

Assume 1 person processing post

Unable to quantify referral time

2 hrs

1 hr

0.25 hr

0.1 2hrs

0.5 hr

3:20 to5:15hrs


27/72


Financ e Phase 2A:Financ e Phase 2A:

LSC Fut ure Stat eLSC Fut ure Stat e

Charge Non Charge Filing SeniorCase Worker

Standards & Comments

FinancePhase

2A

Time Reso-urce

Chargewith files

Non ChargeWith files

Pull File

SkillsSkills Referral

Yes Yes

No No

10 15mins

Read

Letter

Read

Letter

Need

File

Need

File

Yes Yes

No

Get File Get File

Process Process Process

Post

Bucket

Post

Bucket

Post

Bucket

No

5 mins

2 hrs ifrqrd

10 mins

2 hrs

5 mins

30 minsto 4 hrs25 mins

10 15mins

5 mins

5 mins

10 mins

2 hrs

5 mins

30 minsto 2 hrs30 mins

Training needed / cultural issues

to be addressed

Charge post is sent to C/W withFile (no need to pull file at laterstage)

Referral process: Matter wouldalways be passed back to C/Wafter the Senior C/W has

considered it, either with a worksolution or guidance notes. Thisbox to be emptied once daily(allocation rota)

Non Charge post, where fileneeded, files to be supplied byfiling 4 times daily (2 am, 2 pm)

from a tray in each pod. Thisactivity is a priority

Calculated per piece of post

Post split into 1st, 2nd, Dx

Total


28/72


Af t er t he Lean Think ing EventAf t er t he Lean Think ing Event

Reduc ed by 197 and age c lear Reduc ed by 197 and age c lear

Complex

cases

Mixed

cases


29/72


Non Charge Correspondenc eNon Charge Correspondenc e

Week ly Carr ied Forw ard Figures (by w eek )Week ly Carr ied Forw ard Figures (by w eek )

0

100

200300

400

500

600

700

800

900

2ndA

pr

16th

Apr

30th

Apr

14thM

ay

2

8thM

ay

11th

June

25th

June

9thJ

uly

2

3rdJ

uly

6thA

ug

2

0thA

ug

3rdS

ep

17th

Sep

1-Oct

15th

Oct

29th

Oct

12th

Nov

2

6thN

ov

10th

Dec

24th

Dec

7thJan

21stJa

n

4thF

eb

18th

Feb

4thM

ar

18th

Mar

Date 2004 - 2005

CasesAw

aitingAtten

tion

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 6+


30/72


Sum m ary o f k ey benef i t sSum m ary o f k ey benef i t s

Turnaround time from 7 months to max time of5 days (3 day for simple)

Remove Waiting, Unnecessary backlog andInappropriate processing

Improved staff morale

Improved customer relations and satisfactionLack of waste/efficient processes


31/72

Det ai led CaseDet ai led Case

EuropeanEuropean InsuranceInsurance

CompanyCompany


32/72


Set t ing t he Cont ex tSet t ing t he Cont ex t

Major Insurance player in Global market with

Offices in over 20 countriesTotal turnover of approx 1.2 billion worldwide

UK & Ireland accounted for 145m approx.

Looking to grow the business to 200m by 3years and profit from 0% to 15% ROS


33/72


Value Criteria Rank Insurance Company Performance

VsYour Expectations Our Competitors Your best OtherSupplier

Betterthan

Sameas

Worsethan

Betterthan

Sameas

Worsethan

Betterthan

Sameas

Worsethan

Quality Decision

1

Quick Decision

4

Price

2

Cover

3

Support

5


34/72


Com pet i t ive Envi ronm entCom pet i t ive Envi ronm ent

Constrains grow thCompete on priceProducts are not differentiatedfor our customers

Little Innovation

Products

Shrinking market and potentiallyinvalidates the market

Need for repositioning as abroader offer

Lost business and inability toincrease pr ice walk away

Self Insurance dont buy it

Credit InformationSubstitutes

Redefine distribution channels

Reduced distribution costs

Quoting Nett transparency

Lost business and devalue ourproduct

Dominated by two players whodo not add value

Brokers become competitors

Brokers

Competition hits criticalmass/ market share

Opportunity to lead

Stops ability to increase price

Consuming new business

New Players

Changing main competitorsCompetitors

Significance LongTerm?

Significance ShortTerm?

Issue?Factor


35/72


Threats

Re-insurance pull out of market.

New competitors

More sophisticated customers.

Self imposed constraints.

Global economic situation.

Opportunities

Market is looking for an efficient producer.

Weak competitors

New owners?

Weak Brokers.

Direct distributionQuoting Net

Trade sector activities.

Cross unit alignment

Group leverage on sales.

Weaknesses

Skill sets around buyer underwriting

Operating Model

Too many people in the comfort zone

Flexi time

Pay structure inflexible.

Systems are inflexible

Centres of expertise.

Lack of one culture

Group shackles?

Play by the rules too often

Lack of team working of this teamRe-insurance

Strengths

Knowledge and expertise of people systems,process, country risk,

Geographical coverage

Pay and conditions.

Integrated IT systems

Multi national propositionCentres of expertise.

Insolvency and recovery expertise

Depth and breadth of product range

Good relationship with existing customers

In t erna l Env i ronm entIn t erna l Env i ronm ent


36/72


Existing Products /New Consumers

Trade sector alignment efficiencies

New Products /New Consumers

SME product

Specialist capacity issues

Existing Consumers / New Products

SME product

trade finance

Integrated recovery fee.

Specialist capacity issues

Existing Consumers /Existing Products.

New business replaces lost business MRA income

Price increases

Additionality.

0m in Year 1- 45m replace lost business

20m in Years 1- 4 6m in Year 2-4

9m in Year 2-4

Ansof f Mat r ixAnsof f Mat r ix Where w i l l w e grow ?Where w i l l w e grow ?


37/72


Existing Products /New Markets New Products /New Markets

Existing Markets / New ProductsExisting Markets /Existing Products

Sales

Acquisition

Process

High

risk

NPD Process

Order FulfillmentNPI

SupplyChain

The Imp l ic a t ions o f t hese c ho ic es !The Imp l ic a t ions o f t hese c hoic es!


38/72


We will: Grow the Credit Insurance business to 200m by 2006,delivering 15% return on sales.

Delivering outstanding service at reasonable prices anddelivering greater retention

Delivering significant growth from new sales Developing integrated and aligned new offerings and

then taking them to new markets. Achieving greater trade sector alignment Creating a culture of innovation and performance

within our business.

in order to: Turn the UK business into a leading performer within theGroup, securing its future and the future of our people

St ra t egic Di rec t ion St a t em entSt ra t egic Di rec t ion St a t em ent

by:


39/72


The ability to.

manage the relationship with the wider group successfully

understand, achieve and proactively manage customers expectations

operate joined up, cost effective processes

agree a common goal, through supportive culture and trust in our people.

spot and convert growth opportunities in sales in current and new markets

innovate in new offerings.

identify and respond to changes in market conditions

deliver the right number of appropriately skilled, motivated people.

Our Cr i t ic a l Suc c ess Fac t orsOur Cr i t ic a l Suc c ess Fac t ors

Th A i t MTh A i t M


40/72


N

N

People satisfactionindex

Skills index

deliver the right # of appropriately skilled, motivated people.

STRATEGIC I SSUEidentify and respond to changes in market conditions

% sales from new

offeringsSpeed to Market

Customer retention% sales from newmarkets

% sales from currentmarkets

Portfolio value

Culture index

Profit

Claims ratio.

Cost ratio

Customer P erceptionindex.

Speed

Quality

STRATEGIC I SSUEMeasure

N

N

innovate in new offerings

YN

Y

Y

spot and convert growth opportunities in sales in current and

new markets

Nagree a common goal, through supportive culture and trust in

our people.

Y

Y

Y

operate joined up, cost effective processes

N

Y

N

understand, achieve and proactively manage customers

expectations

manage the relationship with the wider business successfullyGot one?Critical Success Factor

The Appropr ia t e MeasuresThe Appropr ia t e Measures


41/72

Lean Order Ful f i lm entLean Order Ful f i lm ent

ProcessProcess

St t i Di t i St t t


42/72


We will: Grow the Credit Insurance business to 200m by2006, delivering 15% return on sales.

Deliveringoutstanding serviceat reasonable prices anddelivering greater retention.

Delivering significant growth from new sales

developing integrated and aligned new offerings andthen taking them to new markets.

achieving greater trade sector alignment

Creating a culture of innovation and performancewithin our business.

in order to: Turn the UK business into a leading performer within

GERLING NCM, securing its future and the future of our

people


by:


43/72


The Current St a t eThe Current St a t e

See the wall charts


44/72


Current St a t e Sum m aryCurrent St a t e Sum m ary

27.43.628140Worst case (JUMP)

27.23.619933Worst case (BUS)

17.70.2657.25Typical (JUMP)

0.40.1181Typical (BUS)

MaxMinMaxMin

Resource (man-days)Time Line (days)

F t f t h t t tF t f t h t t t


45/72


Feat ures o f t he c urrent s t a t eFeat ures o f t he c urrent s t a t e

Customers information comes in to many possible locations.

Lots of delays

Lots of reworking information key information not availablewhen required.

Dont talk to each other across departments

Authorisation based on value, not on risk causing significantdelays

We have 77,500 applications for 5k or less (26%) 64% are for SME customers

F t f t h t t tF t f t h t t t


46/72


Feat ures o f t he c urrent s t a t eFeat ures o f t he c urrent s t a t e

Customer doesnt follow rules and neither do we!.

Risk averse at the moment automatic underwriting not beingapplied.

Using the wrong measures and targets driving departmental

behaviour.

Cross-country targets and standards / criteria are different.

Currently employing 1 FTE person just to input applications


47/72


Analysing t he m apAnalysing t he m ap

Major Wastes / Issues Root causes Opportunities

Process Cultural Process Cultural

Multiple points of entry. Someget delayed and some may getlost causing delays and lostapplications (10% of applicationsdont use the on-line system) *

No overallsingle point ofentry for

customers.

People dontlike sayingNO to

customers.

Enforce a singlepoint of entryfor customers

that do not usethe on-linesystem.

Ensure that allpossiblecustomers usethe system onall possibleoccasions.

Educateinternal staffand customers

to help to buildrelationships.


48/72


Fut ure St a t e Sum m aryFut ure St a t e Sum m ary

6.51.7100.2519.67Worst case (JUMP)

6.51.799.2518.67Worst case (BUS)

0.20.122Typical (JUMP)

0.10.021Typical (BUS)

MaxMinMaxMin

Resource (man-days)Time Line (days)

Th B fi tTh B fi t


49/72


The Benefi t sThe Benefi t s

5.015.560.0160.5Worst Case

0.29.02.036.1TypicalJump

5.015.459.0116.0Worst Case

0.10.31.59.5TypicalBus

FutureCurrentFutureCurrent

ResourceTime Line

Average of72% reduction

Average of69% reduction


50/72

Lean Sales Ac quis i t ionLean Sales Ac quis i t ion

ProcessProcess



51/72


We will: Grow the Credit Insurance business to 200m by2006, delivering 15% return on sales.

Deliveringoutstanding serviceat reasonable prices anddelivering greater retention.

Delivering significant growth from new sales

developing integrated and aligned new offerings andthen taking them to new markets.

achieving greater trade sector alignment

Creating a culture of innovation and performancewithin our business.

in order to: Turn the UK business into a leading performer within

GERLING NCM, securing its future and the future of our

people


by:

Th l


52/72


The p lanThe p lan

We had already completed mapping work within the UKdivision and had identified major savings within their

Order Fulfilment processHaving improved the speed & quality of their existingoffering to existing customers, they then needed to turntheir attention to growing new business

The plan was to map their current Sales AcquisitionProcess and look at designing an improved process at noadditional cost to the business

REFCLA Goes Into Working Tray Receiving Information

Participants/Stakeholders Time Line Resources Standards/CriteriahasesRS CST AM IF CUST BUYER Min Max


53/72


n

Y

Y

+2-3 days

Y

*

+2-3 days +2-3 days + 1-2 days

Y

+1day

Y

110 days

1

1

2-3 days

3-13 days

ALLRS Allinfoavailable

1 min

15-25 mins

21-26

5-10 mins

26-36 mins

Before it is looked atquery 10 day print?!

All info either + or Info available online,in system

Within AuthoritiesWithin TPE levels

sub

70% of cases we haveenough info tounderwrite on

Issue: Cancellation ofCLA why wouldU/W?

Info to CST

REFCLA into

W/F Tray

Take

Decision

Decision

Taken

Info to U/W

Meeting

Decision Taken

DecisionTaken

Policy Breach

Meeting Meeting Meeting Meeting

Ring

Customer

Ring Customerfor further info

Confirmation

of Decision

Ring Buyer? Meeting withBu er

Info can beprovided

Pol Decision

Analyse Info

Info toCST

Info to CSTInfo to CST

Meeting for

further Info

Future State REFCLA goes into Workflow Tray & Receiving Information

Participants/Stakeholders TimeLine

Resources StandardsPhases

Risk Services Account Mngr Customer Buyer

N

Y

NY

N

Y

0

1

6-16 mins

10 mins

5-10 mins

21-36mins

Automatic allocation (to Invo. U/W)

Within Authorities Within TPE levels

Mandate to enable U/Ws to divulgecustomer name (our insured) when

contacting buyer for information

Customer & Buyer details are correct onthe system

Buyer/UW contact encouraged to helpbuild relationships for portfolio control

(Feasibility of someone else sourcing infofor UW work already completed not

practical in this context)

Process in place to capture up to dateinfo for active buyers

AU Principles & practicalities agreed

Across group- What if examined to ensure max %

(X) automatically underwritten

Main speed of service target =noREFCLA in any tray older than X days

Fully utilise credit check facility(review threshold of 10K? & pricedifferential between credit check &

credit limit)

Group wide agreed priority progressin place

Authority thresholds are value at risk& lay with nominated individuals rather

than committee

Interface system errors resolvedwithin 24hrs

Small limits thresholds reviewed

Reduce amount of paper sent toimaging

Quality measure to be defined

RECLA intoTra

Credit Limit

Decision

Letter

Meeting

for info

Info is

provide

Take

Decision?

Look at Case

& A nal se

Info to

Underwriter

Analyse

Info

Take Decision?

Credit Limit

Decision Issued

Credit Limit

Decision Issued

PolicyBreach

Meeting for

Info

Current state Four Fields map

Future state map

Mapping t he SalesMapping t he Sales


54/72


Mapping t he Salespp g

Ac quis i t ion Proc essAc qu is i t ion Proc ess

ThTh


55/72


The m apsThe m aps

Wh t f dWhat w e found


56/72


What w e foundWhat w e found

The business operated almost 100 % via brokers to whomthey were paying commission of 15% direct to the brokers

- 15.5mThe brokers were not giving good value for money andwere not accurately interpreting the VOCThe conversion rate for enquiries was very low

On the very odd occasion where they dealt with thecustomer direct, the level of conversion was very high over 80%No cohesive marketing strategy to support the SalesAcquisition Process hence low enquiry levelThe company were effectively order takers as opposed toorder getters

The proc essThe proc ess c ur rent s t at ec ur rent s t at e


57/72


The proc essThe proc ess c ur rent s t at ec ur rent s t at e

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

SettingDirection

SellingIn

SellingOn

MakingContact

MarketResearch

current

Enquiry

rate

Conversion

rate

Retention

rate

25% 8 % 75%

0%

50%

100%

No

Stra

tegy No

Marketing

What w e didWhat w e did


58/72


What w e didWhat w e did

We devised a new future state Sales Acquisition Processwith the team which removed their sole reliance onbrokers and enabled them to get a clear understanding ofthe Voice of the Customer

We devised a new sales structure to help them achievethis

We identified the skills required at each phase of theprocess

We identified the need for measures & targets at each

phase of the processThe new process will enable major sales performanceimprovement at no additional cost to the business

How t he fut u re st a te c omparedHow t he fut u re st a te c ompared


59/72


How t he fut u re st a te c omparedHow t he fut u re st a te c ompared

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

SettingDirection

SellingIn

SellingOn

MakingContact

MarketResearch

Current

Enquiryrate

Conversionrate

Retentionrate

25% 8 % 75%

50% 50% 95%

0%

50%

100%

Future

Got

astra

tegy G

otaplan

The Proc ess Benef i t sThe Proc ess Benef i t s


60/72


The Proc ess Benef i t sThe Proc ess Benef i t s

-0.33%-0.46%

3514.5946.2 Renewal P rocess (key acct &global)

-10%

-20%

-

0.67%-

0.61%

0.40

0.80

30.40

47.8

0.5

1

91

121.5MinMax

6.1 Renewal process (Reg & SME)

-35%-84%-78%

-25%-68%-59%

0.752.20

3

334759

1.1513.513.5

44145145

MinMax

5. Servicing

-88%

-24%-24%

-38%

-38%-65%

0.65

4.004.00

35

8484

5.25

5.257.9

91.5

128180

Reg &

SME KeyAcctGlobal

4. Enquiry accepted to closu re

See 4See 4See 4See 40.09-0.12

1.23. Enquiry Received(accepted/rejected)

10.00%-0.72%

25.42179962. Strategy - targetingcustomers/sectors

See 2See 2See 2See 21450

( 700)

Per TS1. Trade Sector Developm ent (per

TS)

ResourcesDays

TimeDays

Resources Days

TimeDays

Resources Days

TimeDays

Phases

ChangeFutureCurrentCredit Insurance

Average of40%reduction

Sales Closurespeed

Average of 50%reduction inman hours

Business Benefi t s Sum m aryBusiness Benefi t s Sum m ary


61/72


Business Benefi t s Sum m aryBusiness Benefi t s Sum m ary

Much improved levels of enquiry from 25% to 50%

Substantial conversion rate improvements from 8% to 50%

Much improved bottom line performance (15.5m Commission)

Major reduction in Customer waiting time identified over 40%

Dramatic reduction in man hours identified - over 50%

Planned Sales growth being achieved - 145m to 200m by 2006


62/72

Aust ra l ian CaseAust ra l ian Case

Type One Orde rsType One Orders Current St a t eCurrent St a t eExamples of theUnderlying Cost


63/72


Level 2 Sum m aryLevel 2 Sum m ary

Average process time 56 minutes

Delays 45.3 minutes (81%)

Transport 8.5 minutes (15%)

41 people actions

O T I D

TRIGGER RECEIVE ORDER (PHONE) ADMINISTRATION 2.4 7 2.2 0.21 WRITE ORDER TO STARTRACK ADMINISTRATION 6 1.6 11 1.0 0.2 0.4

2 CREATE DESPATCH LABEL ADMINISTRATION 8 16.8 10 1.7 0.1 15.0

3 ENTER ORDER CELLAR DOOR 49 13.3 3 1.6 1.2 10.54 PROCESS PAYMENT & TO DESPATCH CELLAR DOOR 51 21.8 10 2.4 19.4

114 56 41 1.6 8.5 0.5 45.3Total

Ave Time

(Minutes)

People FLOW (MINUTES)Number Step Area Distance

(Metres)

Australian Wine Producer

Type One Orde rsType One Orders Current St a t eCurrent St a t eExamples of theUnderlying Cost


64/72


Ident i f ied Areas of Oppor t un i t yIdent i f ied Areas of Oppor t un i t y

Geographic location of functions (Admin, Cellar Door, Despatch)

Separation of order taking and order entry

Delays due to the manual transportation of information

Frequent small transportation steps of information

Type One Orde rsType One Orders Fut ure St a t eFut ure St a t eExamples of theUnderlying Cost


65/72



O T I D

TRIGGER ENTER ORDER & PROCESS PAYMENT ADMINISTRATION 1.9 6 1.1 0.7 0.11 WRITE TO STARTRACK ADMINISTRATION 6 0.6 5 0.62 CREATE DESPATCH LABEL & TO DESPATCH ADMINISTRATION 8 36.2 10 1.7 0.1 34.4

14 39 21 1.1 3.0 0.2 34.4Total

Ave Time

(Minutes)

People FLOW (MINUTES)Number Step Area Distance

(Metres)

Lead time reduced by 17 minutes (30%) from 56 minutes to 38.7 minutes

Delay reduced by 10.9 minutes (24%)

Transport reduced by 5.5 minutes (64%)

People interactions reduced by 20 (48%)

Due to removal of one geographical location the movement of people isreduced

Type One OrdersType One Orders


Examples of theUnderlying Cost


66/72



Average

Process time

mins

Delay Time

(mins)

Transport Time

(mins)

Delay

Frequency

ste s

Transport

Frequency

ste s

Geographic

Locations

Current State 56 45.3 8.5 4 38 3

Future State 39 34.4 3.0 2 20 2

Reduced by 30% 24% 64% 50% 47%

Type Tw o OrdersType Tw o Orders Current St a t eCurrent St a t eExamples of theUnderlying Cost


67/72



Average process time 4418 minutes Delays 4318 minutes (98%)

Inspection 14 minutes (0.003%)

Picking transport 62 minutes (1.5%)

Manual transport 22.8 minutes (0.5%)

36 people interactions

Type Tw o OrdersType Tw o Orders Current St a t eCurrent St a t eExamples of theUnderlying Cost


68/72


Ident i f ied Areas of Oppor t un i t yIdent i f ied Areas of Oppor t un i t y

Order visibility.

Stock visibility to allocation sheet. Manual transportation of information.

Visibility of up to date stock on hand and location.

Manual creation of picking slip. Stock accuracy.

Warehouse space.

Aged and obsolete goods (150 pallet positions identified) Broken pallets at fronts of rows (due to Cellar Door).

Type Tw o OrdersType Tw o Orders Fut ure St at eFut ure St a t e

Est im at ed Leve l 2 Sum m aryEst im at ed Leve l 2 Sum m ary



69/72


-- Es t im at ed Leve l 2 Sum m aryEst im at ed Leve l 2 Sum m ary

Lead time reduced by 1,576 minutes (36%) from 4418 minutes to 2842.1

minutes Delay reduced by 1558 minutes (36%)

Transport reduced by 4.8 minutes (5%)

Inspection reduced by 13.3 minutes (92%)

People interaction reduced by 21 (58%)

Distance travelled reduced by 241 metres (80%)

All wasteful activity has been minimised

Type Tw o OrdersType Tw o Orders



70/72



Average

Process time(mins)

Delay Time

(mins)

Transport Time

(mins)

Inspection Time

(mins)

Delay

Frequency(steps)

Transport

Frequency(steps)

Inspection

Frequency(steps)

Geographic

Locations

Current State 4418.2 4318.0 84.8 14.4 8 25 7 2

Future State 2842.1 2760.0 80.0 1.1 3 11 1 1

Reduced by 36% 36% 5% 92% 62% 56% 85%


71/72

Where do w e go f rom here?Where do w e go f rom here?


72/72


Any Questions?

lean thinking in service industry

Documents