Lean is for production, right?

May 18, 2021 | Lean Management

Or perhaps not! Lean methods are being used more and more in administrative areas as well. For example, we talk among other things about Lean Administration. But exactly which areas do we mean here? Administration or the administrative areas are understood to be all company areas that really have nothing to do with the machining a ( physical ) product, like HR, Controlling, Purchasing, Sales, Marketing etc.

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What are administrative processes?

In administrative areas, it is all about increasing the information content of a requested performance, for example, creating added value. Controlling, for example, provides the correct figures and data that are needed as the basis for many other process activities and for decision-making. Sales applies lean ordering processes to ensure that customer orders are processed promptly and to a high standard of quality.

As in production, a variety of waste types can accumulate in administrative processes (e.g., overproduction, waiting times, etc.). Also just like in production, Lean methods can help reduce or eliminate waste in administration.

How should Lean be implemented in administration?

The use of Lean methods in administration has only gained momentum over recent years and has not yet become a term people are familiar with in the market as compared to the concept of Lean in production. So, oftentimes it is necessary to convince and involve a company’s staff first. Among employees, the idea often heard is that Lean methods are only useful in production. We hear, for example,: “Lean is used in production when somehow synchronizing lines. And this somehow optimizes the setup process. What does any of that have to do with me in HR or in Sales?”

These pre-conceived ideas are not surprising, because the topic originally came from production, where it is easier to comprehend and better to visualize than in the indirect areas. However, if we take a bird’s eye view of what is behind Lean Management, what we find is that it is about consistently aligning processes with the customer and taking a targeted approach to eliminate or reduce waste.

The objective here is to create a corporate culture in which each employee checks daily where they can improve something or eliminate waste. This idea is confirmation that Lean can be applied in all areas of the company. Wherever there is a customer (external or internal) or a process, we will find problems and waste. Exactly here is where Lean methods are applied.

Typical examples of waste in administration include, for example, insufficiently qualified information that require additional queries in order to be able to complete a task, or long wait times for orders because interfaces between departments are not properly coordinated. Often, interfaces between different systems or unclear role assignments are sources of waste. Where the latter is concerned, in the worst case, the result could be that no one feels responsible for a particular task.

How can we get employees on board as we embark on the Lean journey?

Most employees wonder: “How can we apply the Lean approach in our company? What kind of cycles should we use in our administrative areas, whether in controlling, sales or service?” The key here is to make the topic tangible and to illustrate how, for example, overproduction can occur in administrative areas. Working as a group to come up with specific examples of types of waste makes for a lot of eye-opening insights for employees. Examples can be found quickly. For instance, “overproduction” occurs as soon as I invite too many people to a meeting. Unprocessed complaints or email result in backlogs.

How can quantitative results be demonstrated in administrative areas?

In production, it is in fact easier to visualize results in terms of quantity. A stack of material is visible to everyone, as is a box being transported from A to B. Moreover, often in production there are data acquisition systems that can be used to evaluate information and quickly reveal key figures. So it is relatively easy to see where there is waste in terms of downtime, for example

In the indirect areas as well, the actual situation should be substantiated using valid data at the start of the project. This data constitutes the take-off point: Where do we want to go from here in order to achieve measurable results? Because system data cannot usually be used here, we often start by interviewing staff. Using representative orders, we observe how long the work steps actually take or how long an order can take to complete. In the simplest case, staff members are given a checklist. On it, they note down the work they perform over a period of two weeks. How often, for example, is a piece of information missing? This gives you an aggregated data basis that helps you define the most critical points you want to work on.

Digitalization can be a valuable contributor here. More and more digital data or workflows are available that can be used to record times, for example. So, let’s say an inquiry comes in. Based on the time stamp, you can see when exactly the email was received. You can also see when the order was set up in SAP, when the quotation was sent and when the order confirmation went out. This allows you to gather all the timestamps from systems like SAP, Outlook, etc.

Plus, there are more and more technologies, such as process mining, that you can link to systems to retrieve data. This way, process flows can be depicted digitally, paired with different percentage frequencies: For instance, how often does process variant A occur, and how often B or C? You have more relevant data, and you can evaluate the current situation much faster.

What can we achieve with Lean Administration?

The goals are very different. Let us take a look at two specific examples:

In one process optimization project, the lead time for a classic order processing system was reduced by 25% by cutting down on interfaces, clearly assigning roles, and modifying or standardizing forms.

In another case, the focus was on function optimization. In one HR department, 20% of the capacities were freed up for new topics. In this case, free capacity was needed to introduce a digital personnel file. The company was not looking to hire new employees for this. So capacity had to be made available within the departments.

Another example is the use of Robotic Process Automation (RPA). For example, one company was able to automate 80% of the “hours confirmation” process. Staff members had regularly entered their hours in SAP. Error messages, etc. had to be checked. In the past, this was done by 13 employees. Today, one employee manages this centrally. Other automation opportunities include travel expense reports, creating manufacturing documents, providing bills of delivery, etc.

There are many other examples of potential for optimization in administrative areas. Regardless of the industry in which the company operates. Lean Administration can be applied everywhere, not only in manufacturing industries but also in the services sector.