lean solutions – beyond the factory floor
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Lean Solutions – Beyond the Factory FloorLean Solutions – Beyond the Factory Floor
Betsi HarrisDirector, Six Sigma and Master Black Belt
Tyco International/ADT Security Services, Inc.
WCBF 5th Annual Lean Six Sigma Summit June 24 – 25, 2009Oakbrook Marriott, Chicago
Betsi HarrisDirector, Six Sigma and Master Black Belt
Tyco International/ADT Security Services, Inc.
WCBF 5th Annual Lean Six Sigma Summit June 24 – 25, 2009Oakbrook Marriott, Chicago
ADT Security Systems, Inc. is a business unit within Tyco International
Major product lines include consumer and commercial security systems, video, access control and fire detection systems
Over 7.8 million customers worldwide rely upon ADT security monitoring systems
ADT helps protect over 80% of top 100 retailers with our electronic security and anti-theft systems
Tyco International/ ADT Security Systems Company InformationTyco International/ ADT Security Systems Company Information
Tyco International: five divisions composed of ADT, SimplexGrinnell, Tyco Safety Products, Tyco Electrical & Metal Products and Flow Control
118,000 employees in over 60 countries
FY 2008 Revenue: $20+ Billion
Strengths include the ADT brand name and global service presence
Six Sigma was implemented at ADT in 2003. The Six Sigma Academy was utilized to assist in implementation, providing training and Master Black Belt consultation
Since 2004, the program has been administered internally without the use of external consultants
Nine waves of Black Belts were trained from 2003 - 2009 and the first in-house Master Black Belt was hired in October 2003
Approximately 150 Black Belts and 240 Green Belts have been trained to date
Major Six Sigma Centers of Excellence include Field Operations, Lead to Order, Order to Cash, Central Monitoring Systems and Corporate Services
The Lean Six Sigma program focuses on customer retention, expense reduction, revenue increase and compliance
Lean Six Sigma at ADT Security SystemsLean Six Sigma at ADT Security Systems
Lean EnterpriseLean Enterprise
Structure company to maximize customer value
Eliminate non-valued activities
“Time-Based” Competition: Deliver product/service as rapidly as possible
Use less of everything compared with Mass Production
Less human effort, space, tools and capital, less time and fewer defects
Five Principles of LeanFive Principles of Lean
1. Correctly specify value from the standpoint of the customer
2. Identify the value stream and eliminate the waste/muda
3. Make the remaining steps flow
4. Let the customer pull just the value needed
5. Pursue perfection (every step adds value)
Transactional/ Service ProcessesTransactional/ Service Processes
Myth:
• “Creative work” – cannot standardize
• Tasks are not repeatable
• Time needed is unknown
• Different steps needed for each cycle
Truth:
Must standardize: repeatable and consistent inputs, process and outputs are required to reduce variability and consistently meet customer requirements
Have it Your Way Paradox: Strict adherence to standard work provides the flexibility to deliver
exception customer-centric service
Value StreamsValue Streams
Lean in service sector is no different than manufacturing
Principles of identifying value to the customer, simplified flow to minimize waste and pull demand for greater profitability applies to all business environments
First step is to develop current state Value Stream Map (VSM) of primary value streams:
Concept to Launch
Lead to Order
Order to Cash
Value Stream Map is sequence of activities to produce good or service, with the physical flow separated from the information flow
Value Stream MappingValue Stream Mapping
Value stream mapping the current state helps to see the entire process starting and ending with the customer
Separating physical flows from information flows provides insight into excess waste in the process, including handoffs, queues/ inventory and delays
Shows process efficiency and waste elimination opportunity
Information
INFORMATION FLOW
MATERIAL FLOW
CU
ST
OM
ER
VA
LU
E
R&DEngineering
Order Entry& Planning
OperationSales &Marketing
Finance
Helps to see and eliminate hidden waste in our servicing processes
Transactional WasteTransactional Waste
1. Defects - incorrect data entry
2. Over production – preparing extra reports, reports not acted upon, multiple copies in data in storage
3. Transportation – extra steps in the process, distance traveled
4. Waiting – processing monthly not as the work comes in (i. e. closings, billings, collections)
5. Inventory - transactions not processed
6. Motion – extra steps, travel from office to office desk to desk, extra data entry
7. Processing – hand-offs, multiple sign-offs, most meetings, inspection, rework
Difficulty of FlowDifficulty of Flow
Multiple handoffs between many functions / departments - each department may have own set of performance metrics
No one “owns” (and sees) customer value stream beginning to
end
Top-Down decision making - many layer of approvals
Quality is “assured” through inspections
Processes built to handle both the routine and the exceptions
Counter-intuitive to mental maps of batch processing and mass production (economies of scale)
Hallmarks of Mass ProductionHallmarks of Mass Production
Semi-skilled workers, expensive single purpose machines, standardized products at high volume
Must produce in large batches - long change-over times and high machine efficiency to achieve “economies of scale”
Goal is to reduce average unit cost by producing in large quantities
Results in long cycle times, high inventory and complex scheduling and distribution systems – MUDA!
Hallmarks of Mass ServicingHallmarks of Mass Servicing
Semi-skilled call center reps trained mile wide, inch deep handling a high volume of calls for all customer types
Low first contact resolution rate: conflicting goals of low unit cost vs. solving customer’s problem the first time
Typically the lowest paid employee yet the one customer “sees” as the company
Results in repeat contacts, escalation queues and complex scheduling systems – MUDA!
Transactional Service DeliveryTransactional Service Delivery
Distinguishing feature of transactional service delivery: high volume of employee to customer encounters, known as “moments-of-truth”
How well the brief encounter is handled determines whether the customer will want to conduct future business
Risk of losing a customer is highly correlated to the moments-of-truth
Direct interface with a customer, such as in a call center or retail store, requires near flawless execution
Difficult, if not impossible, to “rework” the transaction after it has been completed;
The damage incurred from a 20 minute queue time along with an incorrect response to a question cannot magically be undone through even the most heroic service recoveries
Mass vs. Lean ServicingMass vs. Lean Servicing
Mass servicing model of generically trained reps, butts-in-seats staffing and rush the customer off the phone to achieve a low unit cost almost guarantees errors in these critical moments-of-truth encounters
Lean Servicing!
The Answer?
Lean ServicingLean Servicing
Going back to Lean’s roots at Toyota, the concept of a work cell was instrumental in eventually what became known as the Toyota Production System
Lack of capital necessitated simple processes with low set-up time
Accomplished through a series of adjacent workstations where product was produced in a continuous flow – there was no inventory because the workstations were balanced and synchronized
Products were produced and delivered to the customer’s demand with a short lead time, minimal waste and high quality – the essence of leanLack of complexity is what made it work!
Lean Customer-Centric Work CellsLean Customer-Centric Work Cells
Simplified flow of the customer’s request through grouping all knowledge and tasks associated with servicing the customer (or customer segment) within a dedicated work cell of employees
Employees within the cell are multi-tasked and trained across several functional areas (order entry, order fulfillment, service and invoicing); the specialization is centered on the particular customer’s requirements rather than a particular function
Unlike the mass servicing goal of keeping employee utilization high in order to minimize unit cost, lean servicing goal is profitability of the customer across the total spectrum of the value stream
The wastes of hand-offs, queues, bottlenecks and lack of ownership of the entire customer experience are minimized, if not eliminated
Lean ServicingLean Servicing
One of lean’s key tenants, often forgotten or downplayed, is the relationship between salaried management and hourly employees
Unhappy employees are less likely to provide value-added service
A key lean principle is to eliminate recurring problems or requests through having the employees, who are in the best position to “see” the problems, actually fix the problem
Root cause analysis and elimination of recurring problems ensure on-going pursuit of perfection and profitability
In return, must train and truly empower employees to provide flawless service in the critical moments-of-truth
Thank you
Questions?
Thank you
Questions?