Lean Solutions – Beyond the Factory Floor

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  • 1. Lean Solutions – Beyond the Factory Floor Betsi Harris Director, Six Sigma and Master Black Belt Tyco International/ADT Security Services, Inc. WCBF 5 th Annual Lean Six Sigma Summit June 24 – 25, 2009 Oakbrook Marriott, Chicago
  • 2. 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 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
  • 3. 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 Systems
  • 4. Lean 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
  • 5. Five Principles of Lean
      • Correctly specify value from the standpoint of the customer
      • Identify the value stream and eliminate the waste/muda
      • Make the remaining steps flow
      • Let the customer pull just the value needed
      • Pursue perfection (every step adds value)
  • 6. Transactional/ 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
  • 7. Value 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
  • 8. Value 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 Helps to see and eliminate hidden waste in our servicing processes Information INFORMATION FLOW MATERIAL FLOW CUSTOMER VALUE R&D Engineering Order Entry & Planning Operation Sales & Marketing Finance
  • 9. Transactional Waste
      • Defects - incorrect data entry
      • Over production – preparing extra reports, reports not acted upon, multiple copies in data in storage
      • Transportation – extra steps in the process, distance traveled
      • Waiting – processing monthly not as the work comes in (i. e. closings, billings, collections)
      • Inventory - transactions not processed
      • Motion – extra steps, travel from office to office desk to desk, extra data entry
      • Processing – hand-offs, multiple sign-offs, most meetings, inspection, rework
  • 10. Difficulty 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)
  • 11. Hallmarks 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!
  • 12. Hallmarks 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!
  • 13. Transactional 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
  • 14. Mass 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?
  • 15. Lean 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 lean
      • Lack of complexity is what made it work!
  • 16. Lean 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
  • 17. Lean 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
  • 18. Thank you Questions?