LEAN in a Non Manufacturing Environment

ACHIEVING LEAN EXCELLENCE
IN A NON-MANUFACTURING SUPPLY CHAIN
ELM VALLE
RESOURCES GLOBAL PROFESSIONALS
March 2012

Agenda
 Introductions
 Six Sigma v. Lean
 Industry Trend
 Barriers
 Why Supply Chain
 Value Stream and Methodology
2

WE ARE A PUBLICLY-TRADED, GLOBAL
PROFESSIONAL SERVICES FIRM WITH A BIG
FOUR HERITAGE.
 Founded in 1996 as part of Deloitte.
 Management buy-out (1999) and
initial public offering (2000). NASDAQ:
RECN.
 Selectively acquired Big Four service
lines in Europe and Asia/Pacific.
We partner with business leaders and their
teams to plan and execute initiatives as well as
support day to day operations. From more than
80 offices in North America, Europe and Asia
Pacific, Resources serves 1,900 clients in 66
countries. We're a pioneering professional
services firm, a global community with a new
approach to business - inside out.
About Resources Global
3
Professional services provided to:
44 of the Fortune 50
35 of the Fortune Global 50
100%
of the Fortune 500 Pharmaceuticals
Companies
100%
of the Fortune 500 Aerospace and Defense
Companies
100% of the Fortune 100 Energy Companies
80%
of the Fortune 500 Gas, Electric and Water
Utilities
TOP 12 Fortune 500 Commercial Banks
OVER
80%
of the Fortune 500 Financial Services
Companies
100% of the Fortune 500 Entertainment Companies
7 OF TOP
10
Fortune 500 Chemical Companies

4
About Myself
Elm Valle
 Six years U.S. Army Officer
 Experienced Consultant with Resources Global and BIG 4 FIRMS
 Global Supply Chain Experience with Retail, Oil & Gas, and Chemical
 MBA, Lean Six Sigma Black Belt, Project Management Certified
 Membership: Lean Enterprise Institute, APICS, The Hackett Group, The Aberdeen
Group
 15 Years of Operations Experience [Domestic and International]

5
Difference Between Six Sigma and Lean
SIX SIGMA vs. LEAN
LEAN
 Waste Reduction and seeing the
whole.
 300 miss-Deliveries per 300,000
letters
6 SIGMA
 Variation Reduction and problem
solving.
 3.4 miss-deliveries per one million
letters
Part of the same discipline.
Utility is dependent on the goal!
Where is each one used?

6
How Many are LEAN Companies?
90% of Companies claim they are LEAN Practitioners
Only 20% have deployed LEAN past their manufacturing floors

Top Barriers for LEAN deployment
7
All of these can be addressed. There really is no reason not be a LEAN Organization.

Why Supply Chain?
8
“Supply chains are as old as commerce, but the opportunities they now present are without
precedent. Modern manufacturing has driven so much time and cost out of the production
process that there is only one place left to turn for competitive advantage. As business
engineering guru Michael Hammer recently put it in his new book, The Agenda, the supply
chain is the last untapped vein of business gold.”
– Supply Chains: A Manager’s Guide by David A. Taylor, Ph.D.
Pressures Driving Lean in Supply Chain

LEAN in NON-Manufacturing Supply Chain
 Lean is applicable in all business environments, especially in Supply Chain
 Not Manufacturing Specific – All Functions follow a process flow
 Value Stream Mapping is a great way to begin the LEAN Journey for many companies
 Identifies “waste” and reduces steps
 Not an attempt to eliminate work force but redeploy them for Value Add Activities
Value Stream Mapping is a great way to begin the LEAN Journey for many beginning
companies

10
What is Value Stream?
Value - From the Perspective
of the Customer
Flow - No Waiting. No Re-
Work
Work – Standardize, Built-In
Quality
Managing & Learning -
Milestones & Check Points,
Learning Embedded
LEAN Principle – Understand the customer needs and execute the entire value chain to
serve the final customer.

The Formula for Success
Cross Functional Participation with Key Stakeholder
Remove jargon and confusing terminology
Target Pain points in Supply Chain
 PO Processing Time and Cost
 Logistical Bottlenecks
 Supplier Performance
 Inventory Levels to Business Needs
 What are others?
Execute Low Hanging Fruit
Train the “EASY TOOLS” – 5 S, Spaghetti Diagrams, & VSM,

Methodology
 Brand, Marketing, Champion, and Socialize
 Project Plan and Timeline
 Current State Mapping
 Determine Value Stream
 Identify the Wastes
 Map Future State
 Quick Wins & Low Hanging Fruit
 Measure, Control, Improve
 Incremental Progress
 Leadership Support and Buy In
How do I do a LEAN VSM Project?

13
Mapping the Current State
The Do’s and Don’ts of Process Mapping.
Do’s
 DO map the process as it actually happens
 DO talk to the other people who are involved in the process
 DO define the beginning and end of the process before you start
 DO the process map at a high level. Keep it simple and illustrative
 DO work in a team. Seek advice
Do Not’s
 DON’T map the process as you think it happens or as you think it ought to happen. Do
not interpret
 DON’T restrict your process map to activities relating to the department that primarily
runs the process
 DON’T attempt to start process mapping before having identified the process’
beginning and end
 DON’T get bogged down with too much detail
 DON’T struggle on your own

14
Determine Value Add Activities
Minimize
Non-Value Add
RequiredActivity
Eliminate
Improve
Monitor
Value Add
Non-Required
Activity
AUTOMATE
Purchase Orders Rework
Enter Vendor
Invoicing
Inventory Transfers
Delivery of Product
Creating the Purchase Order
Order Fulfillment
From a Supply Chain perspective your customers are
both internal and external.
Loading Trucks
Packing/Unpacking

15
Future State Mapping
 Eliminate Steps & handoffs
 Combine Steps
 Create parallel paths
 Alter sequencing
 Implement Pull
 Reduce / eliminate batches
 Improve quality
 Create organized workplace
 Reduced change over
 Create standard work
 Eliminate unnecessary approvals
 Eliminate NVA
 Co-locate functions based on flow
[cross functional teams]
 Improve Status
 Leverage Automation

16
Example of VSM Wall Mapping

17
Aberdeen Competitive Framework

Keys to Success
 Develop the KPI & Metrics Framework
 Instill the Culture
 Follow Up On Action Items and Execute Low Hanging Fruit
 Continuous LEAN events
 Have others Grade you!

CONTACTS & REFERENCES
ELM VALLE
Consultant Supply Chain & Information Management
Elm.valle@resources-usa.com
281.451.1806
RICK COCHRAN
Senior Client Services Director
Rick.Cochran@resources-us.com
713.403.1967
19
REFERENCES
The Lean Supply Chain Report, The Aberdeen Group
Value Stream Mapping for the Office and Services, Peter Walsh

20
BACK UP: Muri and Mura
Muri is all the unreasonable work that management imposes on workers and machines
because of poor organization, such as carrying heavy weights, moving things around,
dangerous tasks, even working significantly faster than usual. It is pushing a person or a
machine beyond its natural limits. This may simply be asking a greater level of
performance from a process than it can handle without taking shortcuts and informally
modifying decision criteria. Muri also includes bad working conditions, and it will often
push a resource to work harder than its natural limits. Unreasonable work is almost
always a cause of multiple variations. Lean focuses on the planning of processes to avoid
muri and on the preparation and planning of the process, or what work can be avoided
proactively by design.
Mura is the variation and inconsistency in quality and volume in both products and
human conditions. Lean focuses on how the work design is implemented and the
elimination of fluctuation at the scheduling or operations level, such as quality and
volume.

LEAN in a Non Manufacturing Environment

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