The Lean Office

 Lean process flow isn’t just for the manufacturing floor. The greatest opportunity lies in non-manufacturing areas such as government, hospital, and in administrative (back) offices. The possibilities are unlimited because old traditional habits are hard to break. A lean office eliminates waste and saves time.

 
Lean has been used in manufacturing for over 25 years. Only recently companies have started to apply lean to office and administrative processes. When you realize that 60 to 80 percent of all costs associated with meeting customer demands is administrative in nature you can understand why adopting lean makes a lot of sense. Accounting is clearly administrative in nature and should be a prime target for lean.
 
So why hasn’t lean taken hold in the office environment? First, there isn’t a clear understanding of process and office product flow. Second is a failure to understand waste and non-value added activities. Finally, most offices do not have a clear grasp of data needed to measure the impact of lean benefits.
 
Lean thinking is an approach that utilizes:
·         Simplicity
·         Speed
·         Flexibility
·         Visibility
·         Accountability
These concepts then are used to manage processes through application of a continuous improvement philosophy to achieve total elimination of operational and organizational waste.
 
A successful lean initiative requires identifying work that adds value or worth to products or service. Non-value-added work may not directly add value but is necessary for either business or regulatory reasons. Waste is the killer and should be eliminated as fast as possible. Lean categorizes seven wastes:
  1. Defects which is work that contains errors, rework, mistakes, or is missing something.
  2. Motion is any action that isn’t necessary to complete an operation or task.
  3. Inventory represents more information or material than is needed.
  4. Overproducing is doing too much work before it is necessary or required.
  5. Transportation is unnecessary movement of material or information that doesn’t add value.
  6. Waiting is time that is lost when information, people, or equipment isn’t ready.
  7. Over Processing is additional effort that adds no value to the process.
Waste is usually visible and by identifying small opportunities you can achieve large amounts of continuous improvement change.
 
The key to lean office success lies in involving all employees doing work and engaging them in a total effort to eliminate waste from the work processes. People are the key since they are essential components of any process, were involved in its creation, and made changes in how the process evolved over time. Just tossing out some lean tools and expecting magic isn’t the answer. It requires a complete and total committed effort from all employees from top to bottom.
 
One of the essential steps is engaging in value stream management. This technique is not about making people work faster or harder, it is about establishing a system so that work units and information can flow through administration processes at a faster and more efficient pace.
 
When tackling a lean initiative, it is important to understand and utilize the eight steps for value stream management. The following lean principles are critical in achieving success in streamlining the administrative processes:
  • Define value from the customer or client perspective.
  • Identify the value streams.
  • Eliminate the seven wastes.
  • Make work flow.
  • Pull work, don’t push it.
  • Pursue perfection.
  • Continue to improve.
The secret to success in making these principles work is to utilize the entire team and work together.
 
Everyone has a lot to gain by going lean. You’ll make your business more competitive and more profitable. In addition, eliminating waste in the workplace can help overcome fatigue, frustration, and burn-out. These are just a few good reasons to consider a leaner office.

This blog

Lynn Northrup, CPA, CPIM - Lynn's focus is on building business value for both family-owned businesses and other CPAs. I also specialize in lean accounting, process improvement, internal control, and assessment of audit risk. Other accomplishments include publishing two books, development of self study programs for Bisk Education, and an Adjunct Professorship at Villanova University. My wife Jessica and I live in southwestern Colorado and we look forward to contributing to the AccountingWEB community.

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