All production’s improvement efforts can be undermined in the sales office, says John Dwyer. But lean the office and who knows what you might achieve?
When the customer rages about a missed or incomplete delivery, it’s always production’s fault. Often this isn’t just wrong and unfair. It blinds manufacturing companies to easy, near cost-free changes away from production that could make the whole business more competitive.
Much more competitive. Business life doesn’t get much tougher, for example, than being toeto- toe with low-cost far-eastern electronics suppliers. Yet day in and day out the Liverpool firm Brainboxes beats them to supply its add-on PC cards to the likes of Acer, Agilent, BT, Fujitsu, HP, IBM, Lenovo, Motorola and Reuters. No mere box shifter, Brainboxes develops and owns the technologies it sells. It has 35 employees.
Brainboxes’ lean pilgrimage began with help from the Manufacturing Advisory Service (MAS) to drive out waste and increase productivity. The first fruits of Brainboxes’ collaboration with local MAS The Manufacturing Institute (TMI) were a 25 per cent increase in throughput, changeovers on one production line cut by 60 per cent, and stocktaking days cut from 12 person days to five.
The offices were next. Four teams dealt with quotations, processed sales orders for production, offered technical support to existing customers and carried out research and development (R&D). Back from a two-day lean office course with Smallpeice Enterprises at Leamington Spa, Warwickshire, staff could identify lean’s ‘seven wastes’, says lean and six sigma project leader Michelle Best: “We found all seven.”
Waiting times and over-processing were rife. Workers wrote dozens of reports nobody read and wasted more paper and ink on multiple copies of documents for meetings. No wonder, when electronic files were so hard to find on the company’s network. Staff wasted walking time carrying print-outs round to production, sales or R&D for authorisations.
They were following over-complex processes designed from habit rather than for a purpose. They did things that way, says Best, “because that’s the way it’s always been done.”
Many clerical errors, says Best, result from mistyping – cut out the typing and you cut the errors. When Brainboxes’ new products emerged from R&D for production the designers used to hand the purchasing department a paper bill of materials (BOM) for them to buy, and purchasing retyped it into Brainboxes’ Efacs computer system.
Now R&D’s design software produces the BOM list. This reduces errors, has cut BOM entry time from hours to minutes and improved stock accuracy. BOM changes and all those other authorisations are now done electronically.
But though Best thinks lean has its strengths, she’s a real fan of six sigma and its root cause analysis. Lean projects make assumptions about where a problem lies and then you make improvements to eliminate those problems. “They may not be the biggest improvements we can make,” she says.
And that’s why production takes the can undeservedly. If a product’s late, says Best, the real source of production’s failure to meet the deadline may be a build problem caused by suppliers, or production may not have been given the right lead time – or even the right product. Brainboxes divides products into runners, repeaters and strangers. Does the customer really need that one-off? Is there no ‘runner’ that would meet the need just as well?
In Brainboxes’ experience six sigma lends itself just as well to office as production processes. Its six sigma project to reduce sales-order defects showed that over half the sales orders, “had issues,” says Best – wrong parts, wrong addresses or the charging of wrong carriage rates. They’re now at 18 per cent and the aim is to make sales orders defect free.
It’s a similar story at James Walker (JW), a £30 million a year business which employs 490 to make gaskets, compression packings and seals for the offshore, aerospace, automotive and power generation industries. At the end of 2003 JW closed its Woking, Surrey, site to concentrate production at its Cockermouth, Cumbria, factory. That was the beginning of a three-year effort to boost productivity, turnover, profits, innovation and customer service.
JW turned to TMI to radically improve the Cumbria factory’s efficiency. Profitability improved, productivity rose a quarter, on-time delivery rose a fifth, and JW developed more new products and made big quality improvements. Then attention turned to JW’s Crewe, Cheshire, sales and customer service centre.
Until the factory had been fixed, says TMI practitioner Carl Tomlinson: “They didn’t know Crewe was weak.” The company felt it wasn’t making the most of its opportunities in oil exploration, a rising market. The market share was under threat, says Tomlinson, from aggressive competition. “Some of their lead times were quite long,” and JW’s customer service wasn’t keeping up.
But when TMI held a big workshop to move the lean focus to Crewe, customer services manager Lynn Washington wasn’t impressed. “We’d had some success in the manufacturing area [but] I thought how does this work in an office?”
All became clear. When one worker was videorecorded for 40 minutes, says Washington, “I found that very interesting, to sit and analyse what we did.” She saw workers entering quotations or doing other work twice, or sending them to the wrong person. They walked much further, and more often, to the printer than they needed to. Emailed orders were scanned, backed up in the system then printed out needlessly instead of, as today, processed from the inbox. “It really highlighted a lot of things we were doing that didn’t involve any value at all.”
JW’s office KPIs were quotation response, turnround time, order-placement speed, supplemented by customer satisfaction surveys and sales levels. “We needed to respond a lot quicker,” says Washington.
She also learnt that offices too have work in progress (WIP). JW struggled with ‘unbooked orders’ – orders received but not yet passed to production for manufacture. The delay was usually lack of information from the customer, a sister company or manufacturing. Sometimes the information would arrive unnoticed – for days.
By far the most effective change was to reveal these delays. Washington says she could always run a computer report to tell her at what stage everything was. But most of the time this stayed hidden in the IT system.
“Now it’s on a board. I only have to look at the boards and I can see what each team should be dealing with. All of a sudden it was like, ‘work in progress, there’s 30 quotes waiting for a response’. It became a competition as to who got their amounts down.” It made an amazing difference to morale, she says.
There was another morale issue. Sales were on two floors. The seven industry-based teams were upstairs, the lower floor handled distribution and developing business. “That was quite a challenge from a management point of view, to manage two floors and see what was going on,” says Washington.
The seven teams weren’t the best way of dealing or building relationships with customers: “It was over the top. A lot of them were talking to the same customers.” JW reorganised the teams into four, by product type, and invited staff to apply for the four new team leader roles. Not easy: “Everybody going through that finds it difficult to do,” she says.
Uniting the four teams on the ground floor revealed an unsuspected ‘us and them’ issue. The ground floor had thought themselves secondclass citizens, and believed they weren’t doing well unless they got a job on one of the industry teams upstairs.
Unbooked orders once sat at an average £260,000. Now they’re down to an average of £50,000, and the use of highly-visible task or T cards is helping ensure all tasks are completed. JW has driven quotation turnaround from 72 per cent in one day up to almost 80 per cent.
Brainboxes, meanwhi le, is keen to sustain its improvements. A 50 to 70 per cent improvement in any measure is a signal for management to move its attention to more pressing problems, says Best, “but a year later we see even more improvements.”
She cites Brainboxes’ on time and in full (OTIF) delivery performance. OTIF measured 69 per cent when Brainboxes started six sigma. A six sigma project took it to 80 per cent. “That was two years ago,” says Best. Now it’s over 95 per cent: “Once a project finishes, we still get incremental improvements.”
These improvements don’t keep happening by themselves. Continuous improvement is built into every team’s KPIs, wherever they are in the business. Key measures like OTIF are widely circulated by email and regular audits keep staff under pressure to keep improving.
Tact matters, says Best: “It can be difficult when you are focusing on someone’s particular area and saying that there is a problem with the way they do things. We have to press home the fact that any problems are with the process itself, not with the person having to deal with that process… And it is important to give appropriate recognition for their efforts, which is an area we probably overlooked in the early days.”