I’m leading a one-day discussion for a group of companies in Denmark later this month, and in preparation I surveyed them about the state of their lean efforts. It seems that most of them are struggling to bring lean to the office/admin areas, even when they’ve made good progress in their manufacturing areas.
I’ve seen this pattern at most of my clients, and at the companies I meet at various lean conferences. In some respects, it doesn’t make sense. After all, it’s exponentially harder to relocate machines, re-engineer production lines, and redesign equipment and products than it is to move around a few desks, change a computer interface, or change the flow of paper through departments. And yet, companies still struggle to spread lean thinking to the office.
I have a few hypotheses about this:
1. Waste is harder to see in an office. Office workers largely deal with electrons, not protons—that is to say, their work takes the form of electronic documents, not physical pieces of metal, plastic, glass, and wood. In an office, waste doesn’t pile up like physical inventory and WIP; it hides in files on the server, in email inboxes, in extra clicks of the mouse that are really hard to see. It’s not laboriously transported across the factory floor; it’s emailed back and forth (and usually as an infuriating Reply All). It’s not an idle machine waiting for the next part; it’s an idle brain checking Facebook.
2. Waste costs less in an office. Scrap material is expensive. Overtime hours are expensive. Unneeded space and unused machinery are expensive. Computer storage? Paper? Brains that aren’t solving customer problems? Salaried workers who don’t get overtime? Cheap, cheap, free and free (respectively). To be sure, there are hourly workers in the office, but I’ve seldom seen an employee get overtime pay to process a few more invoices—that waits till the next day. It’s hard to get the senior leadership team to focus on a few dimes lost in the office when there are dollars at stake in the factory.
3. Office waste is hard to calculate. Related to point #2 above, waste in the production area is easy to measure. Cost of scrap, overtime, finished goods repair, rent on floor space—all that is easily measurable. But it takes a real force of will, and some creative assumptions, to calculate office waste. How much money is spent on pointless emails? How much does it cost to rework incomplete new account application forms? What’s the price assigned to waiting for the monthly financial numbers? It’s all waste, and all time that could be spent doing far more productive work, but good luck getting agreement on the financial cost. The largest component of office waste isn’t the hard cost that appears on the month-end financials. It’s opportunity cost.
4. The customer (usually) doesn’t complain about the waste in the office. Customers don’t hesitate to complain when product quality stinks or you’re late in delivery. But I can’t remember the last customer to complain because they sales rep hadn’t called on them recently. “You take too long to invoice me” said no customer, ever. Truth is, the office functions, while necessary to keep the company functioning and to get the right product to the customer on time, doesn’t have the same salience to the customer as does the product itself.
5. We’re not very good at talking about waste in the office. Without doing a comprehensive analysis, I’d estimate that 80% of the books, and 80% of the examples in those books, focus on the shop floor. When companies run classes on lean, they talk about the 8 Wastes and lean tools primarily in the factory context. Not only does that make it harder for office workers to understand how to apply lean in their areas, it subtly sends a message that lean is for the shop floor, not the office carpet. When people make their study trip pilgrimage to Toyota in Japan, they never set foot in the office, only the production areas. And in fact, even Toyota doesn’t apply TPS much to its non-production areas.
All of these factors mean that the leadership team doesn’t spend nearly as much time focusing on lean in the office as they do on the shop floor. And starved for leadership attention, lean efforts in the office make slow progress at best, and stagnate at worst.
Nevertheless, if you really want to be a lean organization, you’ve got to bring lean thinking to all areas of the company. Using the fitness metaphor from my book, Building the Fit Organization, you can spend your day in the gym doing squats for your legs, but if you don’t train your heart, you’re not going to get very fit—and you might be headed for a coronary. Your company, like your body, is a complete system. You have to train all of it, not just one area.
How are you going to deal with this problem?