Description
The documentation about Microsoft strategy, Mathers Controls, Convergys for lean manufacturing.
OPERATIONS MANAGEMENT
PROJECT ON LEAN MANUFACTURING SYSTEM
What is Lean Production?
Lean is about doing more with less: less time, inventory, space, labor, and money. "Lean manufacturing", shorthand for a commitment to eliminating waste, simplifying procedures and speeding up production. Lean Manufacturing (also known as the Toyota production system) is, in its most basic form, the systematic elimination of waste – overproduction, waiting, transportation, inventory, motion, over-processing, defective units – and the implementation of the concepts of continuous flow and customer pull. Five areas drive lean manufacturing/production: 1. cost 2. quality 3. delivery 4. safety, and
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morale
Just as mass production is recognized as the production system of the 20th century, lean production is viewed as the production system of the 21st century.
Lean Production Overview
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Non-value added activities or waste are eliminated through continuous improvement efforts Focus on continuous improvement of processes - rather than results - of the entire value chain The lean manufacturing mindset: concept, way of thinking - not techniques; culture not the latest management tool Continuous product flow is achieved through physical rearrangement and system structure & control mechanisms
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Single-piece flow / small lot production: achieved through equipment set up time reduction; attention to machine maintenance; and orderly, clean work place Pull reduction / Just-in-time inventory control
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Basic Elements of Lean Manufacturing
The basic elements are waste elimination, continuous one piece workflow, and customer pull. When these elements are focused in the areas of cost, quality and delivery, this forms the basis for a lean production system. The lean production concept was to a large extent inspired by the Kaizen - the Japanese strategy of continuous improvement. Employee empowerment and promotion among them of a way of thinking oriented at improving processes, imitation of customer relationships, fast product development and manufacturing, and collaboration with suppliers are the key strategies of leading lean companies.An introduction to the Toyota Production System
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Case 1: Toyota Production System
The Toyota Production System is a philosophy of manufacturing that was created by the Toyota Corporation. The Toyota Production System or TPS, has come to be known as a term that is synonymous with Lean Manufacturing. Lean manufacturing aims to improve the manufacturing process by eliminating wastes in all their forms. The TPS names seven wastes specifically and collectively calls these wastes "Muda." Also called "The Seven Deadly Wastes" the muda as defined by Toyota includes the following: over-production, motion (of operator or machine), waiting (of operator or machine), conveyance, processing itself, inventory (raw material) and correction (rework and scrap). Not only are processes sped up when waste is eliminated through TPS but the quality of the product is better. This means that the customer benefits from the TPS process just as much, if not more, than the manufacturer benefits. Everyone wins and the profits reflect this improvement in process. Toyota has long benefited from their innovations in the world of lean thinking and in 2007 became the largest car manufacturer in the world. Other manufacturing companies are definitely taking note and many of the Toyota Production System methods are being copied. Although the principles of TPS can theoretically be applied universally, no manufacturer has yet to master the processes the way that Toyota has. The origins of the Toyota Production System are said to actually have been inspired by American businesses. A delegation from Toyota came to the United States to study their commercial businesses. At the time the Ford Company was recognized as being the innovator in Lean Manufacturing, but when the Toyota executives visited the Ford Motor Company, they were disappointed with how inefficiently they managed their inventory. It was actually from a super market chain that they gained their inspiration for a process now known as Just In Time. It was at this supermarket that they saw that a piece of inventory was only re-ordered once it had been sold from the shelves.
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This was the start of a new way to manufacture, a way that is both complicated and simple and that American's have had a difficult time understanding because of all of the meaning that is behind the actions that are taken in the Just In Time and other methodologies. It is not simply a matter of eliminating the waste but replacing it with a system that allows for continual improvement that benefits the worker, the customer and the company's bottom line. Basically the point is to sacrifice short-term financial goals if need be in order to base management decisions on a more long-term philosophy. This philosophy of sacrificing the short-term for the long-term is called The Toyota Way.
Common terms used in the Toyota Production System:
The Toyota Production System has come to include a great number of different concepts and methodologies. As different companies will find it useful to utilize different strategies for the implementation of their Toyota Production System a brief list and definition of common terms is listed below:
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Just In Time (JIT) - JIT is an inventory strategy that a company may chose to implement in order to improve the return on investment of a business by reducing inventory and the costs associated with carrying unsold goods.
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Jidoka (Autonomation) - Jidoka is a Japanese word that refers to the process of creating an automated production line that also includes a human touch. Machines perform with Autonomation when they are programmed to stop producing in the case of an error. It is then the human who identifies and resolves the problem.
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Kaizen (Continuous Improvement) - This Japanese term refers to the process of gradual change for the better. Employees are encouraged to provide input and improve the processes that they are over thereby making their jobs more enjoyable and the production line more efficient.
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Pokayoke - The process of fool-proofing or mistake-proofing a system by identifying the cause of defects or errors and putting a plan in place to prevent such inadvertent errors from occurring again.
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Muda - The term muda is often accompanied with a list of seven different wastes or "deadly wastes" that a company looking to implement lean manufacturing techniques is trying to eliminate. (The terms "Muri" and "Mura" refer respectively to the overburden and unevenness that accompanies the carrying of the unnecessary wastes).
The Toyota Way
The Toyota Corporation has named their managerial philosophy "The Toyota Way." The Toyota Way includes a series of 14 principles that are considered the basis on which management decisions are made. The people at Toyota believed that in order to think in terms of long-term goals, they needed to have a process for solving problems, a way by which they could add value to the organization by developing its people (on every level, not just management), and to recognize that continuously solving problems by first discovering their origins drives organizational learning. The Toyota Production System and the Toyota way of thinking have given them a competitive advantage on a global scale. This advantage was gained through a combination of their human resource management policies and their highly efficient network of suppliers and manufacturers of the machine and other components used for production. It is the approach to management that is most interesting though. Toyota is known for their corporate culture of employee empowerment. Just consider the following statistics and perhaps you can begin to get a better idea of just how employee centered the Toyota Corporation is. In an average year more than 700,000 improvement suggestions were submitted by Toyota's employees. That is an average of over 10 improvement suggestions per employee per year. What is perhaps most impressive is that over 99% of suggestions were implemented! Toyota knows that the workers are at the center of the process of continuous improvement and that it is their creativity that leads not only to innovation but also to company loyalty and improved morale in the workplace. When job satisfaction is high, there is a greater likelihood that reliable and high quality products will be produced at an affordable price. Of course Toyota is most readily known for their production of cars, but it is their human resource management techniques that have caught the attention of manufacturers around the world. 6|Page
7 Principles of the Toyota Production System
1. Reduce setup times - Employees at Toyota were made responsible for their own setups thus reducing the wastefulness of this process that ultimately adds to value to the customer and takes up valuable in process labor time and equipment. 2. Small-lot production - The process of economically producing a variety of things in small quantities rather than producing things in large batches. 3. Employee involvement and empowerment - Employee are divided into teams and even those in supervisory positions work along side other employees on the production line as part of the team. 4. Quality at the source - Product defects are identified and corrected as soon as they occur or at the source. 5. Equipment maintenance - Operators of the equipment are also assigned to take care of their maintenance since these should be the individuals who know the equipment best. 6. Pull production - The work performed at each stage of the process is dictated solely by demand for materials from the immediate next stage (also known as "Just in Time"). 7. Supplier involvement - Suppliers are treated as partners and are also trained in the TPS methods. How Can TPS Help My Organization?
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Some of the most common benefits that a company sees as a result of perusing Toyota Production System practices are that they are able to identify and enhance customer perceived value in the product or line of products being offered (this includes improved product quality and timely deliveries), waste is decreased and thereby costs are minimized, and they are able to develop a competitive advantage in their manufacturing field. TPS helps almost any organization that chooses to implement its best practices.
Case
2:
Microsoft
Strategy
for
Lean
Manufacturing
Lean Manufacturing solutions Lean manufacturing can improve operational performance by lowering manufacturing costs, increasing on-time delivery, improving quality and customer service, and generating new sources of value. Businesses that want to take advantage of lean manufacturing, however, often struggle to move from a push-based forecast model to a pull-based model based on actual customer demand. By effectively managing lean manufacturing process, people can drive efficient success by reducing waste, inventory, and cycle times, while increasing quality, revenue, and profit margins.
Business challenge
Obstacles to lean manufacturing include the use of manual, paper-based tools, restricted data sharing among applications, inflexible computing technologies, and difficulty in accessing data. Disparate, non-integrated point solutions also present roadblocks to effectively scaling lean manufacturing enterprise-wide. Without established value stream mapping and analysis (VSM&A) tools, people don't have access to a systematic way of conducting accurate and timely value stream analysis. They lack the ability to create a VSM&A system of record, they have limited visibility into value stream improvement opportunities, and they may not have the data integrity necessary to make confident decisions. This leads to excessive time spent collecting and validating data
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rather than to more valuable time spent analyzing data to uncover improvement opportunities. Manual Kanban systems pose their own challenges: inaccurate inventory data, lack of a cohesive system for handling materials replacement, no ability to track performance data, lack of flexibility in response to customer demand, inventory stock outs, lost Kanban cards, and no integration with enterprise business systems. The lack of a value stream performance management system means that people have no enterprise-level analysis capability or visibility into enterprise value streams, no ability to view actual versus projected results, and limited collaboration and knowledge-sharing capability. The Microsoft strategy for lean manufacturing addresses these issues through three key solution areas: value stream mapping, collaborative electronic Kanban, and a lean enterprise portal.
Solutions
The Microsoft strategy for lean manufacturing is to help energize, transform, and sustain the lean operations. Along with its partners, Microsoft energizes people by giving them breakthrough practitioner tools that help them master the basics. The solutions they provide also help institutionalize corporate continuous improvement initiatives by matching people and processes with visual management, business intelligence, and collaboration tools that standardize how companies analyze, measure, monitor, and improve value streams. With people-ready software tools that help workers master the basics and that provide management with a value stream performance management system, you'll be able to sustain lean operations—even if you experience executive and employee turnover. Microsoft and its partners deliver highly customizable technologies that empower people to amplify the impact of solutions to support lean manufacturing efforts in the following three areas: • Value stream mapping: Value stream mapping and analysis is a critical tool that searches for opportunities to eliminate waste and to make processes more efficient. VSM&A solutions from Microsoft and its partners improve visibility into value stream improvement opportunities and empower you to create a lean system of record. 9|Page
• Lean enterprise portal: A lean enterprise portal provides visual management, business intelligence, document management, and collaboration capabilities to give people a standard way of work that they can easily adopt and even extend to suppliers and customers. • Collaborative electronic Kanban: Collaborative eKanban aligns inventory and production with demand, resulting in the ability to reduce inventory, eliminate stock outs and expediting charges, increase buyer and planner productivity, and improve on-time delivery percentages.
Business benefits
By implementing solutions from Microsoft and its partners, people can realize the following benefits: • Complete visibility across the supply chain eKanban provides real-time material visibility, unparalleled supplier communication, replenishment driven by actual demand rather than forecasts, and closed-loop replenishment signals. • Standardized value stream mapping and analysis VSM&A solutions from Microsoft and its partners systematically evaluate and report on value stream performance, improve visibility and reporting into value stream opportunities and projects, improve productivity and collaboration across groups, and capture and report on lean program savings. • Elimination of stock outs and inventory reduction Reduce inventory by 20 to 75 percent, and eliminate stock outs and expediting charges. These benefits result in a reduction of cycle times and improved customer delivery performance, as well as increased productivity for buyers and planners. eKanban solutions streamline production, which can drive down inventory costs as much as 75 percent. • Sustained lean initiatives By implementing lean enterprise portal solutions from Microsoft and its partners, you empower your lean practitioners to improve cross-team collaboration, enhance project 10 | P a g e
tracking, gain visibility into project ideas, memorialize lean techniques, and integrate lean manufacturing design, analysis, and improvements into existing business systems and processes. Enabling your lean practitioners across the enterprise to work together aids you in adopting lean, flexible operational networks and business processes that can change as business needs evolve.
Case study: Commercial Vehicle Group Commercial Vehicle Group (CVG) is a world leader in vehicle solutions for the construction, agricultural, industrial, commercial, municipal, and marine industries. To help improve on-time delivery, reduce inventory levels, and lower costs, CVG engaged Microsoft partner Ultriva. Ultriva deployed an electronic Kanban solution built using Microsoft technologies and the Ultriva Electronic Kanban application. Within just a few months of deployment at two of its plants, CVG reduced its inventory by 43 percent, boosted inventory turns by 28 percent, increased customer on-time delivery, accelerated productivity, and improved synergy with partners.
Situation
Founded in 1997, Commercial Vehicle Group (CVG) is a leading supplier of cabs and cabrelated products for heavy-duty commercial trucks and specialized vehicles used in construction, mining, agricultural, and marine environments. CVG introduced the first air-suspension seat for the trucking industry and today ? the only supplier that can is offer a complete cab interior state-of-the-art technology structures and assemblies to vision-safety solutions, wiper systems, switches and controls, mirrors, and a full array of trim systems. Through such advances, CVG is now ranked No. 1 or 2 in every aspect of the marker of success that stems at least partly? commercial-vehicle body market from the company’s innovative efforts to dramatically streamline the supply chain.
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For example, early on, CVG pursued a “co-location” strategy unique in the heavy-truck industry: establishing production and light-assembly plants near to major-customer sites so as to expedite just-in-time parts shipment. CVG also has deployed extensive enterprise resource planning (ERP) systems for its purchasers, manufacturers, and suppliers, and has implemented Six Sigma programs for process improvement on a similar scale. Most recently, CVG has implemented Kanban, a demand-driven method of inventory replenishment that evolved from a total quality production system pioneered at Toyota Motor Corporation. Some CVG executives were among the first graduates of training programs in the method, and today every CVG employee must complete 40 hours of instruction in a similar program, instruction that is provided by a member of the shop-floor staff. CVG focused heavily on employee involvement, bringing everyone’s skills to bear on eliminating waste in the manufacturing and supply chain, and using those skills to make the business better. When CVG first implemented Kanban in 2004, it was a manual tool, based on plastic or cardboard cards that resided with every part in the company’s inventory. A card would travel with its corresponding part from its arrival at a CVG warehouse to its delivery at a customer site. The card-based approach provided employees an excellent introduction to Kanban, but also had drawbacks. Inventory counts, signals to suppliers for inventory replenishment, and entry of new-inventory information were implemented by hand, making it very time-consuming and complex to adjust inventory. For all these reasons, they decided to take Kanban to the next level by implementing an electronic approach to the method.
Solution
After evaluating a handful of Kanban software products, CVG executives selected Ultriva Electronic Kanban based on a number of criteria. Perhaps most significantly, the solution was browser-based. To get the most benefit from Kanban, they needed a closed-loop solution that would support a continuous-flow process, a
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solution that any of their suppliers could access easily. Browser-based Ultriva Electronic Kanban answered that need perfectly. Another advantage of the solution’s browser-based foundation was its accessibility to the shop-floor employees of CVG who would be using it daily. CVG executives also liked that the Ultriva solution was based on Microsoft server and development technologies, largely Microsoft Windows Server, Internet 2005. This would enable them to integrate the solution seamlessly with existing back-end applications also based on the Microsoft platform. It also would enable them to maintain and update the solution cost-effectively, thanks to the wide availability of expertise in Visual Studio 2005, Visual Studio.NET, and other Microsoft technologies. In early 2006, CVG launched its deployment of Ultriva Electronic Kanban at two of its plants. Within a few months, hundreds of shop-floor employees internally and at some CVG suppliers were using the solution on a daily basis.
Benefits
Ultriva Electronic Kanban proved relatively easy to implement and adopt - with CVG buyers and some suppliers using the product smoothly after just two days of training. Since initial deployment, for those users and others, the benefits of the solution have become clear: faster turns and reduced inventory thanks to a vastly more automated process and better visibility of inventory; a system that empowers employees at all levels; comprehensive tracking and analysis of supplier performance; and closer involvement of suppliers in the process. 1. Faster Turns, Reduced Inventory The first job for Ultriva Electronic Kanban was to automate the scanning of parts coming in and to provide comprehensive real-time visibility of inventory to everyone involved. Using Ultriva Electronic Kanban meant the process was far less prone to errors than the manual approach used before. Another aspect of automation is the solution’s seamless integration with the company’s existing ERP system, enabling the company to provide any authorized user with an accurate 13 | P a g e
and comprehensive real-time view of parts and inventory. Shop-floor employees can access a total view of inventories at all points in the supply chain, so a very efficient and lean material flow and on-time delivery to customers was possible. At one warehouse, within just a few months of implementing the solution, turns speed was up by 28 percent, inventory down by 43 percent, and a savings of more than 6,500 square feet in floor space. 2. Total User Involvement Ultriva Electronic Kanban is empowering employees to take the lead in making e-Kanban a success at CVG. As the solution has eliminated many of the manual steps of securing new parts, buyers say that for the first time they feel like buyers instead of order takers. The solution also helps to serve CVG customers better. A part can be easily tracked from the time it leaves the supplier to its delivery, which helps to know how a given supplier is performing and enables CVG employees to give the customer a heads-up if a part is going to be delayed. Also, managers, whether they’re onsite or on the road, can see comprehensive status of all parts shipments, because the solution will send alerts based on certain conditions to a home PC or a mobile device. In this way, Ultriva Electronic Kanban has helped CVG to work closely as a team with its suppliers and customers. 3. “Now, It’s All Automatic” It’s not only users inside CVG that are realizing the benefits of Ultriva Electronic Kanban. The browser-based user interface and closed-loop architecture means authorized users from any supplier with an Internet connection can tap into the solution and make it work for them. In the past, CVG used ERP system to access sales information, then they batch-processed that information and sent forecasts to suppliers. Now, it’s all automatic. As soon as they receive a part, sell it, or need it replenished, the supplier knows it. So Ultriva Electronic Kanban not only helps to manage inventory and streamline just-in-time delivery, it can help the suppliers to do so as well. Another important factor is the ease of use and allencompassing nature of the solution.
Solution Overview
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Customer Size: 5500 employees Organization Profile: Headquartered near Columbus, Ohio, Commercial Vehicle Group (CVG) has more than 5,500 employees working at more than 35 locations worldwide and serving customers in over two dozen countries.
Business Situation: For two years, CVG implemented the Kanban method of inventory replenishment using a manual, card-based approach that was complex, time-consuming, and prone to error. Solution: CVG implemented Ultriva Electronic Kanban, a turnkey, browser-based solution from Microsoft Partner Ultriva, based in Cupertino, California. The solution is based fully on Microsoft server and development technologies.
Benefits ? ? ? ? ? ? ?
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Inventory turns up by 28 percent Inventory down by 43 percent Saves 6,500 sq. ft. of floor space Helps users work smarter Promotes teamwork Improves customer service Streamlines just-in-time delivery
Partner(s): Ultriva
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Software and Services: Microsoft Internet Information Server, Microsoft SQL Server 2005, Microsoft Visual Studio 2005 and Microsoft Windows Server 2003
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Vertical Industries: Automotive and Industrial Manufacturing Industry Manufacturing
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Country/Region: United States
Case 3: Mathers Controls
Mathers Controls, Inc., a private corporation founded in 1951, manufactures electronic and pneumatic propulsion controls and propeller shaft brakes for the marine industry. The company primarily focuses on supplying components throughout the world to OEMs in the boat building industry that construct vessels larger than 40 feet. A smaller, yet significant portion of business, comes from sales to distributors and individual customers in the fishing, transportation, and pleasure craft industries. Mathers Controls' offices and manufacturing facility are located in Burlington, Washington, and the company employs 52 people.
Situation: Mathers Controls' desire for growth and increased market share and revenue
led the company to develop a new product line aimed at the fully electronic engine and gear control that market. could Aware prevent Prior that it to there from were meeting the restrictions increased project, in its existing for its operations plant demand Mathers
products, Mathers Control was on the verge of approving a more than $1 million expansion project. approving Controls contacted Washington Manufacturing Services (WMS), a NIST MEP network affiliate, for assistance.
Solution: After touring the plant and conducting a fact-finding meeting with top
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means of increasing the capacity of the plant without costly plant expansion. The Center coordinated a lean manufacturing assessment of the plant and arranged for Mathers Controls' senior management to visit another company that had been implementing lean manufacturing over the past year. Discussing the actual improvements and performance enhancements gained by lean manufacturing with another company's president provided Mathers Controls' management team with the assurance they needed to approve WMS' proposal to provide lean manufacturing training and implementation assistance. By adopting lean manufacturing, Mathers Control wanted to increase the
facility's overall capacity by at least 25 percent to avoid the need to expand. WMS contracted a preferred resource provider to thoroughly educate all of Mathers Controls' employees on lean manufacturing concepts, principles, guidelines, and analysis tools, and to provide the basis and framework for change. Then, identification and analysis of the company's processes followed. The employees' experience and lean manufacturing knowledge were applied to the layout design of the new facility. The new layout design:
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moved the entire production area next to the shipping and receiving area introduced manufacturing cells that significantly reduced space
requirements
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promoted one piece flow to minimize assembly costs reduced product lead-time and work-in-process (WIP) lowered inventory levels, which minimized carrying costs stored tools, information, raw materials, and supplies at their point of use to
eliminate wasteful steps and associated costs. With the elimination of most departmental barriers, communication was
enhanced. WMS successfully implemented the majority of the lean manufacturing processes within a six-month period and did so without the company losing more than eight hours of production while the plant equipment was relocated.
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As a result of WMS' assistance, Mathers Controls reduced its production space requirements by 36 percent, which decreased capital expansion/modification costs by 78 percent since the company no longer needed to enlarge the facility. Production capacity increased by 100 percent, which allowed employees to take advantage of cross-training opportunities, while overall capacity increased by 30 percent, with future improvements anticipated. There was a 32 percent decrease in WIP and finished goods inventory, which freed up enough cash to pay for the new plant layout. And, with most of its processes simplified, Mathers Controls decreased production lead times by 50 percent and reduced internal rework by 75 percent.
Results:
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Reduced capital expansion/modification costs by 79 percent. Avoided a costly expansion project. Increased production capacity by 100 percent. Increased overall capacity by 30 percent. Decreased WIP & finished good inventory 32 percent. Decreased production lead times by 50 percent. Reduced production space by 36 percent. Reduced production travel distance by 88 percent. Reduced internal production rework by 75 percent. Enhanced company-wide communications.
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Case 4: Convergys (Target Real Call Center Waste)
Many processes and supporting functions operate in call centers…planning, staff scheduling, call routing, after-call processing and reporting. However, the single most important process in a call center – the one repeated thousands of times a day and the one most in need of improvement – is an agent handling an inbound or outbound call. It is perfectly appropriate to apply Lean Six Sigma process improvement techniques to ancillary call center processes. However, a key Six Sigma principle is to apply improvement resources to the high-leverage opportunities. There is no bigger improvement opportunity in a call center than the agent call handling process. New commercial or in-house software can provide the potential for major changes in the call handling process and enable the application of Lean principles to call handling that can produce breakthrough results for employees, customers and shareholders.
The Challenge: Improving Call Handling
Improving the agent call handling process is hard work. The fundamental challenge is that even for a single call type, there is not one process to improve. In call centers, the agents are the process and therefore a company must have at least as many processes to improve as it has agents, and probably more. For example, if a company has 50 agents handling a particular kind of call, it not only has variation across the 50 agents (each agent does it differently); there also is variability within 19 | P a g e
the agents themselves (they handle the same call type differently each time). Thus a company does not have one process to improve; it has hundreds or thousands, just for one simple call type. Though tools like customer relationship management (CRM) software, scripts and quality monitoring can help reduce the variation, the variation in process and output in even the best call centers in the world is operating at levels that would be completely unacceptable in a manufacturing facility built around Lean manufacturing principles.
Understanding That 'the Agent Is the Process' Reducing this agent variation requires three things: 1. Agents have to have a process to follow (process standardization). 2. They have to want to follow that exact process because it allows them to deliver quality service and because it makes their work life easier. 3. Management has to have complete visibility into agent-by-agent and call-by-call performance so it can be continuously improved. Moreover to keep costs down, these three things need to be accomplished without using expensive call recording or having quality monitors listen in on every call. An improvement strategy built around inspecting quality (call recording/call monitoring) is too expensive. Further, it is not nearly as effective and sustainable as the techniques that have proved so successful in manufacturing – process standardization, error proofing and complete transparency into performance. Software solutions can address all these challenges. Call flows can be built for the agents to follow in a tool on their desktop. Prerecorded audio files can be attached to this call flow that the agent can control/play during the call with the keyboard. Additionally, such software can be integrated with CRM software to pass relevant information back and forth as needed. This type of call center system is not a fully automated solution like an interactive voice response (IVR) system. The agent remains on the call with the customer the entire time. It is
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an ideal combination of the consistency and accuracy of a computer blended with the intelligence, sensitivity and flexibility of a human. If something occurs during the call that is outside the normal process, the agent simply interjects with his/her live voice. And though these voice recordings are in a voice other than the agents, customers have been completely accepting of the system because they are getting the exact information they need in a clear and efficient fashion.
Essential First Step: Standardize the Process
A key Lean principle is to build standardized processes. Sadly, this is often the first challenge – no standardized process for a given call type has ever been defined. Though there may be a process that the training department recommends, it is likely not the process the best agents or even the majority of the agents are currently following. It probably goes without saying, but if a call center wants to improve call handling, it has to define and standardize the processes it wants to improve. Until that is done, the whole call handling operation is, de facto, sub-optimized. Figure 1 shows an actual audio file for the first process a call center built to handle a cell phone activation call, which is a relatively straight-forward call type, but one that would be too hard to handle entirely with automation such as an IVR system. The process was built, an agent speaking the required statements was prerecorded and then the audio file was played at the appropriate times during the call. The dark lines indicate when the audio files were being played, while the yellow shaded areas represent hold/dead air time. These hold/dead air times were times when the agent was doing something else for the call or they were simply unnecessary pauses that had been recorded. Figure 1: Version 1 of Audio File
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Just having a standardized process was a huge step forward. Dozens of agents were using this pre-built process to handle the cell phone activation calls, which drastically reduced the between and within agent variation for how this call type was handled.
Optimizing the Process: Eliminating Waste
However, standardizing a process does not mean the process is optimized. Processes have several kinds of waste associated with them, including waste from having the product or people waiting around, waste from excessive steps or movement, waste from rework, etc. With the right software platform, a call center can apply a Kaizen or continuous improvement approach to eliminate waste. Eliminating Wait Times: Lean manufacturing emphasizes continuous flow. When work in process is waiting, there is no value being added and it represents expensive excess inventory. It is the same with a phone call. Anytime there is silence during the call, no value is being added and resources (telecom and people) are tied up Taking a look at the initial process/recording for the cell phone activation call (Figure 1), it is easy to see where pauses and dead air could be eliminated by re-recording them and tightening up starts, stops and pauses. Eliminating Unnecessary Steps: A Kaizen approach to process improvement involves applying a critical eye to every step in the process and asking such questions as: Is the step important to the customer? Is it absolutely necessary?
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For example, during the phone cell activation call, customers were asked for their email addresses. Most customers (98 percent) when asked did not have one or did not want to give it out. The step was not important to the customer and so the call center administration decided to eliminate it. Improving the Efficiency of Necessary Steps: On the steps that were necessary, each statement was closely examined with an eye toward finding a way to convey the information more efficiently. The call center team looked for sentences, phrases and even words that could be eliminated while still clearly communicating the message. For example, in the first version of the process based on the documented call handling procedures, one question was: "Have you ever had a Brand X phone before or will this be your first?" That was changed to: "Is this your first Brand X phone?" This example represents a 50 percent reduction in word count. Repeated changes like this took the original word count from 856 to 618, an overall improvement of 27 percent. Figure 2 shows the audio file for the final process deployed after applying all the various waste elimination techniques. This audio file does the same job as Figure 1, but much more efficiently. Word count was reduced by 27 percent. Dead air was reduced by 84 percent. And overall talk time was reduced by 45 percent, from 550 seconds to 305 seconds. Figure 2: Version 4 of Audio File
Mistake Proofing: Another key Lean manufacturing principle is to mistake proof the process. An automotive example of this is being unable to shift a car out of "park" unless the driver's foot is depressing the brake.
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For many different types of phone calls, there are certain disclosures that often must be read to the customer. Many of these are required by law while others are best practices that management wants their agents to follow. By building the ideal call flow, management can ensure that all required disclosures/best practices are included exactly where they want them. Quality is built in. While the agents can technically avoid playing the required recordings, they would have to work hard to bypass the process and it would be readily apparent that they had done so. Stopping the Line: Another component of Lean, or Japanese manufacturing principles, that can be leveraged is what is known as "stopping the line" when a problem is detected. Stopping the line allows teams to immediately correct the problem condition and investigate the root cause so that a countermeasure can be built to prevent the problem in the future. The "line" in a call center is the thousands of agents handling calls. Modern call centers have not had the ability to stop the line – that is, to stop an agent that produces poor quality on a call – because they do not have visibility into the quality of every call as it is occurring. These new software solutions can give call center management visibility into the quality of every call as it occurs. When agents use a keyboard to play the recordings, their keystrokes are easy to track and report on, which allows call center management to see exactly what every agent did on every call, right after the call occurs. One or two people can monitor a dashboard of call-by-call performance for hundreds of agents. When an error is detected they can immediately review the file of the call or have a manager or team leader check-in with the agent to understand if there was a problem and what can be done to prevent it. Results: Lean principles encourage systemic, big picture thinking. This means that the results must be examined broadly in terms of their implications for customers, employees and shareholders. Something that is good for the shareholders, but is not a good experience for customers and employees is, long-term, likely to create more problems than it solves.
Improved Employee and Customer Satisfaction
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Some doubt that this solution will work because they think the agents and customers will hate it. The evidence born of experience is just the opposite. The agents want to use this system because it allows them to get the process exactly right. This is especially important for new agents. It also reduces the amount of time agents have to talk during the day. The agents report being less tired and stressed at the end of their shifts. Adoption rates are immediate and 100 percent. From a customer perspective, the customer is told that the agent is using software to improve communication with them but that the agent is on the phone with them the entire time. The customers do not complain. They like getting the information they need clearly and quickly. In fact, multiple measures of customer satisfaction (follow-up surveys, in-call escalations to a supervisor, etc) all triangulate to the same conclusion – the agent-controlled audio files improve customer satisfaction.
Metrics from a Call Center Implementation
In Figure 3, the top graph represents talk time, the bottom graph shows after-call work (ACW), or the time the agent is completing work on a previous call before he/she can take another call. The horizontal lines on the chart represent the targets the call center needed to achieve. The period from October through November is the baseline data from experienced agents taking cell phone activation calls. The December period was part testing, part training and part implementation with new agents. The January through February period is full deployment to all new agents. Brand new agents handled 95 percent of the activation calls from Jan. 1 on. Figure 3: Talk Time and After-call Work
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The December launch and testing period was done just like a lean manufacturing process improvement effort using a pilot cell of agents. Through this focused implementation, it was learned what worked and what did not. When the new call center process was launched with 45 brand new agents for the peak of activation calls, talk time and ACW were better than the target and better than experienced agents had ever been. There also was a reduction in variation in both talk time and ACW. For many centers, variability in these two measures results in having to staff more agents (increase costs) to handle the variability and still meet service levels. In this way, excess agents serve a similar purpose as excess inventory does in a manufacturing operation – a buffer against process variation.
The Payoff for Call Centers and Their Customers
Lean Six Sigma has been introduced and successfully applied in thousands of call centers. But the efforts to date have been off-center, focused on ancillary processes, as opposed to being focused dead-center, on the call handling process. Agent variation in output and quality has had to be tolerated by management. W. Edwards Deming and Joseph Juran, who inspired the creation and refinement of many of the Japanese manufacturing techniques discussed here, noted that variability on critical performance metrics is a threat to the vitality of an enterprise because it is evidence that the business is not being managed effectively.
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Companies can now address this and allow call center leaders to build a standardized process the agents want to follow and to which the most powerful process improvement techniques that have ever been developed can be applied. The ability to apply these process improvement techniques can revolutionize how call centers function and the results they produce – happier, more productive employees will be able to deliver a vastly improved customer experience, and management will be able to implement productivity improvements and cost reductions for shareholders.
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doc_591577239.doc
The documentation about Microsoft strategy, Mathers Controls, Convergys for lean manufacturing.
OPERATIONS MANAGEMENT
PROJECT ON LEAN MANUFACTURING SYSTEM
What is Lean Production?
Lean is about doing more with less: less time, inventory, space, labor, and money. "Lean manufacturing", shorthand for a commitment to eliminating waste, simplifying procedures and speeding up production. Lean Manufacturing (also known as the Toyota production system) is, in its most basic form, the systematic elimination of waste – overproduction, waiting, transportation, inventory, motion, over-processing, defective units – and the implementation of the concepts of continuous flow and customer pull. Five areas drive lean manufacturing/production: 1. cost 2. quality 3. delivery 4. safety, and
5.
morale
Just as mass production is recognized as the production system of the 20th century, lean production is viewed as the production system of the 21st century.
Lean Production Overview
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Non-value added activities or waste are eliminated through continuous improvement efforts Focus on continuous improvement of processes - rather than results - of the entire value chain The lean manufacturing mindset: concept, way of thinking - not techniques; culture not the latest management tool Continuous product flow is achieved through physical rearrangement and system structure & control mechanisms
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Single-piece flow / small lot production: achieved through equipment set up time reduction; attention to machine maintenance; and orderly, clean work place Pull reduction / Just-in-time inventory control
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Basic Elements of Lean Manufacturing
The basic elements are waste elimination, continuous one piece workflow, and customer pull. When these elements are focused in the areas of cost, quality and delivery, this forms the basis for a lean production system. The lean production concept was to a large extent inspired by the Kaizen - the Japanese strategy of continuous improvement. Employee empowerment and promotion among them of a way of thinking oriented at improving processes, imitation of customer relationships, fast product development and manufacturing, and collaboration with suppliers are the key strategies of leading lean companies.An introduction to the Toyota Production System
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Case 1: Toyota Production System
The Toyota Production System is a philosophy of manufacturing that was created by the Toyota Corporation. The Toyota Production System or TPS, has come to be known as a term that is synonymous with Lean Manufacturing. Lean manufacturing aims to improve the manufacturing process by eliminating wastes in all their forms. The TPS names seven wastes specifically and collectively calls these wastes "Muda." Also called "The Seven Deadly Wastes" the muda as defined by Toyota includes the following: over-production, motion (of operator or machine), waiting (of operator or machine), conveyance, processing itself, inventory (raw material) and correction (rework and scrap). Not only are processes sped up when waste is eliminated through TPS but the quality of the product is better. This means that the customer benefits from the TPS process just as much, if not more, than the manufacturer benefits. Everyone wins and the profits reflect this improvement in process. Toyota has long benefited from their innovations in the world of lean thinking and in 2007 became the largest car manufacturer in the world. Other manufacturing companies are definitely taking note and many of the Toyota Production System methods are being copied. Although the principles of TPS can theoretically be applied universally, no manufacturer has yet to master the processes the way that Toyota has. The origins of the Toyota Production System are said to actually have been inspired by American businesses. A delegation from Toyota came to the United States to study their commercial businesses. At the time the Ford Company was recognized as being the innovator in Lean Manufacturing, but when the Toyota executives visited the Ford Motor Company, they were disappointed with how inefficiently they managed their inventory. It was actually from a super market chain that they gained their inspiration for a process now known as Just In Time. It was at this supermarket that they saw that a piece of inventory was only re-ordered once it had been sold from the shelves.
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This was the start of a new way to manufacture, a way that is both complicated and simple and that American's have had a difficult time understanding because of all of the meaning that is behind the actions that are taken in the Just In Time and other methodologies. It is not simply a matter of eliminating the waste but replacing it with a system that allows for continual improvement that benefits the worker, the customer and the company's bottom line. Basically the point is to sacrifice short-term financial goals if need be in order to base management decisions on a more long-term philosophy. This philosophy of sacrificing the short-term for the long-term is called The Toyota Way.
Common terms used in the Toyota Production System:
The Toyota Production System has come to include a great number of different concepts and methodologies. As different companies will find it useful to utilize different strategies for the implementation of their Toyota Production System a brief list and definition of common terms is listed below:
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Just In Time (JIT) - JIT is an inventory strategy that a company may chose to implement in order to improve the return on investment of a business by reducing inventory and the costs associated with carrying unsold goods.
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Jidoka (Autonomation) - Jidoka is a Japanese word that refers to the process of creating an automated production line that also includes a human touch. Machines perform with Autonomation when they are programmed to stop producing in the case of an error. It is then the human who identifies and resolves the problem.
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Kaizen (Continuous Improvement) - This Japanese term refers to the process of gradual change for the better. Employees are encouraged to provide input and improve the processes that they are over thereby making their jobs more enjoyable and the production line more efficient.
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Pokayoke - The process of fool-proofing or mistake-proofing a system by identifying the cause of defects or errors and putting a plan in place to prevent such inadvertent errors from occurring again.
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Muda - The term muda is often accompanied with a list of seven different wastes or "deadly wastes" that a company looking to implement lean manufacturing techniques is trying to eliminate. (The terms "Muri" and "Mura" refer respectively to the overburden and unevenness that accompanies the carrying of the unnecessary wastes).
The Toyota Way
The Toyota Corporation has named their managerial philosophy "The Toyota Way." The Toyota Way includes a series of 14 principles that are considered the basis on which management decisions are made. The people at Toyota believed that in order to think in terms of long-term goals, they needed to have a process for solving problems, a way by which they could add value to the organization by developing its people (on every level, not just management), and to recognize that continuously solving problems by first discovering their origins drives organizational learning. The Toyota Production System and the Toyota way of thinking have given them a competitive advantage on a global scale. This advantage was gained through a combination of their human resource management policies and their highly efficient network of suppliers and manufacturers of the machine and other components used for production. It is the approach to management that is most interesting though. Toyota is known for their corporate culture of employee empowerment. Just consider the following statistics and perhaps you can begin to get a better idea of just how employee centered the Toyota Corporation is. In an average year more than 700,000 improvement suggestions were submitted by Toyota's employees. That is an average of over 10 improvement suggestions per employee per year. What is perhaps most impressive is that over 99% of suggestions were implemented! Toyota knows that the workers are at the center of the process of continuous improvement and that it is their creativity that leads not only to innovation but also to company loyalty and improved morale in the workplace. When job satisfaction is high, there is a greater likelihood that reliable and high quality products will be produced at an affordable price. Of course Toyota is most readily known for their production of cars, but it is their human resource management techniques that have caught the attention of manufacturers around the world. 6|Page
7 Principles of the Toyota Production System
1. Reduce setup times - Employees at Toyota were made responsible for their own setups thus reducing the wastefulness of this process that ultimately adds to value to the customer and takes up valuable in process labor time and equipment. 2. Small-lot production - The process of economically producing a variety of things in small quantities rather than producing things in large batches. 3. Employee involvement and empowerment - Employee are divided into teams and even those in supervisory positions work along side other employees on the production line as part of the team. 4. Quality at the source - Product defects are identified and corrected as soon as they occur or at the source. 5. Equipment maintenance - Operators of the equipment are also assigned to take care of their maintenance since these should be the individuals who know the equipment best. 6. Pull production - The work performed at each stage of the process is dictated solely by demand for materials from the immediate next stage (also known as "Just in Time"). 7. Supplier involvement - Suppliers are treated as partners and are also trained in the TPS methods. How Can TPS Help My Organization?
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Some of the most common benefits that a company sees as a result of perusing Toyota Production System practices are that they are able to identify and enhance customer perceived value in the product or line of products being offered (this includes improved product quality and timely deliveries), waste is decreased and thereby costs are minimized, and they are able to develop a competitive advantage in their manufacturing field. TPS helps almost any organization that chooses to implement its best practices.
Case
2:
Microsoft
Strategy
for
Lean
Manufacturing
Lean Manufacturing solutions Lean manufacturing can improve operational performance by lowering manufacturing costs, increasing on-time delivery, improving quality and customer service, and generating new sources of value. Businesses that want to take advantage of lean manufacturing, however, often struggle to move from a push-based forecast model to a pull-based model based on actual customer demand. By effectively managing lean manufacturing process, people can drive efficient success by reducing waste, inventory, and cycle times, while increasing quality, revenue, and profit margins.
Business challenge
Obstacles to lean manufacturing include the use of manual, paper-based tools, restricted data sharing among applications, inflexible computing technologies, and difficulty in accessing data. Disparate, non-integrated point solutions also present roadblocks to effectively scaling lean manufacturing enterprise-wide. Without established value stream mapping and analysis (VSM&A) tools, people don't have access to a systematic way of conducting accurate and timely value stream analysis. They lack the ability to create a VSM&A system of record, they have limited visibility into value stream improvement opportunities, and they may not have the data integrity necessary to make confident decisions. This leads to excessive time spent collecting and validating data
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rather than to more valuable time spent analyzing data to uncover improvement opportunities. Manual Kanban systems pose their own challenges: inaccurate inventory data, lack of a cohesive system for handling materials replacement, no ability to track performance data, lack of flexibility in response to customer demand, inventory stock outs, lost Kanban cards, and no integration with enterprise business systems. The lack of a value stream performance management system means that people have no enterprise-level analysis capability or visibility into enterprise value streams, no ability to view actual versus projected results, and limited collaboration and knowledge-sharing capability. The Microsoft strategy for lean manufacturing addresses these issues through three key solution areas: value stream mapping, collaborative electronic Kanban, and a lean enterprise portal.
Solutions
The Microsoft strategy for lean manufacturing is to help energize, transform, and sustain the lean operations. Along with its partners, Microsoft energizes people by giving them breakthrough practitioner tools that help them master the basics. The solutions they provide also help institutionalize corporate continuous improvement initiatives by matching people and processes with visual management, business intelligence, and collaboration tools that standardize how companies analyze, measure, monitor, and improve value streams. With people-ready software tools that help workers master the basics and that provide management with a value stream performance management system, you'll be able to sustain lean operations—even if you experience executive and employee turnover. Microsoft and its partners deliver highly customizable technologies that empower people to amplify the impact of solutions to support lean manufacturing efforts in the following three areas: • Value stream mapping: Value stream mapping and analysis is a critical tool that searches for opportunities to eliminate waste and to make processes more efficient. VSM&A solutions from Microsoft and its partners improve visibility into value stream improvement opportunities and empower you to create a lean system of record. 9|Page
• Lean enterprise portal: A lean enterprise portal provides visual management, business intelligence, document management, and collaboration capabilities to give people a standard way of work that they can easily adopt and even extend to suppliers and customers. • Collaborative electronic Kanban: Collaborative eKanban aligns inventory and production with demand, resulting in the ability to reduce inventory, eliminate stock outs and expediting charges, increase buyer and planner productivity, and improve on-time delivery percentages.
Business benefits
By implementing solutions from Microsoft and its partners, people can realize the following benefits: • Complete visibility across the supply chain eKanban provides real-time material visibility, unparalleled supplier communication, replenishment driven by actual demand rather than forecasts, and closed-loop replenishment signals. • Standardized value stream mapping and analysis VSM&A solutions from Microsoft and its partners systematically evaluate and report on value stream performance, improve visibility and reporting into value stream opportunities and projects, improve productivity and collaboration across groups, and capture and report on lean program savings. • Elimination of stock outs and inventory reduction Reduce inventory by 20 to 75 percent, and eliminate stock outs and expediting charges. These benefits result in a reduction of cycle times and improved customer delivery performance, as well as increased productivity for buyers and planners. eKanban solutions streamline production, which can drive down inventory costs as much as 75 percent. • Sustained lean initiatives By implementing lean enterprise portal solutions from Microsoft and its partners, you empower your lean practitioners to improve cross-team collaboration, enhance project 10 | P a g e
tracking, gain visibility into project ideas, memorialize lean techniques, and integrate lean manufacturing design, analysis, and improvements into existing business systems and processes. Enabling your lean practitioners across the enterprise to work together aids you in adopting lean, flexible operational networks and business processes that can change as business needs evolve.
Case study: Commercial Vehicle Group Commercial Vehicle Group (CVG) is a world leader in vehicle solutions for the construction, agricultural, industrial, commercial, municipal, and marine industries. To help improve on-time delivery, reduce inventory levels, and lower costs, CVG engaged Microsoft partner Ultriva. Ultriva deployed an electronic Kanban solution built using Microsoft technologies and the Ultriva Electronic Kanban application. Within just a few months of deployment at two of its plants, CVG reduced its inventory by 43 percent, boosted inventory turns by 28 percent, increased customer on-time delivery, accelerated productivity, and improved synergy with partners.
Situation
Founded in 1997, Commercial Vehicle Group (CVG) is a leading supplier of cabs and cabrelated products for heavy-duty commercial trucks and specialized vehicles used in construction, mining, agricultural, and marine environments. CVG introduced the first air-suspension seat for the trucking industry and today ? the only supplier that can is offer a complete cab interior state-of-the-art technology structures and assemblies to vision-safety solutions, wiper systems, switches and controls, mirrors, and a full array of trim systems. Through such advances, CVG is now ranked No. 1 or 2 in every aspect of the marker of success that stems at least partly? commercial-vehicle body market from the company’s innovative efforts to dramatically streamline the supply chain.
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For example, early on, CVG pursued a “co-location” strategy unique in the heavy-truck industry: establishing production and light-assembly plants near to major-customer sites so as to expedite just-in-time parts shipment. CVG also has deployed extensive enterprise resource planning (ERP) systems for its purchasers, manufacturers, and suppliers, and has implemented Six Sigma programs for process improvement on a similar scale. Most recently, CVG has implemented Kanban, a demand-driven method of inventory replenishment that evolved from a total quality production system pioneered at Toyota Motor Corporation. Some CVG executives were among the first graduates of training programs in the method, and today every CVG employee must complete 40 hours of instruction in a similar program, instruction that is provided by a member of the shop-floor staff. CVG focused heavily on employee involvement, bringing everyone’s skills to bear on eliminating waste in the manufacturing and supply chain, and using those skills to make the business better. When CVG first implemented Kanban in 2004, it was a manual tool, based on plastic or cardboard cards that resided with every part in the company’s inventory. A card would travel with its corresponding part from its arrival at a CVG warehouse to its delivery at a customer site. The card-based approach provided employees an excellent introduction to Kanban, but also had drawbacks. Inventory counts, signals to suppliers for inventory replenishment, and entry of new-inventory information were implemented by hand, making it very time-consuming and complex to adjust inventory. For all these reasons, they decided to take Kanban to the next level by implementing an electronic approach to the method.
Solution
After evaluating a handful of Kanban software products, CVG executives selected Ultriva Electronic Kanban based on a number of criteria. Perhaps most significantly, the solution was browser-based. To get the most benefit from Kanban, they needed a closed-loop solution that would support a continuous-flow process, a
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solution that any of their suppliers could access easily. Browser-based Ultriva Electronic Kanban answered that need perfectly. Another advantage of the solution’s browser-based foundation was its accessibility to the shop-floor employees of CVG who would be using it daily. CVG executives also liked that the Ultriva solution was based on Microsoft server and development technologies, largely Microsoft Windows Server, Internet 2005. This would enable them to integrate the solution seamlessly with existing back-end applications also based on the Microsoft platform. It also would enable them to maintain and update the solution cost-effectively, thanks to the wide availability of expertise in Visual Studio 2005, Visual Studio.NET, and other Microsoft technologies. In early 2006, CVG launched its deployment of Ultriva Electronic Kanban at two of its plants. Within a few months, hundreds of shop-floor employees internally and at some CVG suppliers were using the solution on a daily basis.
Benefits
Ultriva Electronic Kanban proved relatively easy to implement and adopt - with CVG buyers and some suppliers using the product smoothly after just two days of training. Since initial deployment, for those users and others, the benefits of the solution have become clear: faster turns and reduced inventory thanks to a vastly more automated process and better visibility of inventory; a system that empowers employees at all levels; comprehensive tracking and analysis of supplier performance; and closer involvement of suppliers in the process. 1. Faster Turns, Reduced Inventory The first job for Ultriva Electronic Kanban was to automate the scanning of parts coming in and to provide comprehensive real-time visibility of inventory to everyone involved. Using Ultriva Electronic Kanban meant the process was far less prone to errors than the manual approach used before. Another aspect of automation is the solution’s seamless integration with the company’s existing ERP system, enabling the company to provide any authorized user with an accurate 13 | P a g e
and comprehensive real-time view of parts and inventory. Shop-floor employees can access a total view of inventories at all points in the supply chain, so a very efficient and lean material flow and on-time delivery to customers was possible. At one warehouse, within just a few months of implementing the solution, turns speed was up by 28 percent, inventory down by 43 percent, and a savings of more than 6,500 square feet in floor space. 2. Total User Involvement Ultriva Electronic Kanban is empowering employees to take the lead in making e-Kanban a success at CVG. As the solution has eliminated many of the manual steps of securing new parts, buyers say that for the first time they feel like buyers instead of order takers. The solution also helps to serve CVG customers better. A part can be easily tracked from the time it leaves the supplier to its delivery, which helps to know how a given supplier is performing and enables CVG employees to give the customer a heads-up if a part is going to be delayed. Also, managers, whether they’re onsite or on the road, can see comprehensive status of all parts shipments, because the solution will send alerts based on certain conditions to a home PC or a mobile device. In this way, Ultriva Electronic Kanban has helped CVG to work closely as a team with its suppliers and customers. 3. “Now, It’s All Automatic” It’s not only users inside CVG that are realizing the benefits of Ultriva Electronic Kanban. The browser-based user interface and closed-loop architecture means authorized users from any supplier with an Internet connection can tap into the solution and make it work for them. In the past, CVG used ERP system to access sales information, then they batch-processed that information and sent forecasts to suppliers. Now, it’s all automatic. As soon as they receive a part, sell it, or need it replenished, the supplier knows it. So Ultriva Electronic Kanban not only helps to manage inventory and streamline just-in-time delivery, it can help the suppliers to do so as well. Another important factor is the ease of use and allencompassing nature of the solution.
Solution Overview
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Customer Size: 5500 employees Organization Profile: Headquartered near Columbus, Ohio, Commercial Vehicle Group (CVG) has more than 5,500 employees working at more than 35 locations worldwide and serving customers in over two dozen countries.
Business Situation: For two years, CVG implemented the Kanban method of inventory replenishment using a manual, card-based approach that was complex, time-consuming, and prone to error. Solution: CVG implemented Ultriva Electronic Kanban, a turnkey, browser-based solution from Microsoft Partner Ultriva, based in Cupertino, California. The solution is based fully on Microsoft server and development technologies.
Benefits ? ? ? ? ? ? ?
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Inventory turns up by 28 percent Inventory down by 43 percent Saves 6,500 sq. ft. of floor space Helps users work smarter Promotes teamwork Improves customer service Streamlines just-in-time delivery
Partner(s): Ultriva
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Software and Services: Microsoft Internet Information Server, Microsoft SQL Server 2005, Microsoft Visual Studio 2005 and Microsoft Windows Server 2003
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Vertical Industries: Automotive and Industrial Manufacturing Industry Manufacturing
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Country/Region: United States
Case 3: Mathers Controls
Mathers Controls, Inc., a private corporation founded in 1951, manufactures electronic and pneumatic propulsion controls and propeller shaft brakes for the marine industry. The company primarily focuses on supplying components throughout the world to OEMs in the boat building industry that construct vessels larger than 40 feet. A smaller, yet significant portion of business, comes from sales to distributors and individual customers in the fishing, transportation, and pleasure craft industries. Mathers Controls' offices and manufacturing facility are located in Burlington, Washington, and the company employs 52 people.
Situation: Mathers Controls' desire for growth and increased market share and revenue
led the company to develop a new product line aimed at the fully electronic engine and gear control that market. could Aware prevent Prior that it to there from were meeting the restrictions increased project, in its existing for its operations plant demand Mathers
products, Mathers Control was on the verge of approving a more than $1 million expansion project. approving Controls contacted Washington Manufacturing Services (WMS), a NIST MEP network affiliate, for assistance.
Solution: After touring the plant and conducting a fact-finding meeting with top
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means of increasing the capacity of the plant without costly plant expansion. The Center coordinated a lean manufacturing assessment of the plant and arranged for Mathers Controls' senior management to visit another company that had been implementing lean manufacturing over the past year. Discussing the actual improvements and performance enhancements gained by lean manufacturing with another company's president provided Mathers Controls' management team with the assurance they needed to approve WMS' proposal to provide lean manufacturing training and implementation assistance. By adopting lean manufacturing, Mathers Control wanted to increase the
facility's overall capacity by at least 25 percent to avoid the need to expand. WMS contracted a preferred resource provider to thoroughly educate all of Mathers Controls' employees on lean manufacturing concepts, principles, guidelines, and analysis tools, and to provide the basis and framework for change. Then, identification and analysis of the company's processes followed. The employees' experience and lean manufacturing knowledge were applied to the layout design of the new facility. The new layout design:
• •
moved the entire production area next to the shipping and receiving area introduced manufacturing cells that significantly reduced space
requirements
• • • •
promoted one piece flow to minimize assembly costs reduced product lead-time and work-in-process (WIP) lowered inventory levels, which minimized carrying costs stored tools, information, raw materials, and supplies at their point of use to
eliminate wasteful steps and associated costs. With the elimination of most departmental barriers, communication was
enhanced. WMS successfully implemented the majority of the lean manufacturing processes within a six-month period and did so without the company losing more than eight hours of production while the plant equipment was relocated.
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As a result of WMS' assistance, Mathers Controls reduced its production space requirements by 36 percent, which decreased capital expansion/modification costs by 78 percent since the company no longer needed to enlarge the facility. Production capacity increased by 100 percent, which allowed employees to take advantage of cross-training opportunities, while overall capacity increased by 30 percent, with future improvements anticipated. There was a 32 percent decrease in WIP and finished goods inventory, which freed up enough cash to pay for the new plant layout. And, with most of its processes simplified, Mathers Controls decreased production lead times by 50 percent and reduced internal rework by 75 percent.
Results:
• • • • • • • • • •
Reduced capital expansion/modification costs by 79 percent. Avoided a costly expansion project. Increased production capacity by 100 percent. Increased overall capacity by 30 percent. Decreased WIP & finished good inventory 32 percent. Decreased production lead times by 50 percent. Reduced production space by 36 percent. Reduced production travel distance by 88 percent. Reduced internal production rework by 75 percent. Enhanced company-wide communications.
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Case 4: Convergys (Target Real Call Center Waste)
Many processes and supporting functions operate in call centers…planning, staff scheduling, call routing, after-call processing and reporting. However, the single most important process in a call center – the one repeated thousands of times a day and the one most in need of improvement – is an agent handling an inbound or outbound call. It is perfectly appropriate to apply Lean Six Sigma process improvement techniques to ancillary call center processes. However, a key Six Sigma principle is to apply improvement resources to the high-leverage opportunities. There is no bigger improvement opportunity in a call center than the agent call handling process. New commercial or in-house software can provide the potential for major changes in the call handling process and enable the application of Lean principles to call handling that can produce breakthrough results for employees, customers and shareholders.
The Challenge: Improving Call Handling
Improving the agent call handling process is hard work. The fundamental challenge is that even for a single call type, there is not one process to improve. In call centers, the agents are the process and therefore a company must have at least as many processes to improve as it has agents, and probably more. For example, if a company has 50 agents handling a particular kind of call, it not only has variation across the 50 agents (each agent does it differently); there also is variability within 19 | P a g e
the agents themselves (they handle the same call type differently each time). Thus a company does not have one process to improve; it has hundreds or thousands, just for one simple call type. Though tools like customer relationship management (CRM) software, scripts and quality monitoring can help reduce the variation, the variation in process and output in even the best call centers in the world is operating at levels that would be completely unacceptable in a manufacturing facility built around Lean manufacturing principles.
Understanding That 'the Agent Is the Process' Reducing this agent variation requires three things: 1. Agents have to have a process to follow (process standardization). 2. They have to want to follow that exact process because it allows them to deliver quality service and because it makes their work life easier. 3. Management has to have complete visibility into agent-by-agent and call-by-call performance so it can be continuously improved. Moreover to keep costs down, these three things need to be accomplished without using expensive call recording or having quality monitors listen in on every call. An improvement strategy built around inspecting quality (call recording/call monitoring) is too expensive. Further, it is not nearly as effective and sustainable as the techniques that have proved so successful in manufacturing – process standardization, error proofing and complete transparency into performance. Software solutions can address all these challenges. Call flows can be built for the agents to follow in a tool on their desktop. Prerecorded audio files can be attached to this call flow that the agent can control/play during the call with the keyboard. Additionally, such software can be integrated with CRM software to pass relevant information back and forth as needed. This type of call center system is not a fully automated solution like an interactive voice response (IVR) system. The agent remains on the call with the customer the entire time. It is
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an ideal combination of the consistency and accuracy of a computer blended with the intelligence, sensitivity and flexibility of a human. If something occurs during the call that is outside the normal process, the agent simply interjects with his/her live voice. And though these voice recordings are in a voice other than the agents, customers have been completely accepting of the system because they are getting the exact information they need in a clear and efficient fashion.
Essential First Step: Standardize the Process
A key Lean principle is to build standardized processes. Sadly, this is often the first challenge – no standardized process for a given call type has ever been defined. Though there may be a process that the training department recommends, it is likely not the process the best agents or even the majority of the agents are currently following. It probably goes without saying, but if a call center wants to improve call handling, it has to define and standardize the processes it wants to improve. Until that is done, the whole call handling operation is, de facto, sub-optimized. Figure 1 shows an actual audio file for the first process a call center built to handle a cell phone activation call, which is a relatively straight-forward call type, but one that would be too hard to handle entirely with automation such as an IVR system. The process was built, an agent speaking the required statements was prerecorded and then the audio file was played at the appropriate times during the call. The dark lines indicate when the audio files were being played, while the yellow shaded areas represent hold/dead air time. These hold/dead air times were times when the agent was doing something else for the call or they were simply unnecessary pauses that had been recorded. Figure 1: Version 1 of Audio File
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Just having a standardized process was a huge step forward. Dozens of agents were using this pre-built process to handle the cell phone activation calls, which drastically reduced the between and within agent variation for how this call type was handled.
Optimizing the Process: Eliminating Waste
However, standardizing a process does not mean the process is optimized. Processes have several kinds of waste associated with them, including waste from having the product or people waiting around, waste from excessive steps or movement, waste from rework, etc. With the right software platform, a call center can apply a Kaizen or continuous improvement approach to eliminate waste. Eliminating Wait Times: Lean manufacturing emphasizes continuous flow. When work in process is waiting, there is no value being added and it represents expensive excess inventory. It is the same with a phone call. Anytime there is silence during the call, no value is being added and resources (telecom and people) are tied up Taking a look at the initial process/recording for the cell phone activation call (Figure 1), it is easy to see where pauses and dead air could be eliminated by re-recording them and tightening up starts, stops and pauses. Eliminating Unnecessary Steps: A Kaizen approach to process improvement involves applying a critical eye to every step in the process and asking such questions as: Is the step important to the customer? Is it absolutely necessary?
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For example, during the phone cell activation call, customers were asked for their email addresses. Most customers (98 percent) when asked did not have one or did not want to give it out. The step was not important to the customer and so the call center administration decided to eliminate it. Improving the Efficiency of Necessary Steps: On the steps that were necessary, each statement was closely examined with an eye toward finding a way to convey the information more efficiently. The call center team looked for sentences, phrases and even words that could be eliminated while still clearly communicating the message. For example, in the first version of the process based on the documented call handling procedures, one question was: "Have you ever had a Brand X phone before or will this be your first?" That was changed to: "Is this your first Brand X phone?" This example represents a 50 percent reduction in word count. Repeated changes like this took the original word count from 856 to 618, an overall improvement of 27 percent. Figure 2 shows the audio file for the final process deployed after applying all the various waste elimination techniques. This audio file does the same job as Figure 1, but much more efficiently. Word count was reduced by 27 percent. Dead air was reduced by 84 percent. And overall talk time was reduced by 45 percent, from 550 seconds to 305 seconds. Figure 2: Version 4 of Audio File
Mistake Proofing: Another key Lean manufacturing principle is to mistake proof the process. An automotive example of this is being unable to shift a car out of "park" unless the driver's foot is depressing the brake.
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For many different types of phone calls, there are certain disclosures that often must be read to the customer. Many of these are required by law while others are best practices that management wants their agents to follow. By building the ideal call flow, management can ensure that all required disclosures/best practices are included exactly where they want them. Quality is built in. While the agents can technically avoid playing the required recordings, they would have to work hard to bypass the process and it would be readily apparent that they had done so. Stopping the Line: Another component of Lean, or Japanese manufacturing principles, that can be leveraged is what is known as "stopping the line" when a problem is detected. Stopping the line allows teams to immediately correct the problem condition and investigate the root cause so that a countermeasure can be built to prevent the problem in the future. The "line" in a call center is the thousands of agents handling calls. Modern call centers have not had the ability to stop the line – that is, to stop an agent that produces poor quality on a call – because they do not have visibility into the quality of every call as it is occurring. These new software solutions can give call center management visibility into the quality of every call as it occurs. When agents use a keyboard to play the recordings, their keystrokes are easy to track and report on, which allows call center management to see exactly what every agent did on every call, right after the call occurs. One or two people can monitor a dashboard of call-by-call performance for hundreds of agents. When an error is detected they can immediately review the file of the call or have a manager or team leader check-in with the agent to understand if there was a problem and what can be done to prevent it. Results: Lean principles encourage systemic, big picture thinking. This means that the results must be examined broadly in terms of their implications for customers, employees and shareholders. Something that is good for the shareholders, but is not a good experience for customers and employees is, long-term, likely to create more problems than it solves.
Improved Employee and Customer Satisfaction
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Some doubt that this solution will work because they think the agents and customers will hate it. The evidence born of experience is just the opposite. The agents want to use this system because it allows them to get the process exactly right. This is especially important for new agents. It also reduces the amount of time agents have to talk during the day. The agents report being less tired and stressed at the end of their shifts. Adoption rates are immediate and 100 percent. From a customer perspective, the customer is told that the agent is using software to improve communication with them but that the agent is on the phone with them the entire time. The customers do not complain. They like getting the information they need clearly and quickly. In fact, multiple measures of customer satisfaction (follow-up surveys, in-call escalations to a supervisor, etc) all triangulate to the same conclusion – the agent-controlled audio files improve customer satisfaction.
Metrics from a Call Center Implementation
In Figure 3, the top graph represents talk time, the bottom graph shows after-call work (ACW), or the time the agent is completing work on a previous call before he/she can take another call. The horizontal lines on the chart represent the targets the call center needed to achieve. The period from October through November is the baseline data from experienced agents taking cell phone activation calls. The December period was part testing, part training and part implementation with new agents. The January through February period is full deployment to all new agents. Brand new agents handled 95 percent of the activation calls from Jan. 1 on. Figure 3: Talk Time and After-call Work
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The December launch and testing period was done just like a lean manufacturing process improvement effort using a pilot cell of agents. Through this focused implementation, it was learned what worked and what did not. When the new call center process was launched with 45 brand new agents for the peak of activation calls, talk time and ACW were better than the target and better than experienced agents had ever been. There also was a reduction in variation in both talk time and ACW. For many centers, variability in these two measures results in having to staff more agents (increase costs) to handle the variability and still meet service levels. In this way, excess agents serve a similar purpose as excess inventory does in a manufacturing operation – a buffer against process variation.
The Payoff for Call Centers and Their Customers
Lean Six Sigma has been introduced and successfully applied in thousands of call centers. But the efforts to date have been off-center, focused on ancillary processes, as opposed to being focused dead-center, on the call handling process. Agent variation in output and quality has had to be tolerated by management. W. Edwards Deming and Joseph Juran, who inspired the creation and refinement of many of the Japanese manufacturing techniques discussed here, noted that variability on critical performance metrics is a threat to the vitality of an enterprise because it is evidence that the business is not being managed effectively.
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Companies can now address this and allow call center leaders to build a standardized process the agents want to follow and to which the most powerful process improvement techniques that have ever been developed can be applied. The ability to apply these process improvement techniques can revolutionize how call centers function and the results they produce – happier, more productive employees will be able to deliver a vastly improved customer experience, and management will be able to implement productivity improvements and cost reductions for shareholders.
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