Translation from Russian

Translation from Russian

Journal “BUSINESS EXCELLENCE” №6 June 2016

OFFICE WITH the FAST REACTION

Alexandre Louzine

(ILO expert on restructuring and development

of industrial enterprises, certified QRM specialist (Nederland))

Despite the fact that the very name "QRM " contains the word "production", this concept is equally, and perhaps even to a greater extent is relevant for work sophistication of the administrative and managerial staff of the company.

It is commonly known, that the maintaining costs of the office units add at least 30 to 40% to the total cost of the products produced, which certainly works against competitiveness of the company. But, if the estimation of direct cost of administrative and managerial staff is a relatively easy task, to identify and to calculate the actual cost of loses due to their low efficiency is much more difficult task, since virtually no one is oriented at reducing the total cycle time from receiving the order to the final shipment of products.

The survey of executives of 400 US companies claiming to be oriented on acceleration, organized by Professor Rajan Suri, the founder of QRM, showed that 70% of existing rules and regulations are aimed not at the reducing time-consuming, but on the contrary, operate to the detriment of speed. However, the basic loss of time in the office is generated in a lesser extent by low productivity of individual performers, than their functional dissociation, excessive fragmentation of operations and the fact, that the documents have a habit to “stick” to the work desks.

WHAT TO DO?

There has been growth of publications under the heading of "lean office" – a clear indication of the fact, that many foreign and Russian companies are becoming aware of the presence of the above-mentioned problems and are trying to improve the efficiency of office staff, by borrowing these or other tools of lean production from their colleagues from the production units. This is definitely a very hopeful trend, but never the less, to our deep regret, very few organizations even manage to achieve any significant results in their attempt to reduce the lead time. As we shall see below, this is hardly to blame the tools of lean manufacturing; rather, the problem is in the inability to use it correctly.

In addition, the "tool box" of lean manufacturing lack certain tools to address some of the specific problems of modern flexible companies and QRM allows you to fill this gap.

What not to do.

Many office operations can be categorized as "useless", or, as we use to say, are not providing "additional value for the customer". However, the management continues to demand from the office personnel to improve work efficiency by any means. This demand is perceived by employees as a request to do the same, what they used to do before, but to do that better and faster. They forget the old wisdom, that there is no better way to loose resources, then to try to do faster of what should not be done all together. In this case, employees are not just wasting their own time and energy in vain, but on the top of that, they generate a large volume of unnecessary work for others. So as a result, they bring damage to the company proportionally their pseudo effectiveness. A special adversely affect is brought about by implementation of expensive computerized document management systems, which formalizes and thus "cements" the prevailing organizational chaos.

Managerial wisdom says: there is no better way to waist resources then try to do more efficiently what should not being done in the first place.

Without questioning the potential benefits, that the introduction of those managerial innovations can bring about, I want to emphases that those measures should be preceded by rethinking and streamlining of all operations and processes in organization, as a whole, but not at the level of individual services or departments. One should be guided by a common sense, which says, that it is unwise to invest into expensive house renovation, when it requires a total overhaul with the complete rooms re-planning and floor replacement. Only carefully honed and balanced process, freed from unnecessary work and procedures, may be a subject to the final "adjustment” and "polishing" with the above mentioned tools.

How to distinguish the useful from the useless work.

Our opponent would fire me back claiming, that the lean production system is exactly designed to identify all kind of losses, and in particular the "unnecessary work". This is certainly true, but at the departmental level, it is almost impossible to separate office operations, which really provide "value increment" for the final client.

Traditional organization enmeshed in a network of provisions and regulations, which employees have to follow without a clear idea of ​​how much their actions contribute to the "value addition” for the end customer. The traditional functional organizational structure had initially evolved under the radically different business environment, then nowadays. It’s very existence was justified at the time, when companies use to produce on the regular base the large batches of standard products and when each functional unit performed on a regular basis the clearly indicated routine operations.

Nowadays, the enterprises have to accept the relatively small and very diversified production orders, that is why the functional "walls" become an insurmountable obstacle for rapid horizontal interaction between departments, which are directly involved in the process through the implementation of new orders. In this case, many previously well justified procedures and operations become useless and, moreover, causing direct harm.

Accordingly, the sophistication of work of the functional departments in general, and especially individual employees should be delayed until the organizational structure undergo fundamental changes, until the business process “highways” are laid down to change radically the basic design of organizational structure. At the same time the necessity of the very existence of some office structures can be questioned.

Breaking out of the “vicious circle”.

“We plan globally, but act locally”.

By the scale of changes and radicality the QRM concept is similar to the concept of organizational re-engineering, but at the same time, it has got an important advantage. It does not require, as in the case of re-engineering, the simultaneous transformation of the entire company, what could be by itself a very risky operation. In opposite, it provides for gradual implementation of in-depth changes, without the immediate dismantling of the existing structure. Such approach is more likely to be associated with the gradual "cultivation" of the new processes, than with the risky and painful one time “surgical operation".

We start with a market segment, where time valued the most.

The local changes, which eventually make up the global ones, start with a pilot project, the scope of which is limited by only a small group of products or services produced or provided by the company. To determine the market segment of the pilot project the marketers and sellers choose the customers for whom the speed of order execution is a critical factor.

The complexity of selection is that it is, as a rule, can’t be limited to one or two companies or to one or two products, it should be a significant group of objects, having similar processes, which are carried out inside the enterprise, starting with the office and ending up with the production divisions. This group may include the client companies ordering the same type of products or the "single-family" products of various sizes, but similar in the manufacturing technology. It can also be a group of products for which the components and parts are obtained from the same source, or it may be a group of VIP-clients, which gets a special treatment.

There could be many variations of grouping, but what is really important, that all of them meet the following selection criteria:

• there is a real need for a substantial (30-70%) reduction of lead time;

• there is a sufficient amount of work to ensure a constant load of workers of the specially created QRM multi-functional cell;

• the possibility of a group of 3-6 people to perform effectively the full range of required work operations, without involvement of other work units.

Having defined at the first approximation a market segment that meets the above-stated criteria, one proceeds with the evaluation of the potential benefits of lead time reduction, with what it can really provide a company in terms of obtaining of new orders or acquiring new customers, reducing costs, etc. At this stage the multifunctional group of product designers, production engineers, officials responsible for materials and components procurement and outsourcing should be plugged in to evaluate the initial choice done by the core team from the different points of view.

Recreation of the total process from receiving an order to its complete fulfillment.

Having defined the market segment for a pilot project, one proceeds with the recreation of the total work process, which includes a chain of related operations being conducted in the different departments and sections of the company. To solve this problem, we bring together the representatives of all those departments and sections, who are directly involved in this particular work process. The ultimate goal, along with the re-creation of the existing work process (what is most likely has not been ever done before) is the need to get an idea about the time spend at all stages of the process.

Each office worker reports to the evaluation group on the average time she normally spends on fulfillment the particular work task and on the total time duration between the entry and depart of the particular document in her department or work section. This data is used for building up of the “time map”, which provides a visual scheme of the critical time path from the start to the end of the work process, as well as providing a clear indication of tiny “pockets” of productive work (colored in grey) in the total lead time. (Fig. 1)

Designing and implementing of the multi-functional QRM office cells.

Now we reached the first critical phase of the pilot project implementation by arriving at the point, where we have to start breaking the boundaries of the functional "principalities" and to transfer some office workers, directly engaged in the pilot process, to the newly created multi-functional office cell. As a rule, this step plugs in an active resistance of the heads of the functional departments. They put forward a lot of arguments trying to explain why it is not possible or why it should not be done all to-gather.

In case, if functional heads find themself being "squeezed into a corner" by the QRM minded chief executive, they, as a rule, put forward so-called “compromise” solution. Instead of establishing a permanent multifunctional QRM cell, they propose to organize a "virtual" cell, when team members rest in their functional departments and meet together only occasionally to coordinate the common actions.

Whatever convincing arguments may be invoked, the improvement of existing operations without transferring them for execution to the newly created cell (sometimes cells) would not allow to cut radically down the critical time path by 30-50, and in some cases 70 or more percent. It is in the multi-disciplinary cell, where there is no functional barriers, where every one works on a common goal, which is an execution of the client’s order in the shortest possible time, where all members speak "the same language", where decisions are taken without delays and numerous approvals, only there and then the desired results could be achieved.

The office QRM cells are built up by the analogy with the production work cells and are based on the following principles:

·  multi-functionality;

·  job enrichment

·  job enlargement

·  co-location;

·  complete work cycle

·  fully technically equipped

·  autonomy and self-management

The multi functionality of the cell is called upon to cut down drastically the time it takes the documents to “wonder” among the tables of the functional departments - here the principle of "single window" is applied - all the operations are carried out by one team in the same room. Certainly everything is done to avoid unnecessary operations (the ones, which don’t add the increment value to the customer), if by one reason or another, it is not possible to eliminate some of them completely, one have to think on how to perform them in a shorter possible time.

Combining operations. Since each office QRM-cell specializes in a strictly defined, relatively narrow range of operations, it is usually feasible for the team members to acquire the new knowledge and skills needed to conduct effectively the operations standing beyond their functional specialization. This could enable a small group of 3-8 people to perform a wide range of operations, normally conducted by a much large group of functional specialists.

The combined operations can be of the same profile, such as divers types of accounting or different, as a product design and an estimation of its manufacturing cost. In both cases, an additional training of office workers is required. However, in the second case there is a need for more in-depth and long-term training. Normally the investment in this type of training pays back relatively fast. The employees are motivated by different means to acquire knowledge and skills needed to perform new operations, the ultimate goal is that everyone is capable to perform all the operations assigned to the cell.

Co-location

It is natural for the heads of the functional departments to fight for retaining control over their employees, even when they are strongly pushed by the top management to delegate some work to the QRM teams. They demonstrate the particularly strong resistance against the physical transfer of workers to the newly created QRM cell. If, however, they fail to prevent this, they would insist on double subordination of the employee concern: to the head of the functional department (on the permanent base) and to the leader of the QRM team (on the temporary base).

If such compromise structure is acceptable for the multi-functional temporary task teams, it is not suitable for the QRM office cells. First, because those cells are created to operate on the permanent base. Second, the QRM team members are working toward a single common goal -- lead-time reduction, so the previous functional priorities should go by the wayside. Of course, with all this, they should not loose the professional contacts with their former colleagues in the functional department to keep updating their professional knowledge and skills. In this case, the employee sees in his past colleagues the experts capable to help them in solving the specific professional problems.