the path to the lean city - methods and best practices
DESCRIPTION
by Bodo Weigand of Lean Management Institut shown at the Lean Service Summit on 23rd June 2004 ran by the Lean Enterprise AcademyTRANSCRIPT
LEAN MANAGEMENT INSTITUT
Dr. Jorgo Chatzimarkakis
and
Dr. Bodo Wiegand
THE WAY TO LEAN CITYMETHODS AND EXAMPLES
LEAN MANAGEMENT INSTITUT
Starting Position
Lean Thinking
Lean Management methods in the public sector
- Lean Administration
- Lean Maintenance and Service
- Lean Management
Lean City Club
Examples from German local government
Agenda
Page 3 LEAN MANAGEMENT INSTITUT
Income and Expenditures Continue to Diverge
New York City is closing its zoos, turning off the street lights on bridges, closing pediatric clinics and public schools; 4,500 public sector jobs are being cut – allbecause the city budget cannot be financed on credit.
Costs for the Swiss public healthcare system are rising attwice the rate of GDP.
Budget balance for local government in Germany
Healthcare system costs in Switzerland
The financial balance sheet for Germanlocal government continues to deteriorate
The advertising revenues at ARD (Germanpublic television) fell to 300.4 million marksin 1996 compared to 576.7 million marks in 1992Source: ARD-Werbung Sales & Services
Page 4 LEAN MANAGEMENT INSTITUT
Cities: A Case for Revitalization (1)
Freezing expenditures for investment, touch-uprepairs, and limiting activities to the bare necessities
Reorganizing all processes and reducing expenses
Releasing employees to help reduce outsourcingand improve service
Starting marketing programs to increase attractiveness and to boost income
Short-term measures
Page 5 LEAN MANAGEMENT INSTITUT
Cities: A Case for Revitalization (2)
Examining legal rules at the federal state (German: Land) and regional level with an inverted burden of proof.
Why do we need that particular law, rule, or regulation?
Testing the efficiency of all tax-relevant laws in terms of ROI.
What does it cost; what are the benefits?
Determining how useful laws, rules, and regulations are in terms of enforcement; analyzing the costs of enforcement in terms of cost and benefit.
Do we really need the law if we can’t verify it?
Radically simplifying complicated laws and regulations at the national level.
Medium- and long-term measures
Page 6 LEAN MANAGEMENT INSTITUT
The Four Competitive Factors of Business on Demand also Apply to Cities.
A = Availability of service
Q = Quality of process
I = Individuality towards the customer
C = Cost savings in all areas
Business on
Demand
Only Lean Business offers simultaneous optimization of all four competitive factors.
LEAN MANAGEMENT INSTITUTLean M
anagement
LEAN Thinking
Lean Maintenance
and Service
Lean Administration
Lean Innovation
Lean Supply ChainCreate value without waste
Lean Production System
LEAN THINKING – THE LEAN BUSINESS SYSTEM
LEAN MANAGEMENT INSTITUT
Starting Position
Lean Thinking
Lean Management methods in the public sector
- Lean Administration
- Lean Maintenance and Service
- Lean Management
Lean City Club
Examples from German local government
Agenda
LEAN MANAGEMENT INSTITUTLean M
anagement
LEAN Thinking
Lean Maintenance
and Service
Lean Administration
Lean Innovation
Lean Supply ChainCreate value without waste
Lean Production System
LEAN THINKING – THE LEAN BUSINESS SYSTEM
Page 10 LEAN MANAGEMENT INSTITUT
The Five Principles of Lean Thinking
Applying the five principles step by step comprehensively and permanently eliminates waste.The central vision is of a value flow with no waste beyond the boundaries of each individual company.These principles apply the same way to industry, services, and administration as they do to development, production (performance), and order processing (sales).
Define the value of a product or service from the customer’s point of view
Identify the value flow
Create a continuous flow
Switch to a demand-driven system: “Pull instead of Push”
Strive for perfection
1
23
4
5
Page 11 LEAN MANAGEMENT INSTITUT
Defining the Value of a Product or Service from the Customer’s Perspective
Longer office opening hours24-hour operation of light rail public transportationOne call, one visit one decision, one result
Availability of service: this means that services have to be performedin the least amount of time possibleand then provided to the customer.
Value specification from the customer’s perspective
Qualitatively perfect service
Individual service: everyone receives the services they need
Costs have to be reasonable
No incorrect treatments for patientsNo erroneous documentsNo late buses or trains
Provision of infrastructure tailored to the specific industry when new firms openSimplified approval processes for smaller construction projects
Citizens and residents should be able to understand fees and surchargesPrices must be comparable to those in the private sector
Examples
Page 12 LEAN MANAGEMENT INSTITUT
The Philosophy of Lean Thinking: Eliminate all Waste (muda)
Optimize!
Value-creating activities
Any activity that takes materials or information and converts or transforms them in a way that meets customers’ needs and that the customer is also willing to pay for.
Reduce!
Non-value-creating
Any activity that is needed due to thesystems or processes in use today but that does not contribute any value tothe product or service or to customer satisfaction.
Eliminate immediately!
Waste
Activities, processes, time, materials, space, etc.,that do not increase the value of the product or service and that are not needed for the system or process.
MudaType I
MudaType II
Valuecreating
Page 13 LEAN MANAGEMENT INSTITUT
Taiichi Ohno’s Seven Types of Waste are also Found in Public Services
Overproduction1
Inventory2
Unnecessary transport3
Waiting/storage time4
Improper techniques/work processes5
Unnecessary moves6
Repair and material waste7
Examples
Documents and reports with no audienceProjects left filed away in drawers
Unnecessary patient stays in clinicsConstruction material stored for use years in advance
Ambulance transports between clinics or wardsProcedures sent back and forth between departments
Procedures waiting for a clerk with available capacityPatients in the waiting room
Expensive and oversized IT systemsComplicated approval processes for such simpleconstruction as errecting an arborEmployees working in public bodies who have to walkgreat distances to get to the only copierBusiness trips with a poorly defined purpose
Wrongful approvals
Improper treatment of patients
Page 14 LEAN MANAGEMENT INSTITUT
Creating a Continuous Flow
Flow means providing a complete service from beginning to end and without delay
Customers, residents, and patients experience no waiting times
The completion time for each action corresponds to the required process time
There are no stocks (stacks of waiting files)
Examples of flow in the public sector
A Residents’ Agency rather than various public offices
Polyclinics instead of various independent medical specialists that patients have to consult one after another
A Residents’ Agency rather than various public offices
Infrastructure repaired by interdisciplinary teams rather than specialist teams
Page 15 LEAN MANAGEMENT INSTITUT
Switching to a Demand-InducedSystem (Pull instead of Push)
Implementing this principle in practice in the public sector can mean:
Stelle dem Bürger die Wasser-, Strom-, Gasmengen zur Verfügung, die er benötigt.
Stelle dem Bürger die Leistung zur Verfügung, die er nachfragt.
Schaffe eine Infrastruktur, die den Bedürfnissen des Bürgers entspricht.
Mache Gesetzte, die er versteht und die er nachvollziehen kann.
Page 16 LEAN MANAGEMENT INSTITUT
Striving for Perfection
Perfection is an ideal state that is never attained
Public administration cannot rest on their past achievements
Repeat the principles:1. Define value from the customer’s
perspective2. Identify the value flow3. Create a continuous flow4. Pull system
Top-down and bottom-up implementation
LEAN MANAGEMENT INSTITUT
Starting Position
Lean Thinking
Lean Management methods in the public sector
- Lean Administration
- Lean Maintenance and Service
- Lean Management
Examples from German local government
Lean City Club
Agenda
Page 18 LEAN MANAGEMENT INSTITUT
Lean Management methods in public sector
Lean
Adm
inis
tratio
nLe
an C
onst
ruct
ion
Lean
Mai
nten
ance
& Se
rvic
e
Residents’ services
Building authorities
Public construction
Administrative bodies
Municipal utilities
Facility management
Lean
Man
agem
ent
Applications
LEAN MANAGEMENT INSTITUTLean M
anagement
LEAN Thinking
Lean Maintenance
and Service
Lean Administration
Lean Innovation
Lean Supply ChainCreate value without waste
Lean Production System
LEAN THINKING – THE LEAN BUSINESS SYSTEM
LEAN MANAGEMENT INSTITUT
Starting Position
Lean Thinking
Lean Management methods in the public sector
- Lean Administration
- Lean Maintenance and Service
- Lean Management
Examples from German local government
Lean City Club
Agenda
Page 21 LEAN MANAGEMENT INSTITUT
Analysis Modularization Integration Implementation
Establishing a businessmodelOrganization analysisValue flow analysisOrder structure analysisProcess analysisActivity structure analysisCost structure analysisStarting to implementimmediate measures
Module definitionModule optimizationStandardizationDescribing andstandardizing interfaces
Defining the product creation processAssigning andintegrating the modules into the processes
Capacity adjustmentImplementing the processesOrganization adjustmentIntroducing process cost managementIntroducing CIP
Serviceauftragabschließen
Fakturafreigeben
kaufmännischabschließen
Projekt externabschließen
Fakturaanforderungaus Service/Projekt
ist vorhanden
FakturarelevanteBelege aus
Fakturavorratauswählen
Sammelfakturaist zu erstellen
Einzelfaktura istzu erstellen
Zu fakturierendePosten
zusammen-stellen
Fakturaanforde-rung ist inOrdnung
Einzelfaktura istnachzuarbeiten
Fakturapositionenund -konditionen
nacharbeiten
Fakturasperrelöschen
Fakturabuchen
Faturadrucken
Faktura mitAnlage
versenden
Faktura istKunden
zugestellt
Einzelkontraktanlegen
Faktura zuEinzelauftrag
erzeugt
Faktura gem.Fakturaplan
erzeugt
Lean Administration – The Method
Page 22 LEAN MANAGEMENT INSTITUT
Analyzing the Value Flow of the Main and Partial ProcessesValue stream mapping
Auf
trags
-m
anag
emen
t
40 % Auftrags-annahme
18 4
RQ: 33 % / 5 min
PZ = 2 min
5002,5 d
Dis
posi
tion
35 % Auftrags-annahme
8 4
RQ: 10 % /10 min
PZ = 3 min
Ø
Hau
smei
ster
25 % Auftrags-annahme
30 4
RQ: 5 % / 10 min
PZ = 10 min
1000,5 d
Ser
vice
team
Lief
eran
ten
ÜZ
RZ
Auftragbearbeiten
18 5
PZ = 6 min
1000,5 d
10 %
5 min
60 %
15 m
in
Auftragdisponieren
20 8
RQ: 10 %/10 min
PZ = 12 min
9505 d
Servicedurchführen
80 13
VZ = 105 min
PZ = 10 min
9505 d
RQ: 10 %/20 min
Auftragabschließen
20 4
PZ = 8 min
195010 d
RQ: 40 %/10 min
14 4
PZ = 15 min
250013 d
RQ: 20 %/10 min
X-Produkt
Kunde
PZ
13.572Aufträge pro Jahr
Verfügbar: 5/12 25 %15 minAuftrags-zentrum
StandardisiertesAuftragsformular
1,1Tage
StandardisierteAuftragsbezeichnung
EDI@home
2,5Tage
Rückmelde-standards
2,5Tage
JIT-Vorbestellunggewerbespez.
Materialmodule 4 Ta
ge15
%55
min
Selbst-kontrolle
3,6min
4,4min
0,5Tage
7,2min
6min
5Tage
3min
12min
5,8Tage
6min
18min
12,5Tage
6min
8min
13Tage
2min
15min
37,9 Tage Übergangs-/Liegezeit
27,8 Minuten Rückfragezeit (30 %)
63,4 Minuten Prozesszeit (70 %)
ca. 38 Tage Durchlaufzeit
Fakturierung
Page 23 LEAN MANAGEMENT INSTITUT
ABC analysis XYZ analysis
Value proportion
Quantity proportion
A: 70%
B: 20%
C: 10%
A: 70%
B: 20%
C: 10%
Demand
Z products
Y products
X products
Time
The ABC analysis helps identify the orders with the largest potential for modularization.
The XYZ analysis identifies the standardization potential.
Order and Activity Structure Analysis
Page 24 LEAN MANAGEMENT INSTITUT
Geschäftsvorfall Instandsetzung (Fremdleistung) aus Wartung (Eigenleistung) - GMG
Lief
eran
tO
bjek
t-m
anag
emen
gtS
ervi
ce (T
P1)
Ein
kauf
+ L
ogis
tik(T
P4)
AKM
(TP
2)
Serviceleistungerbringen und inRechnung stellen
Zahlungseingangverfolgen
S
E
Auftrag anlegenund Fremdleistung
aus RV abrufen
Leistungfakturieren
M 2.1 M 2.2
M 1.1 M 1.2
M 4.1
M 5.1
Qualitätmonitoren
M O.1
Phase I (Bedarfsidentifizierung und Beauftragung) Phase II (Leistungserbringung) Phase III (Zahlungsabwicklung)
S 1.1
S 1.2
S 1.4
S O.1
S 1.3
Instandsetzungs-bedarf bei IspW
identifizieren
Neuen RVabschließen S 4.1
S 2.1
S 5.2Serviceleistungzurückmelden
S 5.1
S 1.5
M 1.3
KEINE Hausmeister-Aufträge
Keine HM-Aufträge
Haus-meister-Aufträge
Haus-meister-Aufträge
Keine HM-Aufträge
CS-Aufträge < 250 €(ohne eindeutige HM-Produkte, ohne evtl. HM-Produkte, ohne Wartungen)
48.592 3.904 T€
Evtl. Hausmeister-Produkte
38.843 13.690 T€
116.066 44.194 T€
Hausmeister-Aufträge
Eindeutige Haus-
meister-Produkte
Wartungen< 50 €
Wartungen≥ 50 €
Wartungen
CS-Aufträge≥ 250 €
(ohne eindeutige HM-Produkte, ohne evtl. HM-Produkte, ohne
Wartungen)
optionale Leistungen (Service)
Alle CS-Aufträge 2002Anzahl: 180.799 Kosten: 52.511 T€
Anzahl: 67.290 Kosten: 9.840 T€Anzahl: 113.509 Kosten: 42.671 T€
41.8169.274 T€28.230 4.301 T€
22.0203.320 T€
6.000940 T€
26.154 1.636 T€13.912997 T€
8.914558 T€
10.349 2.380 T€
5.3151.060 T€
4.9401.292 T€
Gesamt: 64.733 8.317 T€Nutzer/Dritte: 19.854 2.790 T€GMG: 41.247 5.377 T€
25.474566 T€
15.72522.697 T€
22.4382.268 T€
10.6139.389 T€
KEINE Hausmeister-Aufträge
Keine HM-Aufträge
Haus-meister-Aufträge
Haus-meister-Aufträge
Keine HM-Aufträge
CS-Aufträge < 250 €(ohne eindeutige HM-Produkte, ohne evtl. HM-Produkte, ohne Wartungen)
48.592 3.904 T€
CS-Aufträge < 250 €(ohne eindeutige HM-Produkte, ohne evtl. HM-Produkte, ohne Wartungen)
48.592 3.904 T€
Evtl. Hausmeister-Produkte
38.843 13.690 T€
Evtl. Hausmeister-Produkte
38.843 13.690 T€
116.066 44.194 T€
Hausmeister-Aufträge
Eindeutige Haus-
meister-Produkte
Wartungen< 50 €
Wartungen≥ 50 €
Wartungen
CS-Aufträge≥ 250 €
(ohne eindeutige HM-Produkte, ohne evtl. HM-Produkte, ohne
Wartungen)
optionale Leistungen (Service)
Alle CS-Aufträge 2002Anzahl: 180.799 Kosten: 52.511 T€
Anzahl: 67.290 Kosten: 9.840 T€Anzahl: 113.509 Kosten: 42.671 T€
41.8169.274 T€28.230 4.301 T€
22.0203.320 T€
6.000940 T€
28.230 4.301 T€22.020
3.320 T€6.000
940 T€
26.154 1.636 T€13.912997 T€
8.914558 T€
26.154 1.636 T€13.912997 T€
8.914558 T€
10.349 2.380 T€
5.3151.060 T€
4.9401.292 T€
10.349 2.380 T€
5.3151.060 T€
4.9401.292 T€
10.349 2.380 T€
5.3151.060 T€
4.9401.292 T€
Gesamt: 64.733 8.317 T€Nutzer/Dritte: 19.854 2.790 T€GMG: 41.247 5.377 T€
25.474566 T€
15.72522.697 T€
22.4382.268 T€
10.6139.389 T€
Activity Structure AnalysisValue Flow Analysis Order Structure Analysis
Timeframe for activitiesTimeframe for secondary andcore processes
Quantitativeframework
Duration and frequencyFunctions and offices involved Jobs and orders
Result
+ +
Nr.Aufgabenbereich /
Aufgaben
Anzahl Vorgänge
[pro Monat]
Zeitaufwand pro Vorgang
[Min.]
Zeitaufwand[Stunden pro
Monat]Wieder-holung Min. Max.
1 Ersatzempfänger erfassen 100 5 8,3 Täglich 2 62 Taxen setzen/Ändern 40 15 10,0 Täglich 1 33 Bemerkungen erfassen 50 10 8,3 Wöchentlich 0 04 Risikomerkmale erfassen 20 25 8,3 Wöchentlich 1 15 Sonstige Daten erfassen 30 15 7,5 Täglich 0 06 CTV-Brief veranlassen 5 10 0,8 Wöchentlich 2 87 Internes Telefonat führen 200 3 10,0 Täglich 2 158 Externes Telefonat führen 200 10 33,3 Täglich 2 69 Teambesprechungen 4 60 4,0 Wöchentlich 0 0
10Bearbeiten Mails (lesen, bearbeiten, sortieren, speichern, löschen etc.)
100 3 5,0 Täglich 0 0
11 Lehrgänge/Seminare 1 1.000 16,7 Jedes Halbjahr 0 0
Result Result
Cause-justified process cost allocation
Process Cost Analysis
Page 25 LEAN MANAGEMENT INSTITUT
Analysis Modularization Integration Implementation
Serviceauftragabschließen
Fakturafreigeben
kaufmännischabschließen
Projekt externabschließen
Fakturaanforderungaus Service/Projekt
ist vorhanden
FakturarelevanteBelege aus
Fakturavorratauswählen
Sammelfakturaist zu erstellen
Einzelfaktura istzu erstellen
Zu fakturierendePosten
zusammen-stellen
Fakturaanforde-rung ist inOrdnung
Einzelfaktura istnachzuarbeiten
Fakturapositionenund -konditionen
nacharbeiten
Fakturasperrelöschen
Fakturabuchen
Faturadrucken
Faktura mitAnlage
versenden
Faktura istKunden
zugestellt
Einzelkontraktanlegen
Faktura zuEinzelauftrag
erzeugt
Faktura gem.Fakturaplan
erzeugt
Lean Administration – The Method
Establishing a businessmodelOrganization analysisValue flow analysisOrder structure analysisProcess analysisActivity structure analysisCost structure analysisStarting to implementimmediate measures
Module definitionModule optimizationStandardizationDescribing andstandardizing interfaces
Defining the product creation processAssigning andintegrating the modules into the processes
Capacity adjustmentImplementing the processesOrganization adjustmentIntroducing process cost managementIntroducing CIP
Page 26 LEAN MANAGEMENT INSTITUT
What are process modules?
Process modules are standardizedsubprocessesThey include several related activitiesThey can be used in several product creation processesProcess modules include
1. Job instructions/assistance2. Process times3. Manpower needed4. Qualification requirements5. Aids (equipment, material,
documentation)
What do process modules provide?
Transparency
Measurability
Quality improvement
Comprehensibility
Process-internal flexibility
Structured approach
Clearly defined input and output
Clear allocation of responsibilities
Description of the resources used
Unambiguous definition of interfaces
Customized product creation processes can be represented by standardized modules
Structuring - Modularization
Page 27 LEAN MANAGEMENT INSTITUT
Module Matrix
Numeric identification
Brief description
Description of task sequence
Required resources
Staff required /manpower planning
Standard operation
times for taskexecution
Rules and directives
Modulnummer Modul Modulinhalt Maschinen, Geräte, zusätzliches Personal
Mitgeltende Unterlagen
Modulzeit/Einheit in Fh/Einheit
(Format hh:mm:ss)
Anzahl Mitarbeiter bzw. Maschinen,
MINDEST Qualifikation
Fb In 1.1. Prüfungen der Gleisgeometrie
Fb In 1.1.1. Prüfung mit Gleismeßfahrzeug OMWE
keine Modulsarsierung DS 820 01 15 Ril 821. 2001
1. Bezl Fb
Fb In 1.1.2. Prüfung mit Gleismeßfahrzeug OMW
keine Modulsarsierung DS 820 01 15 Ril 821. 2001
1. Bezl Fb
Fb In1.1.3. Prüfung mit Gleismeßfahrzeug GMTZ
keine Modulsarsierung DS 820 01 15 Ril 821. 2001
1. Bezl Fb
Fb In 1.1.4. Handmessung
Fb In 1.1.4.1. Längshöhe in Gleisen und Weichen mit Gleisvermarkung
Messen der Längshöhe in Bezug auf Gleisvermarkungspunkte mit optichem Visiergerät einschließlich Anschreibung der Bezugspunkte und deren Dokumentation vor Ort
Gleisüberhöhungsmesser, Nivelliergerät, Visiergerät, CEMAFER- bzw. BRIESEMEISTER-Messlatte oder Geodimeter, Bandmaß, (Sakra/Sipo entsprechend der örtlichen Rahmenbedingungen
DS 820 01/ 03 Ril 820 / 821/ 824
00:00:10 Fh/m/Gleis 2 MA (1 M Fb, 1 Bua)
Fb In 1.1.4.2.Längshöhe in Gleisen und Weichen ohne Gleisvermarkung
Messen der Längshöhe mit optischem Visiergerät durch Festlegung von Hochpunkten einschließlich Anschreibung der Bezugspunkte und deren Dokumentation vor Ort
Gleisüberhöhungsmesser, Visiergerät, Bandmaß, (Sakra/Sipo entsprechend der örtlichen Rahmenbedingungen )
DS 820 01/ 03 Ril 820 / 821/ 824 00:00:08 Fh/m/Gleis 2 MA (1 M Fb, 1 Bua)
keine Modularisierung
keine Modularisierung
keine Modularisierung
Page 28 LEAN MANAGEMENT INSTITUT
Specified by process modules
Exchange data between modules
Define data quality, volume, and transfer format
Lay down clear agreements between customer and supplier concerning data quality
Describe the internal and external customer-supplier designations
Define complaint and escalation levels
Consistent implementation solves data quality problems
Processservicerequest
PlanCS order
Interface
CSorder
Process Interfaces Basis for exchanging data and information effectively
Page 29 LEAN MANAGEMENT INSTITUT
Analysis Modularization Integration Implementation
Serviceauftragabschließen
Fakturafreigeben
kaufmännischabschließen
Projekt externabschließen
Fakturaanforderungaus Service/Projekt
ist vorhanden
FakturarelevanteBelege aus
Fakturavorratauswählen
Sammelfakturaist zu erstellen
Einzelfaktura istzu erstellen
Zu fakturierendePosten
zusammen-stellen
Fakturaanforde-rung ist inOrdnung
Einzelfaktura istnachzuarbeiten
Fakturapositionenund -konditionen
nacharbeiten
Fakturasperrelöschen
Fakturabuchen
Faturadrucken
Faktura mitAnlage
versenden
Faktura istKunden
zugestellt
Einzelkontraktanlegen
Faktura zuEinzelauftrag
erzeugt
Faktura gem.Fakturaplan
erzeugt
Lean Administration – The Method
Establishing a businessmodelOrganization analysisValue flow analysisOrder structure analysisProcess analysisActivity structure analysisCost structure analysisStarting to implementimmediate measures
Module definitionModule optimizationStandardizationDescribing andstandardizing interfaces
Defining the product creation processAssigning andintegrating the modules into the processes
Capacity adjustmentImplementing the processesOrganization adjustmentIntroducing process cost managementIntroducing CIP
Page 30 LEAN MANAGEMENT INSTITUT
Product Creation Process
Interlinking the functional areas – integrating process modules
Product creation processes
A B
C D
PRODUCTION
E F
G I
CONTROLLING
H
J L
M N
FINANCE
K
Process modules
e.g. providing services
B
E F
D
O
OC
MB
MO
M
A
Prepare incidental leasing cost sheet
B
D
N
OC
MB
MK
FM A
Cus
tom
erC
usto
mer
Cus
tom
erC
usto
mer
Page 31 LEAN MANAGEMENT INSTITUT
TABG
Invoicerequest
Report backservice
Convertservice toaccount
Removeinvoice block
FASL
KFA
Billingcycle
Print anddispatchinvoice
FGEB
Commercialcompletion
Fulfilservice order
Releaseinvoice
Commercialcompletion
Completeproject externally
Invoice requestfrom service/project
is present
Select invoice-relevant documents
from invoicestore
Collective invoicemust be created
Individual invoicemust be created
Assembleitems to be
invoiced
Invoicerequest isin order
Individual invoicemust be reworked
Rework invoiceitems and
terms
Removeinvoice block
Bookinvoice
Printinvoice
Dispatchinvoice withenclosure
Invoiceis deliveredto customer
Create individualcontract
Invoicegenerated for
individual order
Invoicegenerated as per
invoicing plan
Process module before
Throughput time approx. 10 days
Interfaces withinmodule = 3
Offices involved = 3
Individual activities = 8
Throughput time approx. 3 days
Interfaces within module = 0
Offices involved = 1
Individual activities = 5
High complexity Low complexity
Structuring - ModularizationProcess module after
EXAMPLE
Page 32 LEAN MANAGEMENT INSTITUT
Analysis Modularization Integration Implementation
Serviceauftragabschließen
Fakturafreigeben
kaufmännischabschließen
Projekt externabschließen
Fakturaanforderungaus Service/Projekt
ist vorhanden
FakturarelevanteBelege aus
Fakturavorratauswählen
Sammelfakturaist zu erstellen
Einzelfaktura istzu erstellen
Zu fakturierendePosten
zusammen-stellen
Fakturaanforde-rung ist inOrdnung
Einzelfaktura istnachzuarbeiten
Fakturapositionenund -konditionen
nacharbeiten
Fakturasperrelöschen
Fakturabuchen
Faturadrucken
Faktura mitAnlage
versenden
Faktura istKunden
zugestellt
Einzelkontraktanlegen
Faktura zuEinzelauftrag
erzeugt
Faktura gem.Fakturaplan
erzeugt
Lean Administration – The Method
Establishing a businessmodelOrganization analysisValue flow analysisOrder structure analysisProcess analysisActivity structure analysisCost structure analysisStarting to implementimmediate measures
Module definitionModule optimizationStandardizationDescribing andstandardizing interfaces
Defining the product creation processAssigning andintegrating the modules into the processes
Capacity adjustmentImplementing the processesOrganization adjustmentIntroducing process cost managementIntroducing CIP
Page 33 LEAN MANAGEMENT INSTITUT
Time taken Module 2 = ... h
Calculating Capacity on a Modular Basis Example
Activity Structure AnalysisCore activityFile a report 5 minOpen a CS order 7 minFactor performance 5 min
Process module
Process time = module time = 17 min
Process 15 min
Process 27 min
Process 35 min
+
+
637.5 hTime taken per module andmonth
75%Probability of the module in business occurrence
3,000Business occurrences permonth
17 minModule time 1Quantitative framework
Object structure
Order structure
=
Time taken Module 1 = 637.5 h
Time takenModule n = ... h
Total time taken for core activities
per function
Page 34 LEAN MANAGEMENT INSTITUT
The secondary activities in particular hold high optimization potential because they are mainly attributable to deficiencies at the process interfaces
Project Potentials
Avoiding waste
Main activities Secondary activities
Organizational activities
Potential
Currentstatus
Targetstatus
Capacity requirement
Reduction to a necessary amountOptimizing
Individual procedures
Page 35 LEAN MANAGEMENT INSTITUT
Industrializing Business Processes with Lean Administration
Increases transparency and quality,
Enables clear and measurable processes,
Describes areas of responsibility and resource use,
Clearly defines input, output, and interfaces,
Enables individual and customer-specific solutions based on standardized process modules,
Enables clear capacity planning and process cost accounting,
Reduces organizational and IT costs.
LEAN MANAGEMENT INSTITUT
Starting Position
Lean Thinking
Lean Management methods in the public sector
- Lean Administration
- Lean Maintenance and Service
- Lean Management
Examples from German local government
Lean City Club
Agenda
Page 37 LEAN MANAGEMENT INSTITUT
Lean Maintenance and Service
Disposition of maintenance
and services
Complete services
Modularization,
standardization
Lean
Adm
inistr
ation
Module
-supp
orted
plann
ing
Techn
ical e
quipm
ent
manag
emen
t
Logistics of materials
and spare parts
Module
-supp
orted
purch
asing
Implementation
of work organization
Manag
emen
t of
exter
nal s
ervice
s
Increasing Efficiency of Maintenance Processes
Page 38 LEAN MANAGEMENT INSTITUT
Lean Maintenance and Service
MODULARIZATION AND INTEGRATION
Process analysisModularization and standardizationProcess optimization- Creating integrated
teams- Defining complete
services- Harmonizing schedules- Consolidating space- Harmonizing capacity- Increasing productivity
1 3PURCHASING
MANAGEMENT AND PLANNING
Purchasing management - Module-supported
purchasing- Optimized warehouse
planning- Optimized outsourced
servicesMake-or-buy decisionsPlanning/dispatchSupport base concept
TECHNICAL PLANT/EQUIPMENT
MANAGEMENT
2 4
IMPLEMENTATION
Project managementProject controllingAdjusting capacityAdjusting the support organizationProcess cost accountingIntroducing CIP
Plant/equipment managementSeparating loss classes for plant/equipment modulesMaintenance strategyComplexity managementCost analysis
Page 39 LEAN MANAGEMENT INSTITUT
Number of employees: 16,000
Establishments: 7
Local offices: 35
167 maintenance areas
Project DB Netz AG
Reducing maintenance costs
Locking in the maintenance-quality at a high level
Reducing purchasing costs
Higher level of transparency for planning maintenance processes
Increasing the availability of tracks
Objectives
Enhancement of order processes
Standardized and lean purchasing processes (-20 % costs)
Higher planning reliability
Optimized technical equipment
Productivity improvement +30%
Reduction of costs 225 million €/year
ResultsApproach
Modularization
Module-supported purchasing
Central order management
SAP R/3
Technical equipment management
LEAN MANAGEMENT INSTITUT
Starting Position
Lean Thinking
Lean Management methods in the public sector
- Lean Administration
- Lean Maintenance and Service
- Lean Management
Examples from German local government
Lean City Club
Agenda
LEAN MANAGEMENT INSTITUTLean M
anagement
LEAN Thinking
Lean Maintenance
and Service
Lean Administration
Lean Innovation
Lean Supply ChainCreate value without waste
Lean Production System
LEAN THINKING – THE LEAN BUSINESS SYSTEM
Page 42 LEAN MANAGEMENT INSTITUT
Waste in Indirect Areas
Waste caused by- the flood of papers and documents- looking for files, etc.- unneeded trips around the office (for
copying, faxing, printing, etc.)- unnecessary copying and filing- lengthy training periods due to
increasingly complex systems- lengthy approval processes- inefficient meeting scheduling- inefficient telephone conversations- disturbances at the workplace- poor design of computer workplaces
The waste category criteria also apply to indirect work areas
Page 43 LEAN MANAGEMENT INSTITUT
Continuous Improvement Process (1)
CIP is a business philosphy:
Improving the competitiveness of the firm by increasing
quality and efficiency, with all employees constantly helping
to provide solutions to problems
in small steps.
time
Pro
duct
ivity
Sta
ndar
d
5. Evaluate
1. Identify
Problem-lösungs-prozess
4. Implement 2.
Analyze3.
Plan
Page 44 LEAN MANAGEMENT INSTITUT
Source: Agnus Consult, 1996
Continuous Improvement Process (2)Improving business performance with CIP
80%
11%
27%
94%
94%
98%
21%
3%
36%
0% 25% 50% 75% 100%
CIP reduces throughput times
CIP reduces inventories
cost reductions of over 20%
cost reductions of up to 20%
cost reductions of up to 15%
cost reductions of up to 10%
cost reductions of up to 5%
CIP lowers costs
Profits from CIP exceed costs
Example
Studies at 113 firms showed that
LEAN MANAGEMENT INSTITUT
Starting Position
Lean Thinking
Lean Management methods in the public sector
- Lean Administration
- Lean Maintenance and Service
- Lean Management
Lean City Club
Examples from German local government
Agenda
Page 46 LEAN MANAGEMENT INSTITUT
Optimizing processes on the basis of tried and tested Lean Management methods
Creating transparency in internal processes and showing their strengths and weaknesses
Creating cost transparency and a clear view of costs and benefits
Providing concrete and practice-based ideas for improving efficiency
Conveying the Lean Thinking frame of mind and point of view
Supporting active implementation
Providing the foundation for fundamental customer orientation for internal administrative, service, and maintenance organizations
Lean City Club
Objectives
Page 47 LEAN MANAGEMENT INSTITUT
Lean City Club
The objective of the Lean City Club is to continue pursuing the reform efforts that have already been realized in many local governments and government bodies.
In keeping with the industrial model, the rationalization potentials found in public administration need to be utilized, allowing cities and municipalities to be refounded as enterprises for the purpose of
- city revitalization,
- debt reduction,
- improved orientation to residents,
- achieving a more promising starting position in the race to attract private enterprise and residents
- regaining a forward-looking orientation in cities and municipalities.
Benefits
Page 48 LEAN MANAGEMENT INSTITUT
Reorganizing communal work processes with the aidof the tried and tested tools of Lean Business Systems
Fees for the cities = €1 per resident
Conducting an EU-funded project* in cooperation with the Lean Management Institutes in the Netherlandsand England
Management of the project is led by the Lean Management Institut Deutschland.
Procedure
Lean City Club
* Forthcoming
Page 49 LEAN MANAGEMENT INSTITUT
Lean
Adm
inis
tratio
nLe
an C
onst
ruct
ion
Lean
Mai
nten
ance
& Se
rvic
e
Residents’ services
Building authorities
Public construction
Administrative bodies
Municipal utilities
Facility management
Reorganizing on the Basis of Lean Business Tools
Lean
Man
agem
ent
Page 50 LEAN MANAGEMENT INSTITUT
Creating Thematic Teams
Residents’ services
Building authorities
Public construction
Public transport
Municipal utilities
Facility management
Seel
zeDü
ssel
dorf
Neue
nkirc
hen
Hom
burg
City
5
.....
..... City
20
Short- and medium-term measures
Long-term efforts atchanging the law
Page 51 LEAN MANAGEMENT INSTITUT
Lean City Club
Short-term immediate measures to optimize processes
Process costs for the processes studied
Modules and interfaces that can be assembled – like Lego bricks – to form the necessaryadministrative, service, and maintenance products individually into complete services
Optimization recommendations for legislative solutions
Results of the Workgroups
Page 52 LEAN MANAGEMENT INSTITUT
NOTE:Some pages which were shown at the Lean Service Summit 2004 are notpublished in this documentation.These documents included dates from customers and were not released.Please do not hesitate to contact us for questions and further information.
LEAN MANAGEMENT INSTITUTContact person: Heiko von DamnitzSteinbachstraße 25D - 52074 AachenTel: +49(0)241-89 49 99 93Fax: +49(0)241-89 49 99 94E-Mail: [email protected]
THE WAY TO LEAN CITY