West Michigan HDIOctober 10th, 2012

Amway’s Lean Office Journey

Agenda• Welcome

Jill Bierens – Manager, Global IT Service Desk• Lean Office Overview

Stephen Sweers – Manager, OPX Lean Office• Amway IT Results

David Drake – Lean Leader, ITJill BierensDaniel Uecker-Herman – Lead Service Desk Technician

• Q&A• Optional Tour: IT Operations, ITAM, Lean Cell

About Amway• Founded in 1959• Second largest direct-selling company in the world

Annual sales of more than $10 billion in 2011 More than 450 products 80 countries and territories 20,000 employees Six million entrepreneurs selling Amway products around the world More than 900 patents granted and more than 800 pending

The Heart of Amway

Amway’s Global Service Desk

• Metrics Nearly 6,000 customers in North America and SE Asia Average 13,000 incoming contacts per month (all channels) Average 5,000 calls per month Live answer = 85% First Contact Resolution = 75% Eight Service Desk Technicians Four User Management Technicians

• Current State

• Strategy• Four regions• Follow the Sun• Standardized processes

Caller

Ada HQ6:30am–7:30pm

Malaysia7:00am-7:00pm

Amway’s Global Service Desk

• Identify and eliminate wasteful process steps in a systematic way• More than 60% of the cost of a product or service is attributable to administrative processes.

• Quality and service improve• Turnaround time shortens• Costs go down and profits go up• The customer is ultimately delighted• Resources (people and money) become available to be redeployed to further grow the

business

WHY LEAN OFFICE?

KAIZEN DEFINED

KaiKai“changechange”

(revolutionary) (revolutionary)

zenzen“goodgood”

(sacrifice)(sacrifice)

Self

Whipped Back

Sheep

Altar

• Quality: How to improve it?• Cost: How to reduce it?• Delivery: How to ensure it?• Talent: How to develop it?

LEAN OFFICE ISSUES

ELIMINATE WASTE• The 8 Wastes

DefectsOver-productionWaitingNot engaging peopleTransportationInventoriesMotionExcess processing

ELIMINATE WASTE

• Unevenness Can often be eliminated by managers through level scheduling and

careful attention to the pace of work.

• Overburdening Workers by requiring them to operate at a higher pace, with more

effort and for a longer period of time than appropriate workforce management allows (target utilization @ 85%).

• Right 1st time Quality Improvement• Delivery/Lead Time/Flow Improvement• Cost/Productivity Improvement• Talent Development

• Right 1st time Quality Improvement• Delivery/Lead Time/Flow Improvement• Cost/Productivity Improvement• Talent Development

TRUE NORTH METRICS

“These are a select few measures, and if you improve them each year, ‘good things’ will happen.”

– George Koenigsaecker

“These are a select few measures, and if you improve them each year, ‘good things’ will happen.”

– George Koenigsaecker

LEADERSHIP BEHAVIOR

It can and must be taughtSome have it, some do notProblem Solving Skills

People will feel empowered if they receive positive support for solving problems

People will not accept blame unless forced to

What are the assumptions about people?

Call attention to the problem for assistance, to learn & to avoid the problem in the future

Solve the problem on your own if at all possible

What should the individual who makes a mistake do?

Management (95% of the time)The person who makes the mistake (5% of the time)

Who is responsible?

The “System” (“5 Why’s”)The “Individual” (“5 Who’s”)What is the cause?

A deviation from StandardThe result of someone messing upWhat is a problem?

Lean ManagementTraditional ManagementCritical Questions

It can and must be taughtSome have it, some do notProblem Solving Skills

People will feel empowered if they receive positive support for solving problems

People will not accept blame unless forced to

What are the assumptions about people?

Call attention to the problem for assistance, to learn & to avoid the problem in the future

Solve the problem on your own if at all possible

What should the individual who makes a mistake do?

Management (95% of the time)The person who makes the mistake (5% of the time)

Who is responsible?

The “System” (“5 Why’s”)The “Individual” (“5 Who’s”)What is the cause?

A deviation from StandardThe result of someone messing upWhat is a problem?

Lean ManagementTraditional ManagementCritical Questions

THOUGHT-PROVOKING QUESTIONS• To what extent are your Function’s goals linked to Enterprise Goals? • Can you identify all of your Function’s internal and external customers?

• Do you know all of the products and/or services your Function provides its customers?

• Do you know your customer’s requirements for your Function’s products and/or services?

• Do you measure Functional performance on the basis of how well your products and/or services meet your customer’s requirements?

• Can you identify your Function’s internal and external suppliers?

• Do you establish clear goals for the products and services provided to your Function by your suppliers?

• Do you have documentation of your Function’s role in the cross-functional value streams to which it contributes?

• Do you measure your Function on the degree to which it contributes to cross-functional value streams?

• Do you measure the “upstream” performance of the processes that flow through your Function?

• Do you have tracking and feedback systems that effectively and efficiently gather performance information and provide it to the people who need it?

• Do you have the skills to troubleshoot (remove the root causes of) performance gaps in your systems?

• Do you spend a large percentage of your time working to improve the interfaces between your Function and other Functions and between sub-units within your Function?

• Do employees in your Function work in an environment where their job design, job goals, feedback, rewards, resources and training enable them to make their maximum contributions to process efficiency and effectiveness?

Factors for success:• Clear Business Case• Leadership Endorsement• Clear Roles & Responsibilities• Dedicated Internal Resources• Structured, Systematic Method• Simple, True North Metrics• Frequent Reviews

SUCCESS FACTORS

What:• Improve Internal Process Workflows and Reliability• Standardize Work Processes• Improve Process Throughput Time • Reduce Clerical Errors (implement mistake-proofing techniques)• Establish “Lean Plans”

Where:• Transactional Business Processes (ex: Idea-to-Market, Procure-to-Pay, etc.)• Key Functional Areas (ex: Planning, Procurement, QA, R&D, IT, Sales, Finance)

Impact on:• Throughput Time Variation (Operational Lead Time Improvement)• Right 1st Time Quality Improvement

DEPLOYMENT MODEL: PHASE 1 “STABILITY”

LEAN OFFICE SPECIALIZATION: INSTABILITY

• Specialized work• No level loading• Work duplication• No realization of waste

OFFICE EMPLOYEES SPECIALIZATIONBreadth of Knowledge

Employees typically retain 80% of the process knowledge.

LEAN OFFICE SPECIALIZATION: STABILITY• Multi-Skilled• Multi-Process Handling• Level loaded @ 85% of Capacity

OFFICE EMPLOYEES GENERALISTShared Knowledge

Skills/Training MatrixSkills/Training Matrix

LEAN LEADER STANDARD WORK• Assess efficiency of Functional & Cross-Functional business processes.• Develop Functional “Lean Plans” aligned with Enterprise Strategy.• Enable improvement by providing kaizen breakthrough method & support.• Create expectation for annual improvement in:

• Right 1st Time Quality• Productivity (Cost)• Delivery (Lead Time)• Talent

• Encourage active sharing & adoption of best practices.

1. What are the top 2 or 3 most costly outputs (products or services) your “lean office” makes and delivers to your customers? Or, what causes you the most pain? Brainstorm!

2. Select one output (product or service for your customer), assemble a team and together explore using the SIPOC Tool (Supplier/Input/Process/Output/Customer).

3. Plan your 3-5 Day Kaizen Event using your completed SIPOC as a guide (hint: you may want to include the voices of suppliers, processors, customers and “outside eyes” as well).

4. Execute the Kaizen Breakthrough Method…. again, again and again (5X)!

1. What are the top 2 or 3 most costly outputs (products or services) your “lean office” makes and delivers to your customers? Or, what causes you the most pain? Brainstorm!

2. Select one output (product or service for your customer), assemble a team and together explore using the SIPOC Tool (Supplier/Input/Process/Output/Customer).

3. Plan your 3-5 Day Kaizen Event using your completed SIPOC as a guide (hint: you may want to include the voices of suppliers, processors, customers and “outside eyes” as well).

4. Execute the Kaizen Breakthrough Method…. again, again and again (5X)!

GETTING STARTED: ACTIVITY

SIPOCSupplier Inputs

(Requirements)Process

(Transformational, Value-Creating Steps)

Outputs(Requirements)

Customer

• Meijer• Kitchen

• 36 Minutes Total Time • 2 ea Eggs• ¼ Cup Water• ½ Cup Vegetable Oil• 8” X 8” Pan• Shortening or Cooking Spray• Large Mixing Bowl• Wire Whip or Large Spoon• Electric or Gas Oven capable of reaching 350F• Cooling Rack• Knife• Spatula• Serving Plate

1. PREHEAT: oven to 350F for glass or metal pans, 325F for dark or non-stick pans.

2. GREASE: bottom of pan with shortening or cooking spray.

3. MIX: empty brownie mix, eggs, oil and water in large bowl.

4. STIR: until well-blended (about 50 strokes).

5. SPREAD: in greased pan and bake immediately.

6. BAKE: following times listed per pan size (ex: 8” X 8”: 42-45 Minutes. Add 3-5 minutes for dark or non-stick pans.

7. DONE: when inserted toothpick 1” from edge of pan comes out clean.

8. COOL: completely in pan before cutting and serving.

• 2” X 2” Fudgy Brownie• Warm & Gooey• Served on 6” Serving Plate

• Annie Sweers

1. Pre-Event Planning

1. Pre-Event Planning

2. Event Execution

2. Event Execution

3. Post-Event Monitoring

3. Post-Event Monitoring

Kaizen Sponsor Secured?

Kaizen Team Leader assigned?

Kaizen Target Area Selected/Scoped?

Kaizen Dates & Times Scheduled?

Kaizen Team Room Scheduled?

Kaizen Team Members Assembled (Rule of 1/3’s, SIPOC)

Kaizen Supplies Collected?

Kaizen Pre-Work/Data Collected?

Catering Scheduled?

Kaizen Training Material Prepared?

Management Report-Out Scheduled?

Kaizen Sponsor Secured?

Kaizen Team Leader assigned?

Kaizen Target Area Selected/Scoped?

Kaizen Dates & Times Scheduled?

Kaizen Team Room Scheduled?

Kaizen Team Members Assembled (Rule of 1/3’s, SIPOC)

Kaizen Supplies Collected?

Kaizen Pre-Work/Data Collected?

Catering Scheduled?

Kaizen Training Material Prepared?

Management Report-Out Scheduled?

Kaizen Team Trained, Ground Rules Established.

Current State Condition Identified.

Opportunities for Improvement Defined.

Future State Improvements Implemented & New Process Standardized.

Management Report-Out Created & Delivered.

Adhere to the Improved Process, Continue to Improve & Retrain After Each Improvement.

Kaizen Team Trained, Ground Rules Established.

Current State Condition Identified.

Opportunities for Improvement Defined.

Future State Improvements Implemented & New Process Standardized.

Management Report-Out Created & Delivered.

Adhere to the Improved Process, Continue to Improve & Retrain After Each Improvement.

Visual Controls are in place, Maintained & Continuously Improved.

Standard Work Audits are Conducted, Economic Benefits calculated & Results Communicated.

Weekly Kaizen Newspaper Accountability Meetings Conducted.

Visual Controls are in place, Maintained & Continuously Improved.

Standard Work Audits are Conducted, Economic Benefits calculated & Results Communicated.

Weekly Kaizen Newspaper Accountability Meetings Conducted.

KAIZEN BREAKTHROUGH METHOD

KAIZEN BREAKTHROUGH METHOD: RESULTS

(2 Days)(2 Days)

Current State Process (7 Days)

KaizenKaizen

V/C 56

Minutes

WASTE 7 Days

V/C 10 Mins

WAITING2 Days

Value-Creating WorkValue-Creating Work

WasteWaste

Lean IT: Impact on Amway• Service Desk• Data Center• IT Asset Management• Operations• Voice Telecom• Release management• Application Development

Service Desk• Corporate data stores

Average of 100 requests per month Original process plagued with excessive active and wait times Active time reduced from 45 minutes to 15 minutes SME provides clear direction on users’ needs Process to be leveraged globally

Service Desk• Granting Remote Access

Focused on providing correct access without hand-offs Ensuring we meet PCI compliance requirements Decision tree developed and training provided for SD staff Standard work reduces training time

• Returned capacity = 1,400* hours (Jan-Aug 2012)

* Includes time savings in IT Security and Network Services

What Have We Learned?• New concept to IT

Lean is traditionally associated with manufacturing Many of the things we do have a production flow to them

• Balance between focusing on results vs. learning• Staff hesitation to act without management direction

Empowerment is critical Innovation, learn by doing

• Quantified improvements vs. observed improvements

What Have YOU Learned?

QUESTIONS

Tours• Service Desk• IT Operations• PC Lifecycle Lean Cell

…Please gather in the lobby…David will be your guide