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OpEx in action: A-dec leverages Lean in its offices to support sales

Oct. 22, 2015
But even if an operation does everything right, the best this approach to Lean will achieve is a never-ending journey of continuous improvement. Instead, companies can realize both operational and financial results in months, not years, by designing their operations to achieve Operational Excellence.

Almost every manufacturing operation has attempted to apply Lean principles in order to enhance efficiencies, reduce quantity, or improve quality. This process often involves management setting a goal in one targeted area, making changes to achieve it, then setting another goal. But even if an operation does everything right, the best this approach will achieve is a never-ending journey of continuous improvement. Instead, companies can realize both operational and financial results in months, not years, by designing their operations to achieve Operational Excellence.

OpEx defined
Operational Excellence (OpEx) is achieved when each and every employee can see the flow of value to the customer and fix that flow before it breaks down.SM When OpEx is achieved, flow is not created to increase productivity or efficiency, but simply so everyone understands how their activities flow the necessary material or information through several processes to the customer, and so everyone can see when that flow stops.

Rather than brainstorming or kaizen, a key element in achieving OpEx is to design this flow by using nine guidelines applied in the sequence listed:
1. Takt or takt capability.
What is the ability to meet the demand for the service the office provides?
2. Continuous flow.
Where can we move information in a one-piece fashion?
3. FIFO.
Where can we sequence our work "first-in, first-out"?
4. Workflow cycles.
Can we create a preset time and a preset pathway information will follow?
5. Integration events.
Can we establish robust handoffs when moving large amounts of information?
6. Standard work.
Can we create standard work for processing information and how the information will flow?
7. Single-point sequence initialization.
What single process will set the sequence?
8. Pitch.
How will everyone know if the office is on time?
9. Changes in demand.
How will we react to changes in what the customer wants?

HEY! | New to Lean? See the bottom of this page for a helpful glossary.

These principles create an overarching design of flow in the office. This defines the performance and characteristics of how the office behaves when it receives a customer request. The principles establish how information will flow to provide the service, how everyone will know what to work on next, how long it will take to complete the request, and how everyone in the office will know if they're on time.

Once OpEx is achieved, it will result in not only waste elimination, but also in top-line business growth. This is because reaching the destination of OpEx frees management from running the operation, allowing it to focus on offense activities that grow the business.

One example of a company who has applied the principles of OpEx and realized significant growth is A-dec.

From Lean to OpEx
A-dec is an Oregon-based manufacturer of dental equipment (e.g., chairs, cabinets, delivery systems, dental lights) founded in 1964 by husband-wife team Ken and Joan Austin. Today, A-dec's 50-acre headquarters is home to approximately 1,000 employees who design, manufacture, and market the company's equipment to dental professionals worldwide, supported by facilities in the United Kingdom and Australia.

A-dec embarked on a Lean journey in 2000. Initially implemented in the manufacturing process, the company undertook to expand the concepts and, in 2005, formed a special Lean team focused exclusively on translating Lean concepts into its administrative processes. While this effort resulted in notable improvements in the company's office areas, A-dec realized it could attain better results by better designing its repetitive processes. This was to be done through the use of guidelines to achieve OpEx and create a "self-healing flow," meaning that (1) every employee could see if the flow was normal or not, and (2) know what to do when flow became abnormal.

To start, A-dec sent about 10 of its employees to a training program on achieving OpEx. The program covered the design guidelines to create Lean value streams in the office, including process families, binary connections, workflow cycles, processing cells, integration events, single point initialization, pitch, and more. However, A-dec came to understand that to be truly effective, it needed more people exposed to OpEx concepts. Therefore, it pulled in leaders from administrative areas and key members of its customer service department to be included in the improvement work. One of the first areas it decided to target was quoting.

READ THE COMPANION ARTICLE | OpEx in action: A-dec leverages Lean in its offices to support sales

Quoting department challenges
Recently, A-dec witnessed a 28% increase in its dental custom quote volume over a 12-month period. This created frequent overtime and delayed quote deliveries. A-dec made several attempts at process improvements to reduce the backlog, but the company realized few gains. Recognizing that A-dec loses business when it cannot process a quote in a timely manner, the quoting department reached out to the company's Lean experts to capture the current state and review the process.

What they found was that 94% of the time, in-process quotes were waiting for the next operation to occur. The waiting occurred at two points in the quoting process. The first was happening midway into creating a quote, when the engineer occasionally encountered a question and sought clarification from a customer service representative. This created a flow reversal back to the process start. The second delay point existed at the final quote check. Upon completion, all quotes were checked by the customer service representative and another engineer. Then, a final review was completed by the original engineer. This caused delays of up to one day.

Putting OpEx principles to work
A number of OpEx principles are central to improving flow in office areas like quoting. For example, in processing cells, the appropriate people come together at a preset time each day to process information in a one-piece flow fashion. Workflow cycles connect people in the office and let them know what to work on next in the right sequence without meetings, status updates, or management supervision.

At A-dec, these principles and others inspired changes to the quoting process to maintain a constant, forward movement of quotes through the future state process, minimizing the tendency for stops and reverse flow. For example, the team implemented FIFO lanes for incoming quotes, an escalation protocol, and an Andon System (figure 1). In A-dec's case, the Andon System consisted of a board visible from the desks of all dental furniture specialist engineers and the two co-located customer service representatives. The board updated every minute with key information to quickly inform the viewer of the custom quote status. This was critical to establishing visual, self-healing flow so employees could tell if flow was normal or becoming abnormal.

Figure 1: An example of A-dec's Andon System board

To address abnormal flow, standard work was created so employees could maintain the workflow and generate quotes properly and consistently. This included standard work for additional hours, which was based entirely on the Andon board and the time of day. "Visibility itself is a motivator," says A-dec design engineer Darren Nettrouer.

Below are the indicator colors implemented:

Oldest institutional quote:
—fewer than 10 days
—10 to 14 days
—older than 14 days

Oldest dealer quote:
—fewer than five days
—five to seven days
—older than seven days

Total quote projects:
—fewer than 15
—15 to 20
—more than 20

Improvements based on need
The Andon board version seen here is an improvement over its original implementation. A-dec changed its thinking on quotes to make the Andon board more closely reflect the number of customers waiting for something from the company. The key was not focusing on the number of variants, but the number of projects. Many projects came in with multiple variants and did not go to the customer until all of the variants were completed. Therefore, team members were celebrating when the variant count was low, even though there were still customers waiting.

In addition, a split was made in the turnaround-time counter between institutions and dealers, due to a difference in expectations between them: Dealer quotes usually need to be turned around quickly to be responsive to the dealer representative and end customer, whereas institutional quotes have a longer time expectation because they are more project-based with a more long-term planning process.

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A-dec also added the order queue to the Andon board so team members would be able to accurately see how much design work was in the pipeline. Depending on how saturated it is with designs, the company may shift resources to quoting. This helps A-dec choose the countermeasures if something in the process goes awry.

When colors on the Andon board change, A-dec has the following countermeasures available to implement:
1. Change prioritization (e.g., "hot" items completed first)
2. Cancel meetings
3. Work overtime
4. Request help from others outside group
5. Change distribution of work in team

A destination of success
A-dec has been on its Lean journey for 15 years. As the company continues to build and reinforce its Lean culture, it strives to create a system of improvement that drives the right behaviors and empowers people to feel ownership over their processes. "It never seems like you have enough time to improve the process, but if you make the time, it is worth it in the long run," says A-dec design engineer Irving Giller.

Introducing the concepts of Operational Excellence, along with other critical communication and problem-solving skills, has provided a different perspective for implementing positive change towards a known goal.

For A-dec, seeing is believing.

A glossary for Lean

New to Lean? Here's a starter's guide to help you jump in.

"Lean" is synonymous with Lean manufacturing. It is a method for eliminating wasteful processes. The Lean philosophy is best known for its incorporation by Toyota in the 1990s and is often cited as a key to the company's continued global success.
Continuous flow:
When a product continues through a production workflow without separating it for additional processing
Lean promotes a "smoothness" of workflow
Short for "first-in, first-out," meaning orders in first are processed first (and not delayed by orders that come in after)
Integration events:
Part of a learning cycle where findings are reviewed and decisions are made
Continuous improvement
Timeliness of monitoring steps in a workflow to see if things are behind schedule
Single-point sequence initialization:
A customer request comes in at the same point in the workflow, guaranteeing a standard turnaround time
Standard work:
Work is completed the same way each time
Production time required to meet customer demand

Kevin J. Duggan is a speaker, executive mentor, and educator in applying advanced Lean techniques to achieve Operational Excellence (OpEx). He is the founder of the Institute for Operational Excellence and Duggan Associates, and the author of three books on OpEx: Design for Operational Excellence: A Breakthrough Strategy for Business Growth, Creating Mixed Model Value Streams, and The Office That Grows Your Business-Achieving Operational Excellence in Your Business Processes.