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Extending Lean Labor To The Back Office

Source: Kronos Inc.

In a competitive market, you must continually find ways to improve your operations to heighten productivity, increase quality, enhance responsiveness, and reduce costs. Many organizations have long achieved this goal by applying Lean principles to their manufacturing operations. Yet 60 to 80 percent of all costs related to meeting customer demand are administrative or office-related functions.2 As a result, many organizations are looking to significantly improve their bottom line by extending Lean initiatives beyond the plant floor3 by applying Lean concepts to back-office processes long ignored in process improvement efforts.

Lean is based on two principles: eliminating “waste” — any step in a process that adds no value as defined by customers — and smoothing workflow. Seventyfive to ninety percent of the steps in service and administrative processes, such as order entry, quoting, and purchasing, add no value.5 Lean analysis identifies wasted processing and manpower. It is also designed to smooth out the volume of work so that it can be performed continuously regardless of variations in demand, eliminating rush periods and fire drills that drive excess staffing and negatively impact quality.