Transferability of the Japanese Lean Management Approach from Production into the Office

Table of Contents

Preface

Lock Flag

List of abbreviations

List of figures

1. Introduction
1.1 Problem statement
1.2 Objective
1.3 Structure of the Thesis

2. Development of the Lean Philosophy
2.1 Top-Down or Bottom-Up Management Approach
2.2 History and Core Idea
2.3 Definition of the term “Lean Management”
2.4 Usage of the term “Lean“
2.5 From TPS to Lean Administration

3. Process Optimization with Lean Administration
3.1 In Search of Wastefulness - the 3 MU‘s
3.1.1 MUDA- The 7 Types of Waste
3.1.1.1 Wasteful over-production
3.1.1.2 Wasteful waiting times and idle periods
3.1.1.3 Wasteful unnecessary transportation
3.1.1.4 Wasteful unnecessary inventory and buffer stocks
3.1.1.5 Wasteful inappropriate processing (over-processing)
3.1.1.6 Wasteful unnecessary motion and searching
3.1.1.7 Wasteful defective products and wasteful non-quality
3.1.2 MURA - Wasteful imbalance or deviation
3.1.3 MURI - Wasteful overload or overburden
3.2 Lean Principles
3.2.1 Define value from customer’s perspective
3.2.2 Identify the value stream
3.2.3 Implementation of the Flow Principle
3.2.4 Implementing the Pull Principle (Kanban)
3.2.5 Striving for perfection (Kaizen)
3.3 Methods
3.3.1 Value Stream Mapping
3.3.2 The Kanban Board
3.3.3 CIP - The Continuous Improvement Process
3.3.3.1 PDCA Cycle
3.3.3.2 6W - Questioning Technique
3.3.3.3 5S Method
3.3.3.4 Ishikawa Diagrams
3.3.4 Performance Indication Systems
3.3.4.1 CVE - Customer Value Effectiveness
3.3.4.2 Complaints ratio
3.3.4.3 Working and processing time
3.3.4.4 Ability to meet deadlines
3.3.4.5 Productivity of staff
3.3.4.6 Lost orders
3.3.4.7 Improvement suggestions per employee and year
3.3.5 Employee involvement

4. Critics and barriers for implementation
4.1 Lack of contingency
4.2 Human aspects 4.3 Scope and lack of strategic perspective 4.4 Coping with Variability 4.5 Further barriers in Administration

5. Practical example of Lean Administration implementation
5.1 Methodical approach to data collection via interview
5.2 Evaluation method of the interviews
5.3 Key results of the experts interviews

6. Résumé
6.1 Summary of key messages
6.2 Target of the Thesis
6.3 Outlook

Bibliography

Internet Sources

Appendix I. Interview Guidelines II. Transcripts of the Interviews III. Coding Guideline

Preface

The credit belongs to the man who is actually in the area, whose face is marred by dust and sweat and blood, who knows the great enthusiasms, the great devotions, and spends himself in a worthy cause; who, at best, if he wins, knows the thrills of high achievement, and, if he fails, at least fails daring greatly, so that his place shall never be with those cold and timid souls who know neither victory nor defeat.

(John F. Kennedy on Theodore Roosevelt - New York City, 5th December 1961)

Lean Produktion ist der Hit unserer Tage. Doch die großen Produktivitätsreserven liegen in Verwaltung und Management, nicht in der Fertigung.

(Hermann Simon)

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The present thesis with the title “The Transferability of the Japanese Lean Manage ment Approach from Production into the Office - Approaches, Perspectives and Oppor tunities for the Optimization of Administrative Processes” contains the in-house data of the companies and Therefore, access to this thesis is restricted to the FOM Hochschule für Oekonomie & Management as well as to the assessors of the thesis. The thesis must not be made publicly available, neither made available to third persons.

Bönen, 19.01.2015 Genuine Signature

List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

List of figures

Figure 1 - Sea of problems according to Regber - By lowering the stocks, wastefulness and losses are to become tangible 13

Figure 2 - The Causes, Symptoms, and Impacts chart of over-production according to Regber 14

Figure 3 - The Causes, Symptoms, Impacts chart of waiting times and idle periods according to Regber 15

Figure 4 - The Causes, Symptoms, Impacts chart of unnecessary transportation according to Regber 16

Figure 5 - The Causes, Symptoms, Impacts chart of unnecessary inventory and buffer stocks according to Regber 17

Figure 6- The Causes, Symptoms, Impacts chart of inappropriate processing according to Regber 18

Figure 7 - Causes, Symptoms, Impacts chart of unnecessary motion and searching according to Regber 19

Figure 8 - The Causes, Symptoms, Impacts chart of defective products and non- quality according to Regber 20

Figure 9 - The 5 Lean Thinking Principles according to Womack and Jones and in accordance with Maslow’s hierarchy of needs, represented as a pyramid with the most basic principle at the bottom 23

Figure 10 - Value chain optimization by value stream identification 26

Figure 11 - Push or Pull Principle in Administration 30

Figure 12 - Value Stream Diagram for application process 34

Figure 13 - Example of an Online Task Board, (Agilar Software Version) 35

Figure 14 - Starting of a continuous improvement process 37

Figure 15 - The continuous quality improvement due to standardization with PDCA 39

Figure 16 - Ishikawa fishbone-type cause-and-effect diagram 42

Figure 17 - The main gaps and criticism of lean thinking 50

Figure 18 - The Lean Iceberg Model 52

Figure 19 - Implementing lean into the office - time frame for the leap 53

1. Introduction

After the propitious end of the year 2013, economy started a slow recovery with signs of a cyclical upturn at the beginning of 2014. The construction sector, consumer industries and company service providers were in good shape, while capital goods producers have almost returned to their former strength. Other important international trading companied started to intensify their growth little by little.¹

Globalization continued its progress, since the economic crisis weakened multinational corporations from Europe, the USA and Japan only barely. At the same time, companies in the West were increasingly challenged by global competition. Fast-acting contractors found new clients and strategic trading partners, while the latter, however, were facing strong and aggressive competition.²

International competition continues to remain one of the key issues that companies have to deal with today.³ Productivity and efficiency have to be improved steadily and innovation, research and development initiatives are to be constantly promoted.⁴ In order to address this issue successfully, numerous companies make investment into the education and training of their personnel a priority.⁵ Employees are called upon to recognize the potential for improvement at their workplace and to propose creative so lutions. The concept of Lean Management, formerly mostly applied at Japanese com panies, is presently a reference term for lean processes and continuous competitive ness building.⁶

In scholarly literature, Lean Administration or Lean Office is described as the applica tion of Lean Management approaches and methods to the field of business processes, without regard to whether they take place on the shop floor or on higher administrative levels.⁷ In the present thesis, the applicability of this management approach will be not only analyzed, but also submitted to critically scrutiny. Is the term “Lean“ only expres-

sive of a misplaced downsizing fervor, as critics claim, or are the successes of Lean Management transferable into the sphere of administration as well? Is it, thus, possible to achieve a “lean” administration? Can processes, often described as “non- transparent“ and “non-measurable,“ indeed, be optimized through the application of this new management approach?

1.1 Problem statement

Lean Management is often described as a philosophy, a theory, a process, a method or a toolbox which replaces the division of labor, mass production and the corresponding management thinking. However, as a rule, most theories, methods and philosophies enjoy a heyday, gain wide acceptance for a short period of time and are replaced afterwards, due to their eventual obsolescence caused by their lack of development.⁸ Lean Management, in contrast, seems to have developed through the past century. The realization that the management of mass production has become overly complex, rigid and costly has resulted in a re-focusing of management on customer needs and the skills of employees as well as on goods and services.⁹

Companies that successfully apply Lean Management can, thus, set new standards in the field of employee motivation and productivity.¹⁰ For this, however, an understanding of this new management philosophy is required. Therefore, the task of management is to create the framework for the achievement of Lean Management standards and to promote and support employees in the process of rethinking of their activities,¹¹ so as to show the way to an efficient and effective implementation of the methods of Lean Management as a means of continuous development.¹²

1.2 Objective

Nowadays, the methods of Lean Management are increasingly used and adopted for office administration. This management approach aimed at achieving optimization and efficiency is called Lean Administration. Nevertheless, office administration is still large- ly dominated by Taylorism. Companies that want to achieve an increased productivity of the office work, usually use overhead value analysis, zero-base budgeting or auto mation.¹³

The study Lean Office 2006, conducted by the Fraunhofer IPA and Kaizen Institute, asked the study’s participants: “What is your estimate of the amount of wastefulness in the office work?” 162 participants stated that, on average, 32% of their total work is wasteful and that only 68% of their work consists of productive activities.¹⁴ A Lean Office study of 2010, conducted by Fraunhofer Austria and Fraunhofer IPA, likewise reveals a high potential for Lean Management: 27% of the net working time - according to company estimates - is the average percentage of wastefulness.

The greatest potential for optimization, corresponding to a 55% share of the to- tal working time, is to be found in the improvement of poorly coordinated processes.

On average, a productivity increase of 9% was achieved in administration over the past three years. The corresponding figure in the sphere of production was, however, 15%.¹⁵

In the following sections of this thesis, different types of wastefulness are identified and reasons for the above indicated waste of working time of about 30% are presented. Furthermore, this research aims to provide a comprehensive insight into the concepts of Lean Management and Lean Administration. As well, this thesis aims to describe and evaluate the transferability of this way of reasoning into the office work. The ques- tion of whether and to what extent Lean Administration can help companies optimize their processes and increase efficiency is analyzed and responded to.

In the practical part of this thesis, the role that Lean Administration assumes at and is described in detail.

That part also explains what their approach to the introduction of Lean Administration has been, how they developed and worked with this approach in the present period and how employees have experienced the introduction of this approach to administra- tion. That part of the thesis also demonstrates what room for improvement there is as well as what limitations of Lean Administration these companies have experienced.

4

The objective of this thesis is to find out how companies can reduce wastefulness, optimize processes and make operational procedures more efficient at the office using the Lean Administration approach.

1.3 Structure of the Thesis

At the beginning of the thesis, the development of the Lean Philosophy is presented and general definitions of this and other concepts are proposed. The following part of the thesis discusses different Lean Management principles and methods and presents their detailed descriptions. In the next part, this thesis delineates the manner in which Lean Administration has developed from Lean Management and addresses the issue of the transferability of Lean Management methods into the sphere of office work. Fur- thermore, a variety of Kaizen-based methods for making Lean Management transfera- ble into other spheres are outlined and the measurability of the effectiveness and wastefulness of these methods in a given context is discussed. Additionally, this part provides information about the transferability of Lean Management methods into the sphere of office work. In the next part of this thesis, critics to Lean Management are outlined and possible barriers to the implementation of Lean Management in the office work are identified. Last, on the basis of an interview, which was conducted with the Lean Managers at and , as well as on the basis of various performance figures provided by the compa- nies, the importance and success of Lean Administration within different administrative areas is described. These interviews further aim to see, if there can be derived a poss- ible strategy for successful transformation of the Lean Management approach from production into the office.

2. Development of the Lean Philosophy

Formerly, Taylorist thinking rooted in the approaches to the division of labor, manage- ment hierarchies, and shop floor supervision developed by Henry Ford and Alfred P. Sloan was widespread at companies. Presently, the management world is making a transition to a novel manner of thinking that the Lean Management epitomizes.¹⁶

2.1 Top-Down or Bottom-Up Management Approach

In recent decades, economic development in Germany was dominated by profound structural changes, particularly illustrated by a significant increase in employment in the 5service sector. In contrast, the importance of traditional, extractive sectors of economy, such as agriculture and forestry, as well as that of the manufacturing sector has de- creased.¹⁷

At present, in Germany the service sector represents about three-quarters of the job market. Almost as high is its contribution to the Gross National Product that stands at about 70%. Innovative, competitive and high-quality services not only contribute to the exploitation of economic development and growth possibilities, but at the same time assist users of these services increase productivity and innovation.¹⁸ The implication of this is that almost every company possesses variously extensive administrative de- partments and processes whose main task is service provision. In view of the impor- tance of these services not only for production, but also for administration, a reform of business processes and their optimization becomes increasingly important.

The term “Business Process Reengineering” was coined by H. Johansson in 1993. Business Process Reengineering (BPR) represents the most widely-used and tho- roughgoing method for the restructuring of business processes.¹⁹ According to the ex- planation provided by Hammer and Champy, this term refers to a fundamental rethink- ing and radical redesign of business processes aimed at achieving dramatic improve- ments in important metrics, such as cost, quality, service and turnaround time.²⁰

Initially developed and applied in the USA, BPR is a top-down approach to the plan- ning, design and optimization of business processes. Among the renowned companies that serve as historical examples of the application of this approach are IBM, Xerox and Chrysler corporations. Whereas Business Process Optimization only seeks to improve individual processes, in order to make them more efficient, BPR represents a more fundamental rethinking of the whole company operation, its processes and its business strategy. The basic assumption underlying this approach is that company structures habitually become overly complex and tangled, which necessitates that they be torn down, in order to enable a fresh start. As part of the application of this approach, processes and structures are deliberately dismantled. Based on customer benefit and management vision, the new organizational design of the company is determined, planned and supported from above, as part of this top-down planning approach. Con- sequently, radical change driven by profound organizational modifications takes place, as existing organizational structures are not only improved, but replaced with new ones. A company is, thus, intended to undergo a transformation from a functional to a process-orientated organization.²¹

In contradistinction to the approach described above, Japanese management methods, such as CIP, Kaizen and Lean, commonly known as gentle or successive are becom- ing increasingly popular. The distinctive feature of these methods is their bottom-up management style, which implies that the entire company is involved in supporting their implementation. The role of the manager using this approach is to motivate employees and optimally utilize their skills. According to this approach, structures and processes are to be improved and redesigned from the bottom to the top of the company.²²

In order to achieve best possible results from continuous process optimization, redesign and improvement, various management approaches can be used separately and in conjunction with each other. This thesis focuses on the Japanese Lean Philosophy, a bottom-up method Toyota is most famous for.

2.2 History and Core Idea

The term “Lean” or “Lean Production,” in German language also often referred to as “schlanke Produktion”, became generally known over 17 years ago with the help of research Womack und Jones have done. In the 1990, they conducted a study at the Massachusetts Institute of Technology (MIT) that made a wide range of innovative ap- proaches to solving production system problems developed at Toyota Corporation ac- cessible to the Western automotive industry.²³ Their study indicated that Lean Produc- tion resulted in a significantly better quality of Japanese car manufacturers, as com- pared to their competitors from Europe and the USA. These Japanese management approaches also resulted in twice the efficiency and flexibility of production vis-à-vis Western counterparts.²⁴ The elements of the Lean Production approach, such as CIP, JIT, Pull-Principle and others, are, therefore, based on Toyota’s pioneering work.

As in the 1990s, at present the situation of the American automobile industry is difficult. Given that the results of the MIT study indicated promising opportunities in the field of industrial management, the Japanese production model has gained in popularity in other industrialized countries and has become a topic of frequent discussions. The term “Lean Production” has gained wide acceptance, principally, as a consequence of this study that compared different assembly plants of automobile manufacturers. Other divisions other than production, such as research, development, administration and sales, were included only considerably later into the purview of this approach.²⁵

While in American English the term Lean Production refers to the entire company processes, in German usage the meaning of this term has been restricted to production processes only. That implied a development phase, that finally created the term Lean Management to establish a comparable meaning, also in Germany.²⁶

Over time, the principles of Lean Production were increasingly generalized and adopted beyond the automotive industry. These principles were also referred to as Lean Management, even though that time this term had no different meaning to the original term of Lean Production.²⁷ Only in recent years there has occurred a shift in the meaning of Lean Production, due to the transformation of Lean Management into a term referring to a management philosophy. Lean Management has, thus, become complementary to Lean Production, by extension however, aims to avoid all forms of wastefulness, mistakes and unnecessary costs not only in production but also in all other areas, while striving for the best possible quality.²⁸

Consequently, for nearly two decades, production companies around the world have used the philosophy of Lean Production as the basis for their optimization efforts. Whereas this approach was originally applied in the automotive industry, the transformative philosophy of Lean Production has since found its way into other industries, such as mechanical engineering or consumer goods industry.²⁹

At present, the concept of Lean Production has developed from a focus on production to a comprehensive Lean Management approach. The latter term, thereby, refers to a holistic management of business processes related to development, purchasing, sales, processing, production, logistics and services activities.³⁰

Lean Management is largely applied in the following distinct manners:³¹

Lean Management / Lean Thinking as a new, general management approach Lean Management in Production (Lean Production)

Lean Management in Development (Lean Development)

Lean Management in Administration (Lean Administration / Office)

2.3 Definition of the term “Lean Management”

As described above, the term “Lean Management” is derived from the philosophy of the Toyota Production System (TPS), which is presently known as “Lean Production“.³² Although it is often assumed that the term Lean Production comes from Japan, however, it was coined by Krafcik, one of the authors of the study “The Machine That Changed The World” conducted by the MIT in 1990.³³

By this new neologism, Krafcik wanted to express how this management approach was different to conventional methods of production, such as Buffered Production. While Lean Management is based on Lean Production, it extends far beyond the sphere of production and comprehensively affects functions, structures and processes of a com- pany.³⁴

According to Pfeiffer, the concept of Lean Management should, therefore, be inter- preted as referring to a new holistic, integrated management „philosophy.“ Lean Man- agement represents, thus, a permanent, consistent and integrated application of a set of principles, methods and measures aimed at achieving effective and efficient plan- ning, design and control of the entire value chain of goods and services in industrial and other sectors. It shall involve all design factors of the company with the principal aim of avoiding wastefulness. Thus, this management approach is oriented towards optimizing the system efficiency in the short, medium and long term for all participant in the company processes.³⁵ The purview of this approach also includes external agents, such as suppliers and customers.

Lean Management refers to a “lean” utilization of production factors, such as means of production, materials and personnel, in a manner that is as time efficient and economi- cal as possible. As well, Lean Management aims at adjusting up- and downstream processes according to the customer demand, in order to continuously improve turna- round times in the whole business process chain and thereby to increase global com- petitiveness.³⁶

2.4 Usage of the term “Lean“

As a stand-alone term, “Lean” is used to describe processes that are “slimmed” down as much as possible, while, consequently, eliminating all types of wasteful activities.³⁷ Wastefulness can also be defined with regard to various types of resources, such as time, space, money, material and labor. The guiding principle of “lean” approaches is that these types of a wasteful use of resources are to be eliminated. In addition, these approaches to value creation also recognize the importance of the customer’s point of view and of the optimal coordination of the whole value chain.³⁸

If the concept of leanness is successfully implemented, this will result in swift and high- ly flexible processes. The company will then be able to offer its customers the exact product they are asking for at the right time, with best quality and at lowest costs.³⁹

„Lean is actually about a new business model that delivers far superior performance for customers, employees, shareholders and society at large. Initially this superior performance is delivering exactly what customers want without any problems, delays, hassles, errors and fire-fighting.”⁴⁰

2.5 From TPS to Lean Administration

Presently, while additional approaches have been developed outside the production sphere, they still remain subsumed under the original umbrella concept of Lean Management. In the current management practice the elimination of wastefulness in the administrative sphere is referred to as Lean Administration or Lean Office.⁴¹

Lean Administration represents a holistic approach to the reduction and eventual elimi- nation of wastefulness in the administrative sphere not directly connected to production activities. Its aim is to continuously optimize administrative activities, while reducing lead times of various processes. According to the Fraunhofer IPA, the application of Lean principles can realize capacitive potentials of over 20% in projects within adminis- tration.⁴²

Not only improvements of entire value creation sequences, such as quotation process, but also optimizations of workflows within the company, such as administrative processes, can be realized. Thus, the implementation of Lean approaches at the workplace can lead to the optimization of management activities at different organiza- tion levels. To achieve this, Lean Administration initiates a constant learning process aimed at continuous improvement by defining new standards for office activities. This requires consistent customer focus, employee involvement, the development of quality awareness and an instant recognition and reduction of waste. Only in this manner, company resources can be discovered, performance can be improved and costs can be minimized. As part of Lean Administration, company’s employees are expected to recognize, develop and implement approaches for the improvement of processes and the resolution of problems by themselves.⁴³

3. Process Optimization with Lean Administration

The aim of any process optimization is a more efficient use of company resources. This may be achieved by either keeping the output constant but diminishing the use of re- sources or by increasing the output, while keeping the level of resource utilization sta- ble. According to Töpfer, the best way to optimize is primarily to discern and eliminate all wastefulness that occurs in the course of individual process activities and related resource consumption. Additionally, process optimization requires the identification of all deviations from the nominal value of process-related performance indicators and the consequent detection and eradication of all variations from these indicators.⁴⁴ Hence, Lean Management can be referred to as an instrument for process optimization, since it helps to identify waste and to streamline processes.⁴⁵

In order to test the transferability of Lean Management methods and principles for process optimization in the administrative sphere, they have to be clarified and discussed in detail. In addition, various types of wastefulness need to be further examined, because the Philosophy of Lean Management or Lean Production is perceived as the origin of the modern concept of Lean Administration.⁴⁶

3.1 In Search of Wastefulness - the 3 MU‘s

In 2013 Gorecki and Pautsch gave a pragmatic advice to all companies that are inter- ested in initiating Lean Management at their organizations. According to them, these companies should first concentrate on the area of their activity where wastefulness is at its highest level, where the value stream is most decelerated and where economic val- ue is most often destroyed or high costs emerge. Correspondingly, the successes of Lean Management can be seen there in the most prompt and prominent fashion.⁴⁷

Therefore the identification of wastefulness relates to the following questions. What is wastefulness precisely and which different types of wastefulness can be found in a company? Would a competing company not already try to avoid wastefulness on a continuous basis? Which level and kind of wastefulness is acceptable? Is there waste- fulness that remains unnoticed at first sight and which therefore is not obvious?⁴⁸

In 1988 Ohno explained in his book, which became a standard work of Lean Produc- tion, that insufficient standardization and rationalization creates wastefulness (in Japa- nese, MUDA), imbalance or deviation (in Japanese, MURA) and overload (in Japa- nese, MURI) in workflows and labor time, which eventually results in the manufacturing of defective products.⁴⁹ Bicheno stated, that by understanding the 3 types of wasteful-ness a company also obtains a better understanding of Lean, because the 3 MU ’s are linked.⁵⁰

3.1.1 MUDA- The 7 Types of Waste

Womack and Jones started their book “Lean Thinking” with the words: “Muda. It’s the one Japanese word you really must know“⁵¹.

Nowadays, the term “Muda,” deriving from the Japanese word for waste, is known worldwide. In daily life, it is possible to discover different types of wastefulness almost everywhere. It often occurs when individuals waste resources without making a contribution to added value.⁵²

In the sphere of production and in TPS Ohno differentiated between 7 different types of wastefulness.⁵³ These types of wastefulness have later also been applied to the sphere of administration:

1. Wasteful over-production (largest wastefulness)
2. Wasteful waiting times and idle periods (time on hand)
3. Wasteful unnecessary transportation
4. Wasteful unnecessary inventory and buffer stocks (stock on hand)
5. Wasteful inappropriate processing (over-processing)
6. Wasteful unnecessary motion and searching (movement)
7. Wasteful defective products and wasteful non-quality

According to Regber, wasteful over-production and unnecessary inventory and buffer stocks account for the largest part of the total wastefulness estimated to be at the level of 40%. For instance, if a company has high transportation costs, the failure of a deli- very would be very expensive. Therefore, the company builds up stocks in order to always be able to deliver its products. In case of a high error rate in its production processes, the company also builds up inventory, in order to always have buffer stocks in case of problems. This creates a vicious circle of rising expenses.⁵⁴

illustration not visible in this excerpt

Figure 1 - Sea of problems according to Regber - By lowering the stocks, wastefulness and losses are to become tangible⁵⁵

To illustrate the possibilities of breaking this vicious circle of wastefulness by means of Lean Management, Regber uses the above image of a sea of problems. The ship on the sea symbolizes the production, while the water represents the inventory. In order to make the production process represented by the ship as efficient as possible, Regber advises reducing inventory as much as possible, while using the visual metaphor of draining the water covering the rocks of wastefulness that enables the sailing of the ship despite these underlying problems. By draining the water, the company is forced to grapple with the 7 different problems of wastefulness depicted as reefs that need to be removed before more the water can be drained completely.⁵⁶

In the following sections, the 7 types of wastefulness and their transferability to Lean Administration will be explained in detail. First, however, it should be noted that the amount of wastage due to faults and poor quality in the sphere of administration is very high. In the study Lean Office 2006, the participants indicate that only 4% of 100% of business processes at their own workplace can be carried out without queries and un- certainties. Conversely, this means that 96% of all processes have faults and are characterized by wastefulness. Hence, there is a huge potential for improvement.⁵⁷

3.1.1.1 Wasteful over-production

Over-production means that the company manufactures more products, semi-finished products or services than are actually needed. This kind of wastefulness also includes the completion of already ordered products before delivery date, since these products in turn cause storage costs.⁵⁸ This type of wastefulness is often referred to as idle performance and forms the basis for the following types of wastage.

illustration not visible in this excerpt

Figure 2 - The Causes, Symptoms, and Impacts chart of over-production according to Regber⁵⁹

In Lean Administration, this type of wastefulness also includes excessive information or information overload. This kind of wastefulness can include, for example, an e-mail addressing multiple receivers in the subject line which have nothing to do with the con- tent or task the e-mail has been written for.⁶⁰ In this example, the company wastes hardware and human resources. This represents a wasteful use of hardware re- sources, due to the necessity to save and send of these extra e-mails. This information overload also reduces personnel capacity, as in most cases it is not obvious for the recipient of the e-mail whether the information is relevant to him or not. Additional kinds of this form of administrative wastage include detailed calculations for a preliminary price inquiry, excessively long procedural instructions, 1-year forecasts for C-products, overcapacities for rare peak demands, the copying of hundreds of barely necessary forms and producing project plans that are not implemented at a later stage.⁶¹

3.1.1.2 Wasteful waiting times and idle periods

This type of wastage is often caused by the lack of availability of materials, means of production or information. Whenever the operation of personnel or machinery is obstructed, waiting times or idle periods arise.⁶² These may be caused by inefficient transport routes or poorly coordinated processes.⁶³

Figure 3 - The Causes, Symptoms, Impacts chart of waiting times and idle periods according to Regber⁶⁴

Lean Administration identifies this type of wastefulness as a result of inquiries that lead to prolonged waiting times, computer programs that need a system restart for their up- date or failures to process case information due to the need for further information. Wasteful waiting times are also associated with unnecessary delays in phone or e- mails responses or in meeting participation and project approval procedures.⁶⁵ This unnecessary wastage mostly occurs in every company in various areas. The implica- tions of this wastefulness are that external customers or internal staff members are not served optimally.⁶⁶

3.1.1.3 Wasteful unnecessary transportation

Means of transportation are not inherently value-adding, because they do not bring an immediate benefit to the customer. Nevertheless, in every company transportation tasks are carried out to an unnecessary extent. Usually, parts are not directly taken from one manufacturing step to the next and processed there, but wait for their next process step and, thus, necessitate room for temporary storage. Transportation activi- ties can occur both within the company, such as the transportation of semi-finished products from one plant to another, and outside the company.⁶⁷ Various means of transportation can include conveyors, forklifts, transits, trucks, and carts.

Figure 4 - The Causes, Symptoms, Impacts chart of unnecessary transportation according to Regber⁶⁸

According to the approach of Lean Administration, wasteful unnecessary transportation describes an unnecessary transportation of forms, folders, or other correspondence resulting in an interruption of information transfer. Into this type of wastefulness are also included redundant, poorly targeted meetings, large e-mail distribution lists, comprehensive and often paper-based internal mail arrangements and a lack of routine optimization in office logistics.⁶⁹ This wastage in the office operation unnecessarily prolongs working and processing times.⁷⁰

3.1.1.4 Wasteful unnecessary inventory and buffer stocks

In order to achieve a particularly favorable unit price, most buyers attempt to obtain preferential pricing terms from their suppliers through negotiation. These pricing terms, however, are often tied to a very high order quantity. Although this circumstance might

decreasingly apply to external suppliers, internal suppliers still tend to accept this conditionality. Also in order to avoid the risk of a delay in delivery, many companies have vendor parts or intermediate products on stock.⁷¹

Often, the cause for increased inventory and buffer stocks in the form of vendor parts and intermediate products is inharmonious manufacturing processes. The latter are in turn caused by the lack of space at the site of work processes, the misplacement of parts and materials or communication problems. These problems could, thus, be avoided by always producing only as much output as needed for the next process, in order to ensure a smooth manufacturing process.⁷²

illustration not visible in this excerpt

Figure 5 - The Causes, Symptoms, Impacts chart of unnecessary inventory and buffer stocks according to Regber⁷³ Stocks that serve as a buffer for the process of production cause excessive costs, due to the need for their storage. Buffer stocks also conceal the points of weaknesses in the production process. Unnecessary stocks are wasteful since they increase storage costs that are purely composed of storage expenses, such as building insurance, lighting, maintenance and warehousing investment. Unnecessary inventory increases costs related to inventory-related expenses, such as stock insurance, the depreciation or value adjustment of stock, and capital investment.⁷⁴

In the administrative sphere, unnecessary stocks that consume capital and cause retrieval and transportation costs can include office material, electronic files, billing or order due lists, multiple filings, full e-mail accounts and various records.⁷⁵

3.1.1.5 Wasteful inappropriate processing (over-processing)

This type of wastage includes all costs and problems occurring during the processing of serial products. In particular, this type of wastefulness refers to high downtimes of machines as well as incorrect or unsuitable choices of process sequences.⁷⁶ Therefore, the manufacturing process of each product should be adjusted to its requirements, in order to avoid unnecessary mistakes and waiting times, which further lead to high costs and processing times.

Figure 6- The Causes, Symptoms, Impacts chart of inappropriate processing according to Regber⁷⁷

In the administration sphere, this type of wastage can be caused by unsuitable or insufficient means of labor or resources, unclear responsibilities, lacking or impractical processes, wrong software, incorrect software settings, outdated computer and other equipment, redundant evaluation tools, a lack of qualified personnel, computer games being played at the workplace, aimless internet surfing and day trading.⁷⁸

3.1.1.6 Wasteful unnecessary motion and searching

Necessary working equipment, tools and all other requisite objects should always be placed in a smart way, making it easy for personnel to access or to find them without great movement or searching efforts.⁷⁹

Unnecessary motion, poorly planned business trips, walking distances to physically separated staff or office equipment, cupboards or meetings as well as poor workplace ergonomics, such as permanent bending or stretching in order to reach working equipment or files and poor seating, can be included into this type of wastefulness in administration. This wastage leads to a subpar performance of the employees as well as shortens their productive working time, due to temporary workflow interruptions and decreased concentration.⁸⁰

illustration not visible in this excerpt

Figure 7 - Causes, Symptoms, Impacts chart of unnecessary motion and searching according to Regber⁸¹

3.1.1.7 Wasteful defective products and wasteful non-quality

This type of wastefulness is often described as waste, since it derives from quality problems or quality defects. Since quality is often also seen as a strategic competitive advantage, this type of wastage is most important to eliminate. Also in value stream analysis (see section 3.3.1) quality is a factor to be considered. Furthermore, this type of wastefulness is externally visible, such as to the customer, and causes additional non-value-adding operational activities for the company, such as reworking, withdraw- als from the market, recalls, defect discounts and other processes. If a defect is de- tected prior to delivery to the customer, it can be corrected or reworked by the compa- ny, while causing idle performance. However, if this defect leads to rejections of fi- nished or semi-finished products, it can be indicative of a value-reducing performance of the company.⁸²

In the office environment, defects may be caused by missing documents, outdated or incorrect information as well as poorly organized processes that lead to a general interruption of the value stream within a company. Likewise, missing or incorrect information can lead to questions, correction loops and unnecessary approvals.⁸³

illustration not visible in this excerpt

Figure 8 - The Causes, Symptoms, Impacts chart of defective products and non-quality according to Regber⁸⁴

Finally, it has to be concluded that all seven types of wastefulness negatively affect the success chances of a company and cost money as well as resources.⁸⁵ Therefore, by avoiding wastage, an improved profitability of the company is also to be achieved in the administrative area.

3.1.2 MURA - Wasteful imbalance or deviation

In Lean Management, wastage in the form of deviation or imbalance is called Mura. Thus, Mura is intended to describe those losses that occur in production due to the lack of capacity adjustments, which leads to losses ensuing from queuing or non-optimal capacity utilization.⁸⁶

In 2009 Bicheno stated that a rapid and continuous process flow is not possible with unequal requirements. They cause queues and additional starting periods utilizing ex- tra time, materials and equipment that are required to meet peak demand. Of course, customer inquiries or orders are rarely well-balanced. However, there are numerous companies that reinforce this imbalance through their own corporate policy, such as monthly reports and quantity discounts. Bicheno is of the opinion that it would be mu- tually beneficial, if companies would encourage suppliers and customers to order or produce products regularly and in a coordinated manner. Vis-à-vis the question of whether suppliers indeed enjoy an advantage by delivering in bulk, it seems that com- panies need to reconsider the implications of their management decisions. Today’s competition is not about bulk deliveries enabling the customer to be content with the ordered products for months. It is more about swift changes and changing demands

which lead to the conclusion that companies need to work closely with both customers and suppliers, in order to meet their requirements in the long-term and to be able to customize their processes with regard to working times, vacation periods, and other management issues.⁸⁷

Furthermore, Bicheno sees in Mura a fundamental problem generating a cycle of mul- tiple other forms of wastage. This wastage starts with the fact that deviations and im- balances cause employees and machines to be overloaded, which makes them sus- ceptible to faults. Therefore, in times of high incoming order volumes, employees are likely to be stressed. Stress can be the reason the employee is not maintaining the machine correctly. The high working capacity of the machine can cause a breakdown for a short period of time. These interruptions can be connected to poor machine main- tenance by employees, while causing deadlines to be missed. In other words, Muda can cause Mura that arises from long delivery times and unstable quality. Thus, a cycle of wastefulness starts from Mura to Muri, from Muri to Muda and from Muda back to Mura. Companies need, first, to become aware of this cycle and, second, to either es- cape or avoid it.⁸⁸

In the office environment, such as the department of order processing or the customer call center, there are times with lesser order volumes or incoming calls, due to holiday seasons or periods of low demand. In order to avoid Mura, companies can encourage their employees to reduce accrued overtime, to utilize vacation periods, or to take care of necessary filing, archiving or equipment maintenance. Numerous companies already introduced flexible employment time models, in order to respond swiftly to often drastic downturns in customer demand. In many cases, companies also employ temporary staff, in order to bridge periods of high ordering activity. This assumes that companies monitor their capacity, know which periods are to come and take note of long-term changes in their activity, in order to take appropriate action. That way, they may even be able to take advantage of imbalances and deviations.

3.1.3 MURI - Wasteful overload or overburden

Kamiske et al. state that Muri, i.e. overload, describes losses caused by excessive stresses or demands in the overall working processes. They make a distinction be- tween the overload caused by the handling of the manufacturing process and the over- load caused by the machines involved in the manufacturing process. Thus, Muri can

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¹ Cf. Schumann, A., Schlotböller, D., Beland, U., Gemkow, T., Nothnagel, I. (2014), p.p. 4-7.

² Cf. http://www.spiegel.de/wirtschaft/globale-konkurrenz-konzerne-aus-schwellenlaendern-fordern-den-westen- heraus-a-604019.html, accessed 2014-08-13.

³ Cf. Porter, M. E. (1989), p. 18.

⁴ Cf. Romberg, A. (2010), p.p. 10, 16-18; Arbor, A., Liker, J. K. (2010): p. 12.

⁵ Cf. Armstrong, M. (2003), p. 4; De Cieri, H., Dowling, P. J. (2006), p.p. 15-35.

⁶ Cf. http://www.nzz.ch/aktuell/wirtschaft/nzz_equity/reinraum-statt-waschraum-1.18093075, accessed 2014-08-13.

⁷ Cf. Wiegand, B. et al. (2004), p. 14.

⁸ Cf. Madigan, J. (2009), p. V.

⁹ Cf. Walsh, I. (1992), p. 1.

¹⁰ Cf. Walsh, I (1992), p. 1; see also summary of the 5-year study of the MIT with over 100 studies on the future of the automotive industry, in Womack, J. P, Jones, D. T., Roos, D, Sammons Carpenter, D. (1990).

¹¹ Cf. Walsh, I (1992), p. 6.

¹² Cf. Romberg, A. (2010), p. 11.

¹³ Cf. Walsh, I (1992), p. 3.

¹⁴ Cf. Wittenstein, A.K. et al. (2006), p.5.

¹⁵ Cf. http://www.fraunhofer.at/de/presse/pressearchiv/studie_lean_office.html, accessed 2015-01-04.

¹⁶ Cf. Walsh, I. (1992), p. 1.

¹⁷ Cf. http://www.destatis.de/DE/ZahlenFakten/Wirtschaftsbereiche/Dienstleistungen/Methoden/InfoDienstleistungen .html, accessed 2015-01-04.

¹⁸ Cf. http://www.bmwi.de/DE/Themen/Mittelstand/Mittelstandspolitik/dienstleistungen.html, accessed 2015-01-04; OECD (2014), p. 23.

¹⁹ Cf. Johansson, H. J. et al. (1993), p. 14; Author’s note: This book and Hammer and Champy’s were launched in the same year. Johansson et al., however, use the term as if it were already daily routine and characterized it.

²⁰ Original wording: "Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed.", in Hammer, M. et al. (1993), p. 32.

²¹ Cf. Johansson, H. J. et al. (1993), p.p. 5-6; Kent, A. (2000), p.p. 24-25

²² Cf. Schein, E. H. (1993), p.p. 336, 338.

²³ Cf. Tonn, K. (2012), p. 41; Womack, J. et al. (1990); Womack, J. et al. (1992), p. 10; Schultheiß, W. (1995), p. 14.

²⁴ Cf. Jeziorek (1994), p. 3.

²⁵ Cf. Wittenstein, A. K. et al. (2006), p. 17.

²⁶ Cf. Kranemann, J. (2004), p.p. 1-2; Schultheiß, W. (1995), p. 17.

²⁷ Cf. Pfeiffer, W. et al. (1994), p.p. 10 ff.

²⁸ Cf. http://de.wikipedia.org/wiki/Lean-Management, accessed 2014-08-17.

²⁹ Cf. Womack, J. et al. (2004) p. 351; Tonn, K. (2012), p. 41.

³⁰ Cf. Lanza et al. (2011), p. 36; Tonn, K. (2012), p. 41; Walsh (1992), p. 1.

³¹ Cf. Wittenstein, A. K. et al. (2006), p.p. 21-22.

³² Cf. Walsh, I. (1992), p. 1.

³³ Cf. Müller, K. (1995), p. 381; Pfeiffer, W. et al. (1994), p. V; Bleher, N. (2014), p. 9.

³⁴ Cf. Pfeiffer, W. et al. (1994), p. V; Bleher, N. (2014), p. 9.

³⁵ Cf. Pfeiffer, W. et al. (1994), p. 53.

³⁶ Cf. Tonn, K. (2012), p. 41; Hansmann, K. W. (2006), p. 210; Springer, R. (2009), p.p.44-46.

³⁷ Cf. Tapping, D. et al. (2003), p. 43; Wiegand, B. et al. (2004), p. 11.

³⁸ Cf. Bleher, N. (2014), p. 9; Womack, J. P. et al. (2004), p.p. 23-24; Klevers, T. (2013) p. 30.

³⁹ Cf. Liker, J. (2008), p. 32; Bleher, N. (2014), p. 9; Groth, U. et al. (1994), p. 35.

⁴⁰ Jones, D (2007) cited in Bleher, N. (2014), p.p. 9-10.

⁴¹ Cf. Hörner, G. (2005), p.p. 32-33.

⁴² Cf. http://www.ipa.fraunhofer.de/fileadmin/www.ipa.fhg.de/pdf/Produkt-

_und_Qualitaetsmanagement/Studie_Lean_Office_-_Zusammenfassung_lang_060723.pdf, accessed 2014-08-16.

⁴³ Cf. Walsh, I. (1992), p. 4; Mempel, G. et al. (1992), p.p. 24-28; Hölzel, M. (1994), p. 217; Koetz, A. G. (1994), p. 136.

⁴⁴ Cf. Töpfer, A. (2008), p. V.

⁴⁵ Cf. Geyer, H. (2007), p. 351.

⁴⁶ Cf. Boss, W. et al. (2011), p. 45.

⁴⁷ Cf. Gorecki, P. et al. (2013), p. 20.

⁴⁸ Cf. Wiegand, B. et al. (2004), p. 23.

⁴⁹ Cf. Ohno, T. (1988), p. 41; Kamiske, G. F. et al. (2011), p.p. 99-101; Kamiske, G. F. et al. (2012), p. 42; Brunner, F.

J. (2014), p. 12.

⁵⁰ Cf. Bicheno, J. (2009), p. 5.

⁵¹ Cf. Womack, J. P. et al. (2010), p. 15; Bicheno, J. et al. (2009), p. 5.

⁵² Cf. Womack, J. P. et al. (2004), p. 23.

⁵³ Cf. Möller, G. et al. (2009), p. 45; Schmidt, C. et al. (2006), p. 305; Ohno, T. (1988), p. 46; Klevers, T. (2013), p.

30.

⁵⁴ Cf. Regber, H. et al. (2007), p.p. 43, 45.

⁵⁵ Source: Regber, H. et al. (2007), p.44.

⁵⁶ Cf. Regber, H. et al. (2007), p.p. 40-41.

⁵⁷ Cf. Wittenstein, A. K. et al. (2006), p.p. 7-8; Wittenstein, A. K. (2006), p.p. 33-51; Wesloy, M. et al. (2008), p.p. 24-27.

⁵⁸ Cf. Regber, H. et al. (2007), p. 28.

⁵⁹ Source: Own figure in dependence on Regber, H. et al. (2007), p.p. 28-29.

⁶⁰ Cf. Bieber, K. (2001), p.p. 16-18.

⁶¹ Cf. Wiegand, B. et al. (2004), p. 25.

⁶² Cf. Regber, H. et al. (2007), p. 29.

⁶³ Cf. Klevers, T. (2013), p.p. 16-17, 22.

⁶⁴ Source: Own figure in dependence on Regber, H. et al. (2007), p.p. 29-30.

⁶⁵ Cf. Bieber, K. (2001), p.p. 16-18.

⁶⁶ Cf. Wiegand, B. et al. (2004), p. 25.

⁶⁷ Cf. Regber, H. et al. (2007), p. 30; Klevers, T. (2013), p. 29.

⁶⁸ Source: Own figure in dependence on Regber, H. et al. (2007), p. 30.

⁶⁹ Cf. Bieber, K. (2001), p.p. 16-18.

⁷⁰ Cf. Wiegand, B. et al. (2004), p. 25.

⁷¹ Cf. Regber, H. et al. (2007), p. 31; Klevers, T. (2013), p. 23.

⁷² Cf. Syska, A. (2006), p. 15.

⁷³ Source: Own figure in dependence on Regber, H. et al. (2007), p. 32.

⁷⁴ Cf. Jung, H. (2009), p. 387.

⁷⁵ Cf. Bieber, K. (2001), p.p. 16-18.

⁷⁶ Cf. Regber, H. et al. (2007), p. 31.

⁷⁷ Source: Own figure in dependence on Regber, H. et al. (2007), p. 32.

⁷⁸ Cf. Bieber, K. (2001), p.p. 16-18; Wiegand, B. et al. (2004), p. 32.

⁷⁹ Cf. Regber, H. et al. (2007), p. 32; Klevers, T. (2013), p.p. 17-18.

⁸⁰ Cf. Bieber, K. (2001), p.p. 16-18; Wiegand, B. et al. (2004), p. 26.

⁸¹ Source: Own figure in dependence on Regber, H. et al. (2007), p.p. 32-33.

⁸² Cf. Brauckmann, O. (2002), p.p. 34-35.

⁸³ Cf. Wiegand, B. et al. (2004), p. 26.

⁸⁴ Source: Own figure in dependence on Regber, H. et al. (2007), p.p. 33-34.

⁸⁵ Cf. Klevers, T. (2013), p. 20.

⁸⁶ Cf. Kamiske, G. F. et al. (2011), p.p. 99-100.

⁸⁷ Cf. Bicheno, J. et al. (2009), p.p. 6-7.

⁸⁸ Cf. Bicheno, J. et al. (2009), p. 7.