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By: Gustavo Diaz

Business Process Engineering & Lean Tools
in a Transactional (Service) Environment
Introduction

Even though the use of the Six Sigma Methodology in a manufacturing environment has been well
established for the last thirty years; the use of Six Sigma in the transactional or service industry came
later on circa mid nineteen nineties. Its deployment was doubtful at first, and it took another ten to
fifteen years for Six Sigma to be recognized as a very viable improvement and optimization methodology
in the high volume transactional service areas.

As Six Sigma, Lean was articulated to support manufacturing environments; in particular successfully
used by Toyota, as the Toyota Production System (TPS), and later known as Lean Manufacturing.

With the success of Lean Manufacturing in the manufacturing environments, it was a matter of time for
scholars and practitioners to migrate and integrate tools and methods from Lean into the "traditional"
Six Sigma DMAIC. Lean Six Sigma came into the business process improvements arena in the early to
mid nineties. Some natural questioning and reasonable skepticism has taken place since then. Lean Six
Sigma is going to the same growing pains and recognition as a set of tools that supports and furthers an
analyst tool box to improve his (her) ability to improve non-manufacturing or transactional business
processes. Lean Six Sigma is better defines as an extension and adoption of tool into the traditional Six
Sigma DMAIC methodology.

What is Lean or Lean Six Sigma?

Lean Manufacturing is a series of practices that systematically attacks and reduces waste; targets cost
reduction and proposes operator empowerment. The waste term would represent non-value added
activities, delays in the production cycle, rework, unnecessary inspections, and non-optimized inventory
levels of raw materials, product in process or finished product. Lean equates to streamline and use
"less".

Typical tools to achieve these reductions and improvements are: Value Stream Mapping (VSM), Muda
(Waste reduction), 5S (Sort, Set in Order, Shine, Standardize, and Sustain) organization tools, Kaizen blitz
or kaizen teams, Theory of Constraints (TOC), TAKT time, Continuous Flow Manufacturing (CFM), Kanban
methods, continuous improvement, among others.

Lean Six Sigma has mainly being adopted by the DMAIC methodology of Six Sigma. However, some
integration work has also been done in the Design for Six Sigma (DFSS) methodology.

The Metaspire Approach
For the past five years Metaspire has been leveraging Lean concepts within the Business Process
Management (BPM) framework. Lean tools are use in the analysis and design of processes, values,
organizational priorities. Metaspire has also leveraged the Six Sigma tools available in Metastorm
ProVision® such as process maps, capability models and scorecards, to mention a few of the Provision®
constructs.
When using BPM tools such as a Business Interaction Model, a capability model, a process model or a
requirement model, Metaspire practitioners, where appropriate, would also leverage tools like Quality
Deployment Function (House of Quality), Failure and Mode Effect Analysis (FMEA), or an Ishikawa
exercise (all Six Sigma tools) to gather prioritized customer needs and wants, potential causes for failure
modes and input them into Goal, Opportunity or Problem models, or Organization models. The
advantage of this combined approach is to help the customer (client) to quantify levels of defects and
opportunities, measure the capability of their processes, as well as visualize where these defects are
occurring in their processes and operations.
By the same token, Lean Six Sigma benefits from the different and powerful tools in Provision® like its
process modeling tools, organization modeler, opportunity modeler and strong simulation capabilities
(in particular the ProVision tool completely lacks from the Six Sigma artifacts - leaving the modeler/
analyst to look for alternatives).

Use and Benefits of Lean
The use of Lean Six Sigma in a transactional environment helps increasing the following aspect of a
business process:
    Increase customer loyalty and customer spend.
    Decrease levels of defects lowering the transaction costs
    Increase of transactional speed (rates) and volumes.
    Streamline of processes.
    Organizational productivity.
    Process capability and flexibility.

How to Apply the Lean Tools?
The best way to present the use of Lean Six Sigma is to use the metaphor of a tool box. The more tools
and the more different sizes of a tool, the easier a job is completed. The Lean tools that have been
adopted in the DMAIC framework have enhanced the abilities and the skills of Metaspire consultants,
analysts and organizational developers. The following graph depicts the places where the Lean tools are
most likely to be effectively used.
Define            Measure            Analyze       Improve         Control

Project Charter   Value Stream Maps   Muda          5 S methods     Kaizen teams
                  Takt Time           Bottlenecks   Kaizen
                  Kaizen Blitz (low   Lead Time     Pull / Kanban
                  hanging fruits)     Takt Time     Safety
Lean Tool                                        Definition                                          Uses of Lean Tools in a Transactional Environment

                The 5 S’s actually stand for Japanese terms, which loosely translate as Sort, Set
                in Order, Shine, Standardize, and Sustain. A place for everything. Everything in      5S are applicable in organizing work areas, such us call
5S (Area
                its place. Clean. Shadow boards. Labels. Transparent containers. Clear posted         agent workstations, LAN rooms, computer desktops, mail
organization)
                instructions. Color codes. All appropriate tools where needed and fit for use.        rooms,
                Remove the un-needed. Place infrequently used items out of the way.
                                                                                                      When looking at business map processes (transactional
                                                                                                      environments), bottleneck determination is important when
                The machine or function that limits the output of the entire factory. The idea is
Bottleneck                                                                                            trying to determine ways to improve cycle time. Bottlenecks
                to focus all efforts on improving the output of the bottleneck by eliminating
(Constraint)                                                                                          are also part of resource balancing in process workflows
                the restrictions that have created that bottleneck.
                                                                                                      represented in swim lane process maps or value stream
                                                                                                      maps.
                                                                                                      Kaizen blitz is used in transactional or manufacturing
                A concentrated improvement initiative typically focused on one shop or office
                                                                                                      processes when we try to execute and implement solutions
                area. Generally involves 2-5 days. The intention is to make something happen
Kaizen Blitz                                                                                          for “low hanging fruits”. It does require process champion
                now, i.e. to attain significant tangible results by the end of the project. Blitzes
                                                                                                      sponsorship due to the intensity of the process resources in
                are a powerful way to get something done in a particular area.
                                                                                                      a short period of time.
                A signal to move or make an item in a production process. The simple rule is
                that no item is to be produced or moved unless there is a kanban authorizing
Kanban          it. A Kanban can be anything: A light, a card, etc, it most frequently takes the      N/A
                form of a physical space or container: e.g. squares taped out on a table, lines
                painted on the floor, marked tote bins, carts, racks, etc.
                There is typically a direct relationship between the amount of Work in Process
                inventory and the actual lead time required to get a product through your
                manufacturing process.
Lead Time       In most traditional plants, the lead time to get a product through the                N/A
                operations is considerably longer than the actual “Value Add” time, creating
                unnecessary inventories and longer time to make the product available to the
                customer
                Anything that does not add value, from the customer’s and only the
                                                                                                      Muda is applicable in any business process, since process
                customer's perspective. Ask the questions: “Would the customer pay extra for
Muda                                                                                                  optimization includes the elimination of non-value added
                us to do this?” “Would the customer care if we eliminated this activity?”
                                                                                                      process steps or product and service features.
                Constantly push to minimize / eliminate all non-value adding activities from
Lean Tool                                      Definition                                         Uses of Lean Tools in a Transactional Environment

               the entire value stream. Note that there is likely going to be certain activities
               that still must be done that do not add value.
               This concept is based on the idea of leveling production for efficient use of
                                                                                                   Takt time is a useful metric to compare with the process
               your resources. The sales requirement is divided by the planned work hours to
Takt Time                                                                                          cycle time, as it helps us to determine lead time or early
               arrive at the required rate of production to meet the customer demands for
                                                                                                   finishes for processes.
               the product.
               The entire chain of participants, from basic raw material to the final customer.
               It involves suppliers, customers, wholesalers / distributors, retailers, and
                                                                                                   Value Stream maps are interchangeable with the more
               transportation steps. Since the ultimate consumer price is a function of the
                                                                                                   traditional swim lanes. If the level of complexity calls for
Value Stream   cumulative costs of the entire value stream, streamlining this supply chain
                                                                                                   clear identification of moves, delays, storages and rework
Mapping        becomes critical.
                                                                                                   loops, then the Value Stream map is likely a better tool than
               In a more narrow definition, “value stream” is also used to denote the entire
                                                                                                   the traditional swim lane maps.
               stream of activities required to move a product through the internal processes
               / activities within the enterprise.
Do you need help with Lean for Services?
We can help trim processes, control costs and improve profitability.
               Request your free assessment today.

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Business Process Engineering & Lean Tools in a Transactional (Service) Environment Introduction

  • 1. By: Gustavo Diaz Business Process Engineering & Lean Tools in a Transactional (Service) Environment Introduction Even though the use of the Six Sigma Methodology in a manufacturing environment has been well established for the last thirty years; the use of Six Sigma in the transactional or service industry came later on circa mid nineteen nineties. Its deployment was doubtful at first, and it took another ten to fifteen years for Six Sigma to be recognized as a very viable improvement and optimization methodology in the high volume transactional service areas. As Six Sigma, Lean was articulated to support manufacturing environments; in particular successfully used by Toyota, as the Toyota Production System (TPS), and later known as Lean Manufacturing. With the success of Lean Manufacturing in the manufacturing environments, it was a matter of time for scholars and practitioners to migrate and integrate tools and methods from Lean into the "traditional" Six Sigma DMAIC. Lean Six Sigma came into the business process improvements arena in the early to mid nineties. Some natural questioning and reasonable skepticism has taken place since then. Lean Six Sigma is going to the same growing pains and recognition as a set of tools that supports and furthers an analyst tool box to improve his (her) ability to improve non-manufacturing or transactional business processes. Lean Six Sigma is better defines as an extension and adoption of tool into the traditional Six Sigma DMAIC methodology. What is Lean or Lean Six Sigma? Lean Manufacturing is a series of practices that systematically attacks and reduces waste; targets cost reduction and proposes operator empowerment. The waste term would represent non-value added activities, delays in the production cycle, rework, unnecessary inspections, and non-optimized inventory levels of raw materials, product in process or finished product. Lean equates to streamline and use "less". Typical tools to achieve these reductions and improvements are: Value Stream Mapping (VSM), Muda (Waste reduction), 5S (Sort, Set in Order, Shine, Standardize, and Sustain) organization tools, Kaizen blitz
  • 2. or kaizen teams, Theory of Constraints (TOC), TAKT time, Continuous Flow Manufacturing (CFM), Kanban methods, continuous improvement, among others. Lean Six Sigma has mainly being adopted by the DMAIC methodology of Six Sigma. However, some integration work has also been done in the Design for Six Sigma (DFSS) methodology. The Metaspire Approach For the past five years Metaspire has been leveraging Lean concepts within the Business Process Management (BPM) framework. Lean tools are use in the analysis and design of processes, values, organizational priorities. Metaspire has also leveraged the Six Sigma tools available in Metastorm ProVision® such as process maps, capability models and scorecards, to mention a few of the Provision® constructs. When using BPM tools such as a Business Interaction Model, a capability model, a process model or a requirement model, Metaspire practitioners, where appropriate, would also leverage tools like Quality Deployment Function (House of Quality), Failure and Mode Effect Analysis (FMEA), or an Ishikawa exercise (all Six Sigma tools) to gather prioritized customer needs and wants, potential causes for failure modes and input them into Goal, Opportunity or Problem models, or Organization models. The advantage of this combined approach is to help the customer (client) to quantify levels of defects and opportunities, measure the capability of their processes, as well as visualize where these defects are occurring in their processes and operations. By the same token, Lean Six Sigma benefits from the different and powerful tools in Provision® like its process modeling tools, organization modeler, opportunity modeler and strong simulation capabilities (in particular the ProVision tool completely lacks from the Six Sigma artifacts - leaving the modeler/ analyst to look for alternatives). Use and Benefits of Lean The use of Lean Six Sigma in a transactional environment helps increasing the following aspect of a business process: Increase customer loyalty and customer spend. Decrease levels of defects lowering the transaction costs Increase of transactional speed (rates) and volumes. Streamline of processes. Organizational productivity. Process capability and flexibility. How to Apply the Lean Tools? The best way to present the use of Lean Six Sigma is to use the metaphor of a tool box. The more tools and the more different sizes of a tool, the easier a job is completed. The Lean tools that have been adopted in the DMAIC framework have enhanced the abilities and the skills of Metaspire consultants, analysts and organizational developers. The following graph depicts the places where the Lean tools are most likely to be effectively used.
  • 3. Define Measure Analyze Improve Control Project Charter Value Stream Maps Muda 5 S methods Kaizen teams Takt Time Bottlenecks Kaizen Kaizen Blitz (low Lead Time Pull / Kanban hanging fruits) Takt Time Safety
  • 4. Lean Tool Definition Uses of Lean Tools in a Transactional Environment The 5 S’s actually stand for Japanese terms, which loosely translate as Sort, Set in Order, Shine, Standardize, and Sustain. A place for everything. Everything in 5S are applicable in organizing work areas, such us call 5S (Area its place. Clean. Shadow boards. Labels. Transparent containers. Clear posted agent workstations, LAN rooms, computer desktops, mail organization) instructions. Color codes. All appropriate tools where needed and fit for use. rooms, Remove the un-needed. Place infrequently used items out of the way. When looking at business map processes (transactional environments), bottleneck determination is important when The machine or function that limits the output of the entire factory. The idea is Bottleneck trying to determine ways to improve cycle time. Bottlenecks to focus all efforts on improving the output of the bottleneck by eliminating (Constraint) are also part of resource balancing in process workflows the restrictions that have created that bottleneck. represented in swim lane process maps or value stream maps. Kaizen blitz is used in transactional or manufacturing A concentrated improvement initiative typically focused on one shop or office processes when we try to execute and implement solutions area. Generally involves 2-5 days. The intention is to make something happen Kaizen Blitz for “low hanging fruits”. It does require process champion now, i.e. to attain significant tangible results by the end of the project. Blitzes sponsorship due to the intensity of the process resources in are a powerful way to get something done in a particular area. a short period of time. A signal to move or make an item in a production process. The simple rule is that no item is to be produced or moved unless there is a kanban authorizing Kanban it. A Kanban can be anything: A light, a card, etc, it most frequently takes the N/A form of a physical space or container: e.g. squares taped out on a table, lines painted on the floor, marked tote bins, carts, racks, etc. There is typically a direct relationship between the amount of Work in Process inventory and the actual lead time required to get a product through your manufacturing process. Lead Time In most traditional plants, the lead time to get a product through the N/A operations is considerably longer than the actual “Value Add” time, creating unnecessary inventories and longer time to make the product available to the customer Anything that does not add value, from the customer’s and only the Muda is applicable in any business process, since process customer's perspective. Ask the questions: “Would the customer pay extra for Muda optimization includes the elimination of non-value added us to do this?” “Would the customer care if we eliminated this activity?” process steps or product and service features. Constantly push to minimize / eliminate all non-value adding activities from
  • 5. Lean Tool Definition Uses of Lean Tools in a Transactional Environment the entire value stream. Note that there is likely going to be certain activities that still must be done that do not add value. This concept is based on the idea of leveling production for efficient use of Takt time is a useful metric to compare with the process your resources. The sales requirement is divided by the planned work hours to Takt Time cycle time, as it helps us to determine lead time or early arrive at the required rate of production to meet the customer demands for finishes for processes. the product. The entire chain of participants, from basic raw material to the final customer. It involves suppliers, customers, wholesalers / distributors, retailers, and Value Stream maps are interchangeable with the more transportation steps. Since the ultimate consumer price is a function of the traditional swim lanes. If the level of complexity calls for Value Stream cumulative costs of the entire value stream, streamlining this supply chain clear identification of moves, delays, storages and rework Mapping becomes critical. loops, then the Value Stream map is likely a better tool than In a more narrow definition, “value stream” is also used to denote the entire the traditional swim lane maps. stream of activities required to move a product through the internal processes / activities within the enterprise.
  • 6. Do you need help with Lean for Services? We can help trim processes, control costs and improve profitability. Request your free assessment today.