How to create a lean office?

To stay competitive, you have to constantly look for improvements. In such situations, a lot of lean manufacturing techniques come in handy, even if you have mainly office workers. I will show you briefly how you can use lean manufacturing tools and other techniques to create an efficient lean office that helps you introduce your strategy.

What generates the inefficiency in Office?

Most offices are actually very similar to factories. They produce certain goods and services and have almost the same problems as every factory. Instead of cars or food, offices produce reports, presentations, decisions, and codes. Production lines and warehouses are replaced with Computers, printers, coffee makers, and open spaces.

The main purpose of the lean office is to reduce inefficiency and to make the firm more efficient. This requires removing the so-called waste. By waste, we mean all actions that don’t generate added value. Waiting for your computer to switch on, doing work that can be automated, and searching for documents done by your colleagues are examples of such waste. Let’s look at the types of waste that we can find in the office.

Now it’s time to see what generates this waste. Again, we will look at the reasons by type of waste:

A lot of waste is especially generated by the layout of the office. Let’s look at this culprit in more detail.

How do you measure the inefficiency?

To improve the situation, you have to be able to measure it. There are 2 ways to measure the inefficiency in offices:

  1. Throughput. The first approach is to look at the so-called throughput. By throughput, we mean end-products measured in quantity produced. In the case of offices, you would have to measure that on the level of departments or even teams. For example, the customer services department’ throughput would be the number of customers serviced. If you were dealing with coders, you could measure their work by looking at the number of items finished, or lines of codes written.
  2. Time wasted. The other approach is concentrated on analyzing with time. Firstly, you would have to measure what percentage of the time devoted to work is wasted on things that don’t generate value. This percentage we call Overall Labor Efficiency (OLE). Let’s look at a short example that deals with these KPIs.

    Once you know what the average OLE and how many people is you have you can estimate how many hours of your people are wasted. For example, if you have 100 people, monthly they should provide you with 150 hours of work per person, and the OLE is 60% (in other words 40% of their time wasted) then to calculate the wasted in the month hours, we would use the following formula:
    Wasted hours = # of people * # of hours per 1 person * (1- OLE)
    in hour case we get 6 000 hours wasted per month. Below you can find the calculations:
    Wasted hours = 100 * 150 *40%= 6 000 hours per month
    You can also just look at the number of people that do unnecessary things:
    # of people that are not delivering value = # of people * (1- OLE)
    In our case, we would get 40 people not delivering value. Below you can find the calculations:
    # of people that are not delivering value = 100 people * 40% = 40 people

In practice, you will be using a mix of both methods. The goal is to increase the throughput and decrease the waste measure in the number of wasted hours or the number of people not delivering value

Methods you can use to introduce Lean Office

Now let’s see how we can create a Lean Office. We will discuss the main methods that you can use. For more details check out the presentation or the course.

  1. Remove bottlenecks. A lot of waste is generated by the bottlenecks that are slowing down the work in the office. A bottleneck can be a place, a specialized person, or some sort of asset. Let’s look check the general approach to removing bottlenecks.

    If you are wondering where to look for bottlenecks, we have created a list of usual suspects
  2. Pick the optimal location for the office. Not surprisingly the location of the office matters a lot. If it is placed in the wrong place, people will waste a lot of time commuting, or you may have problems with attracting the best candidates. That’s why when you are analyzing the location you should not only look at rent and labor costs but also the time that your people will have to waste to go back and forth to the office. The optimal location is the one that takes those 3 things into account.
  3. Rearrange the office. How you organized the space will also impact the efficiency of people working in the office. Despite emails and phones, people have to talk to each other and meet to coordinate complex projects. If the space is not organized to minimize waste, people will be mainly walking instead of working. Let’s look at an example of an analysis in which we try to improve the layout of the office:
  4. Find the optimal mix of remote and office work. Remote work creates new opportunities for improving the efficiency of people. Firstly, they can minimize the commuting time by being present in the office 3 days a week instead of 5 or going home before the traffic peaks. Secondly, if you partially use remote work, you have been not limited to only candidates leaving in the same city. This usually helps you improve the quality of your staff.
  5. Standardize the work. You can eliminate the need for a lot of work by simply creating standards and templates. This also reduces the need for coordination
  6. Modular Design. The next step is to create and use modules. The so-called modular design will help you create mode universal solutions and use the full potential of the teams. Let’s look at some examples of modular design:
  7. Use the Critical Chain method. Most people want to minimize the risk of not delivering on time. That’s why they create buffers by saying that a specific task will take them more time than they think it will. Unfortunately, most of them don’t use this time wisely and end up missing deadlines. The alternative approach is not to create a buffer for every task but rather to create one big buffer for the whole project that is available to the project manager. This is the so-called Critical Chain approach. Let’s have a look at how we can use it in practice:
  8. Poka Yoke. To prevent people from making mistakes you can use the so-called Poka Yoke. In this group, we have different mechanisms that make it difficult to commit an error. An example of a Poka-Yoke is traffic lights. Simple communications help you coordinate the car drivers and pedestrians and prevent accidents. Let’s look at some examples of Poka Yoke in the offices.
  9. Use Kanban to manage projects and tests. To minimize waste, you have to manage efficiently projects. One of the most useful tools that will help you achieve that is Kanban which helps you keep track of tasks and limited the number of tasks that the team is solving. Let’s look at an example:
  10. Define KPIs. What gets measured gets done. In order to limit waste and increase throughput, you have to have a system of KPIs. Without that, you will not be able to pick the optimal route toward the ultimate goal. Check our post on that where we discuss how to create and use KPIs.
  11. Search for benchmarks. Finally, you need benchmarks to be able to see by how much you can improve the situation. Let’s look at the types of benchmarks that you may be using:

That’s in short when it comes to the most useful methods that will help you create Lean Office. As always, I recommend checking for more examples of our online course Lean Manufacturing in Office for Management Consultants. You will find there +3 hours of content and more than 80 lectures, that will teach you all the things you need to be able to improve the efficiency of offices.

Big projects that help you create a high performing teams & firms

So far, we have discussed how to apply simple methods to make the office lean. On top of that, you can do more complicated projects that will help you drastically increase the efficiency of your work. Those projects are much more complicated

  1. Design the Scaling process. Most firms are not balanced (they have too many people in one department and too few in others). This is due to the fact that scaling is hardly ever managed. That’s why you can achieve a lot by designing the scaling process. This requires defining the speed of scaling and constantly looking for new bottlenecks. Check our post on scaling for more information.
  2. Create PMO. To do bigger changes in the firm you need quite often an additional team that is concentrated only on the change you are trying to make. You can quite often achieve that by establishing the so-called Project Management Office (PMO). Check our post on setting up and running PMO for more information.
  3. Use the Funnel Approach. Firms are usually organized by functions and not processes. To capture the impact of processes on the firm I recommend using the funnel approach to more complicated areas. It helps you manage projects, find improvements and increase sales. Check our post on how to use funnels for more information.
  4. Create a training system. The organization is a living organism that is constantly changing and not always in the right direction. That’s why you need a training system that helps you influence the way people work, the tools, and the approaches they use.
  5. Look for Innovations. You should also look for innovations in an organized way. They will help you improve the efficiency of the work in paramount ways. Have a look at how you can search for innovations.

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