SM4.4 How to Reduce Waste in Offices and Service Industries

SM4: Waste Reduction (Muda) SM4.4 How to Reduce Waste in Offices and Service Industries

Most improvement is an incremental process. “Kaizen” is a Japanese word for incremental improvement. Most people think of the removal of waste occurring only on the factory floor.

Waste can also occur in Office Operations; administration, human resources, sales & marketing. Experts report that Office Operations waste is at a higher level than waste on the factory floor.

The principle reason: operations on the factory floor are very visible. People optimise things on the factory floor. As previously discussed, experts have categorised waste into 8 types. Yellow & Blue Belt

Table of Contents:

People Wastes
Process Waste
Information Waste
Asset Waste
Wrap Up
Resources

Office waste removal can contribute a large amount to the bottom-line profit.

We have to be honest with you, this is undoubtedly a pretty “dry” topic.

BUT

It is our job, here, to get you to think about the problems that commonly occur in an office situation.

Operations that go on in the Office are much less visible.

They happen on a computer or in someone’s office and are visible only to them.
Often the hand-on of tasks from one person to the other is not as visible as it is on the factory floor.
A document that is typed by one person stays on a computer until the next person collects it. All this time, it is “invisible”.

This potential office waste is given special attention here.

Here are some wastes that you will immediately agree with;

Unnecessary and/or lengthy meetings.
The need to chase up signatures on documents.
Many drafts of documents. Many people contributing their thoughts separately. These all need to be “massaged” into one document.
Approval mechanisms that rely on an individual who is not always available.
Example: authority to spend money or arrange travel.
End of month accounting procedures started at the end of month. This delays the final documents by several days or weeks. Better to start the cycle earlier.
Processing, for example, an insurance claim that requires several individuals to contribute. The document works its way through the internal mail system. It returns to the mail office at each stage.
And the list goes on and on….

There are many ways to categorise the types of waste in the office environment. How we do it is not particularly important.

The value of looking at waste comes from:
Thinking about the steps in an office/service industry environment.

Removing the waste:

Speeds up the process time.
Reduces defects and rework.
Lowers costs.

The experts in this area divide waste into 4 general categories. There are 26 specific types within these categories.

The 4 general categories are:

People: everything to do with people.
Process: waste arising from office procedures.
Information: relates to data and various reports on data.
Assets: the office and office equipment.

People Wastes

This refers to people not working as productively as they might. To reduce these types of wastes, you need to change people’s work habits.

There are 5 groups of people wastes which occur when work groups are not well managed.

People Wastes can be the most difficult to reduce because they are very personal. At best they might mean overturning “the way it has always been done here”. At worse, they might lead to outright revolt.

Goal Alignment Waste

This refers to human energy and other resources expended. This occurs when people are not working in the same direction or for the same purpose.

Classic example of this:

People working in a “silo” of their own. They rarely share the experience of undertaking some tasks with other groups.

Sales and Marketing work in their “silo” and rarely communicate with Accounting.
Accounting works in its “silo”. It rarely discuss issues like Payroll and its improvement with HR etc.

These various silos are working at “cross purposes”. What is making one “silo’s” job easier or faster may be simply moving the work to a different “silo”.

This problem is at its worse when changes are made to “save costs”. Until then, the existing systems would have settled into a routine; even though this routine might be inefficient.

When changes occur to “save money” this stability goes out the window. A whole range of new wastes come into being.

Example:

Reducing the expenditure on outside IT technicians may save money.
But this then consumes a great deal more of the time of the less experienced full-time office staff.
They are trying to do that IT work; and much less efficiently.

Cross-silo teams, working on the issue, will reduce this type of waste.

Example:
Payroll: Accounts, HR and those involved in recording (e.g.) timesheets in the factory, are on the team.

A change increases the workload of a group.
All members of the team can see the increase.
They work together to decide what is the most efficient system across all the involved silos.

Alignment Waste

Alignment Waste is when effort occurs to carry out unnecessary or inappropriate tasks.

Examples:

Elaborate Power Point presentations. Displayed but hardly looked at by the people meant to be watching them.
Things done “just in case”.
Reports prepared in case they are required.
Accounting materials produced but not used.
Documents created and filed to leave a “paper trail”.

It includes a whole host of “make work” activity designed to keep busy. “Parkinson’s Law” states “work will expand to fill the time available”
Go to the article: What Parkinson’s Law Tells us About Wasted Work

Examples:

Glossy draft presentations: prepared before the advertising campaign is clearly thought through.
Producing the glossy drafts is waste. But it keeps the design staff looking busy in the process and that, in turn, means job security.
Elaborate meeting agendas and meeting business papers. They take considerable effort to construct. They are often not visited in any detail at the meeting.

Waiting Waste

Waiting waste is the one that is most obvious. We bet that anyone who has worked in an office environment will immediately agree.

Examples:

Going to meetings that are unnecessary or long.
Waiting for meetings to start because people are late.
Sitting around waiting for an event/meeting to happen.
The need to listen to and respond to telephone calls to your office.
People “dropping in” at the office.
Emails.
A copier or computer that doesn’t work or needs a service etc…

It is even worse when you consider the number of people at a meeting. The total time wasted is the total of each person’s wasted time.

Motion Waste

Examples:

When people must move between locations to complete a task:

Often the travel route has not been optimised.
Time and other resources are wasted in the travel.

Long distance travel:

How often do staff travel a couple of hours in each direction for a 1 hour meeting?
The length of time for air travel. Combine this with performance-degrading jet lag after the trip.
Solution: Video conferencing allows people to ‘commute’ to these meetings from their desk. Thus saving a great deal of time and money.

Examples within the office:

Needing to walk to a distant printer.
Walking to meet with a colleague on a regular basis to help the processing of a work task.
Solution: place work colleagues together in one team within arm’s reach of each other.

Examples with ergonomics of the work place:

A person has a lot of twisting actions in their current office setup.
The work desks are not set at an appropriate height for the individual.
Staff lose time trying to work around a less than ideal work environment.
Repetitive strain injuries can take them out of the workforce until healed.

For identification and solutions to this Office version of Motion Waste:

Motion Waste was covered in greater detail in SM4.1 Eight Types of Waste under the heading Transportation.

Processing Waste

Processing Waste comes about when any less than optimal work is being carried out.

Examples:

Parkinson’s Law states “that work will expand to fill the time available”.
- Well-intentioned people, with not enough to do, create more work to appear busy.
- This also occurs when people are worried about losing their job due to insufficient work.

Go to the article: What Parkinson’s Law Tells us About Wasted Work

A task that has not been well designed.
- If there are motions and actions in a task that are not definitely needed, this is Processing Waste.
A person is new to a particular task and not trained on how to do it.
- That person goes off on a well intentioned tangent while they try to work out how to do the task.

Solution:

Standardise the process for undertaking the task.

Process Waste

Experts say that there are 12 different Process Wastes.

Process and execution design flaws result in these Process Wastes.

The ones we are most familiar with occur in the factory environment.
Here we are looking at the office equivalents.

Control Waste

Supervision and monitoring of staff/personnel:

Control Waste occurs when this does not add sustainable and long-term improvements.
This refers to the performance of both the people involved and/or the operation.

Examples:
Traditional “Top Down” Management:

Senior level staff make decisions and subordinate staff carry out the task.
- If they come to a halt in the course of doing their work, they wait around for the next instruction.
this wastes the input that might otherwise come from staff working in a team environment:
- These are the people most familiar with the work.
- They are the ones most likely to know the problems associated with the work.
- They can contribute ideas for solutions when motivated in a team work environment.

Traditional “Command and Control” businesses:

The boss’ word is law.
Supervision resources are greater than is necessary.
Supervising the operation of staff takes quite a deal of time.

An “Alternate” environment:

Groups work as small, self monitoring teams.
The supervisor undertakes work. But is also available to train and consult with the team members they supervise.
This is a far more efficient use of labour.
The Supervisor is being productive in their own right.

Variability Waste

Refers to when things are not done consistently or using “standard workflow”:

This leads to the same task carried out in different ways.
Outcomes can vary, and the likelihood of defects increases with the variation.

Examples:

“Knowledge workers” may approach the same task in their own way thinking it is better than the way others do.
Variation in work flow in an office would become normal rather than unusual.
Imagine if aircraft pilots approached their preflight take off checklist in different ways!
Because of these variations, work progresses at different paces at the different stages.
It may get stockpiled before and after a particular stage as a result of these variations.
Such stockpiles of work in progress (WIP) are a type of waste. Without them, the task would have finished faster.
Value would have been delivered to the final customer faster.

In the factory environment:

The way of doing a stage would have been standardised.
The stages would have been sized so that work flows through them at a uniform rate.
This reduces the amount of wasteful WIP throughout the process.
This can also be the goal for the office environment.

Tampering Waste

Tampering Waste refers to the very common situation where individuals “improve” the way things are done because they believe that their improvements are better.

The waste comes about because:

Different staff undertaking the same task are now executing that task in a different way.
It is entirely possible that the outcome of executing the task will also be different.
The product being produced may no longer be standardised and “best practice”.
The individual who normally undertakes some process is not available (e.g. annual leave) and someone else fills in.
Changes are made to a process by an individual acting alone and/or by direction from a Manager trying to compensate for some problem in the system.

Outcome:

Introduces “defects” into the task.
Adds to the confusion of those persons executing the tasks when they are given different ways of approaching the operation.
If someone filling in is not properly instructed on the “standard work”, they may go off and do, in all innocence, what they think is the right thing. and
This could introduce defects into the process, that may go unseen, or which may need rectification when the original responsible person returns to work.
Introduction of a policy that creates work to manage the problem rather than focusing on removing the problem itself.

Strategic Waste

Strategic Waste comes about where people are satisfying short term goals.
Or responding to immediate pressure by expediting the loudest manager’s voice in what they do.

Examples:

Do something “in-house” that could be outsourced or bought off the shelf.
“Re-inventing the wheel” instead of outsourcing or purchasing something to do the job.
In the longer term it is the faster and cheaper solution.

Examples of strategic waste in an office:

Trying to build software yourself rather than using a professional.
Smaller businesses undertaking Sales & Marketing, Website design, Accounting and Bookkeeping yourself.

Outcome:

Your business will excel at only a few things.
- e.g. Website Design: it will take more time to produce an inferior product than if you outsource.
Businesses can see only the expense side of outsourcing a task.
- Calculate the income you have forgone when diverting your own and your staff’s time to the task.
- The outsource agency will be far better at what they do, hence reducing waste.
- If they are not good at what they do you can replace them with another.
When your own staff do the task it is only a fraction of their employment.
- They are not easily replaced, they still need to do their other jobs.

Standardisation Waste

We have already alluded to this type of waste. It comes about when there is either no fixed way (standard) of doing a task or those standards are ignored.

This may be because:

People disagree with them (they weren’t consulted).
Staff don’t know about them.
Staff have not received training to put them in place.

There will be several ways of performing a particular task in an office environment.

One of these will be:

“The best” way of doing it fastest.
Most accurate.
The cheapest etc.

It makes common sense to make this best practice approach the standard for that task.

Also, produce written or visual standard guides for the task.

This will remind experienced operators how to do the task.
It will train and manage inexperienced people beginning to do the task.

If you do not have standard work and/or do not follow it, all sorts of waste will be introduced.

The waste will come through less than optimal processing.
This will lead to an increase in the number of mistakes and defects.

Sub-Optimisation Waste

Refers to one process competing with another process for human or other resources.

Example:

The IT Help Desk resources come under heavy demand.
- Software update installation – torn between several conflicting demands on their time.
  - This leads to multi-tasking, none of the jobs are completed particularly well.
Different systems for handling orders to different suppliers or customers.
- Minor differences in the way your business works with these customers/suppliers.
- Instead, develop one optimal process rather than leaving as different approaches.
- It is most likely that the customer/supplier doesn’t mind how you provide the information.
When you have more than one location.
- Staff in the different locations work in isolation from the other locations.
- They develop different approaches to the same task.
- It would be much more efficient to have one optimal process across the entire company.

Reliability Waste

Refers to the addition of extra layers of supervision and inspection. This is done in an attempt to build reliability into office systems.

Example:

Problem – invoices sent out with mistakes.
Solution to the problem – the processing of invoices requires two people – one to do the invoice, the other to check it.
- On the face of it this is a simple change but it has doubled the cost of your invoicing system.
- When one of the two people involved is away, a less experienced third person becomes involved.
- This may consume even more resources:
  - Through errors due to inexperience.
  - By requiring a training load on the remaining operator or supervisor.

Solution:

Standard work practices and checklists improve reliability.
It ensures that each step in the process is completed in the same way.

Scheduling Waste

Refers to poor scheduling of people and other resources.
This includes the raw materials for operating your business.

Examples in an office environment:

People required to undertake a task are not available when needed.
Raw materials, like photocopier paper, is not available.

Solution:

Improve scheduling, change the tasks among staff so that their availability is higher when needed.
Make sure that raw materials are available by using a Kanban approach
Go to the article: How Kanban Improves Workflow
- Kanban will pull through an order when a critical point occurs in the stock on hand.

Example:

During periods of annual and parental leave.
- Valued and productive members of staff are away for significant periods of time.
- The tasks that they were undertaking need to be covered.
- The tendency is to have surplus staff on the payroll to cover these periods of leave.
- This can be a waste if no one is away so relief staff are not needed. Also, I f more are away than there are relief staff, the problem is not fully solved; you are still short-handed.

Solution:

Use a temp agency to supply relieving staff when needed.
If you have good written or visual standards for each of the tasks:
- The temp person will slot into the organisation easily.
- This would not be much harder than retraining an existing member of staff.
if you find a good temp, they might be your next hire!

Work-Around Waste

Refers to resources used to create and operate informal processes.
They replace the official processes or conflict with other informal processes.

This can come about in an office environment when systems or devices are not fit for the task.

Examples:

People develop a way of compensating for this weakness. This introduces more work by way of compensation.
It also introduces more variability into the task. Each person does it differently when developing their own work-around.
If a work-around is necessary, then fix the root cause of the problem.

Work around:

Photocopier sheet feeder not working, so manually feed paper one sheet at a time – consumes more resources.

Solution:

Stop the photocopier jamming.

Uneven Flow Waste

Your goal for your business:
Improve the flow of work through your business so that it performs to the greatest value for your clients. See articles on Flow .

Examples:

When work piles up between stations it becomes a cost to the business.
You have invested money and other resources in getting it to that stage in the work flow.
You cannot pass on the cost of those resources to the customer until the rest of the tasks are complete.

Inventory and Work-in-Progress like this shows up on your Balance Sheet as an Asset.

This is a completely false impression of your business.
- It is an Asset in the sense that it can be sold.
It is an enormous drain on your cash flow and the rate at which your business can grow.
You run the risk that some of the work will become obsolete while sitting in inventory.
- Then it becomes a complete waste.

Checking Waste

It is critical that materials prepared are accurate in professional officers. An example is Lawyers and Accountants.

Examples:

Company embarrassment due to typo’s or incorrect accounts.
- A double, or even triple, checking regime introduced to remove the risk of such errors re-occurring.
- These checking activities are waste – they are a duplication of effort.
- Some types of errors may still get through the system.
The waste cost is even higher if carried out by a more senior, higher paid, member of staff.
This can more than double the cost.

Error Waste

Refers to an error, also known as a defect, in the production of work.
This may mean that the work up to this point needs to be completely discarded and the effort re-started.

Example:

You are photocopying a large document using a sheet auto feeder. You didn’t realise that there was a cockroach in the system.
You may get a dark line down every page of your photocopy.
This means that you have to throw it out (waste of copy paper and toner) and repeat the exercise (wasted operator time).
If the document is urgent you reduce the value of your service to your customer.

In the “Lean” ecosystem, there is a whole set of disciplines for making it much more difficult to make a mistake.
If you had a set of standards for operating the photocopier, one of the items would have been to check the screen for dirty marks.
If it wasn’t there already, the standard could be upgraded to add that task in.

Information Waste

In some circumstances Information Waste might be a subset of Process Waste.

In an office environment, often the business is “Information”.
It is important enough to warrant its own group of identified wastes.

Translation Waste

In an office, it is quite common for systems, processes and devices to change.
A process that worked with the previous system may no longer work with the new system.

Examples:

An old invoicing computer program required data in a format different from a new one.
- Any old invoices that need to run on the new invoice system may have to be re-keyed.
This process of “Translation” introduces waste in its own right,
It could introduce transcription errors where people mistype some key strokes.

The following event shows it is not limited to your office environment.

The Mars polar lander crashed into Mars instead of landing gently.
The diagnostic revealed that seperate teams were involved in getting it to Mars and landing it on Mars
One worked in English units of length and the other in non-compatible Metric units.
They are quite different in nature so the spacecraft crashed when one system handed off to the other during landing
The end of this story is the “Waste” of a $170 million American space craft.

In any office environment, spreadsheets offer a massive potential for waste.

People spawn their own spreadsheet for various purposes.
The spreadsheet from one individual is often unintelligible to another person. It has to be explained.
A computation in one spreadsheet doesn’t also appear in another spreadsheet.
People change the columns, rows and formulas to suit their own slant on the data.
The spreadsheet might be better replaced with a simple database program.
This achieves the same outcome, an “Administrator” is the only person who can make changes.

Missing Information Waste

As work flows through your office environment it gets suspended every time there is missing information.

Example:

The client has failed to provide all the necessary information to complete the annual tax return.
The accounting office slows down on the annual return till the missing information is received.
The delay irritates the client.
It interrupts the smooth flow of work through the business.

Solution:

Send the client a list of desired information in advance as a checklist.
They can mark off as they send information to the accountant.
If anything is missing, the Accountant will take remedial action in advance of the delay.

Hand-Off Waste

Handing off refers to passing a completed work item from one person to the next in the chain.
Depending on how this is conducted, there can be large delays introduced.

Example:

Person A completes a task. They put the partially finished document into the internal mail system.
It stays there until the next person picks it up.
The next person fails to check their mail for a while.
The work sits there unattended, losing value in the eyes of the client.

Solution:

Manage this waste by having all the people necessary for a chain of work sitting close together.
Pass completed work to the next person.
Given time and the will, resize the jobs done by each person so that each step takes the same amount of time.
Work will flow through the system with minimal stockpiling before work stations.
The concept named “one-piece flow” argues that a team should only handle one piece of work each at a time.
Nothing should stockpile between stations.

Irrelevancy Waste

Introduced waste handling unnecessary information or the problems that unnecessary information causes.

Examples in an office environment:

Various measurements and KPI’s that people strive to meet.
- Waste when they do not improve the operation of the business.
Aiming for “Local Optima” where every step in the process works as fast as it can thinking this is “efficient”.
- The outcome of this process is considerable waste in the form of work-in-progress.
  Go to the article: How to Manage Local Optima Problem

Inaccuracy Waste

In an office environment, a lack of accuracy can generate a series of downstream events.

Example:

An incorrect invoice sent out requires remedial work.
- Then client pacification to repair the damage caused by the inaccuracy.
A receptionist making appointments at a professional practice sets incorrect dates for a meeting.
- This will have flow on effects in the organisation.

Asset Waste

The assets of a office or service business are often people whereas, in conventional thinking, assets are often thought of as materials and property.

Example:

Assets of an office might be assumed to be inventory and intellectual property.
However, the return on investment in those assets is less than it might be if they are not used to their greatest advantage by the office staff.
That is waste.

Inventory Waste

Inventory in the “Lean” ecosystem is one of the most frowned upon forms of waste.

It has the disadvantages that:

It ties up the money invested in buying the inventory for the creation of the work in progress.
There is some wastage in the inventory (e.g. it exceeds its use-by date and is discarded).
A more up to date style of inventory replaces the stock item.
- Discard the work in the older inventory or discount it.
The letterhead changes.
- Discard any materials produced and stockpiled on the old letterhead.

Work in Progress Waste

Work in Progress is a product that is not completed. It is waiting on more work from a downstream operation.
Until it moves to this next stage, it is costing the business money.
It has consumed resources, like time and money, to get to its present stage.
That cost will not be recovered until the final item goes to the client and the client has paid.

People wanting to be seen to work hard generate unnecessary Work in Progress (WIP).
They generate more product at their stage of the cycle than required.
This is the problem arising from Local Optima and Parkinson’s Law, which says that people will do work to seem busy even if that is not very productive.
Go to the article: How to Manage Local Optima Problem
Go to the article: What Parkinson’s Law Tells us About Wasted Work

Fixed Asset Waste

Fixed Assets refer to equipment and buildings in particular.

Introduce waste when:

Equipment is no longer used.
- It is not fit for purpose.
- It is not completely utilised.
More building/office space than required.
- Unnecessary rent is paid.

Capital Waste:

A building located in a more expensive location than is necessary.

Wrap-up

A range of causes of office waste have been shoe-horned into a set of categories.

The classification of what waste goes where is not important.

It is important that you recognise that the office environment can be more wasteful than the factory environment.
In the factory, waste is often visible, measured and reduced.

Waste in the office is rarely even considered as an issue.
Little is done to reduce it.

Office waste removal can contribute a large amount to the bottom-line profit.

When you work on office waste:
1. Start with a checklist of possible wastes developed from the material above.
2. Work in a co-operating department in the business.
3. Refine how to identify, control and track the various wastes you find.
4. Develop a written set of guidelines for use in the office areas of your business.

What You Have Covered

SM4.1 Eight Types of Waste: has covered the eight types of waste.
SM4.2 Capturing Waste in the Wild: has converted your knowledge about the eight types of waste into data that you can use to actually begin to reduce waste.
SM4.3 Prioritising Waste Removal: has shown you how to decide what waste to focus on for removal.
SM4.4 Office Kaizen – Waste in Offices and Service Industries: has covered people wastes, process waste, information waste and asset waste (this article).

In other articles, at Blue Belt level, we talk about the science of more advanced ways of removal.
Go to the article: How Kaizen Leads to Continuous Incremental Improvement

Resources

For a far more detailed discussion on office waste see:

William Lareau: Office Kaizen: Transforming Office Operations into a Strategic Competitive Advantage (June 12, 2002)

William Lareau: Office Kaizen 2: Harnessing Leadership, Organisations, People and Tools for Office Excellence (November 29, 2010)

These books are available on Amazon.

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