Lean Office Increases Profitability at Two Montana Companies
By Deborah Nash, MMEC
Two Montana manufacturers, West Paw Design in Bozeman and Cleanwaste in Belgrade, are managing for growth and greater profitability in an area often overlooked in continuous improvement efforts – the front office and order processing.
Because manufacturing makes money by generating and filling orders, the traditional processes of filing and retrieving sales folders, re-connecting with busy customers for needed details, updating order status, rekeying data for invoicing, comparing freight rates, etc., are standard protocol. And making delivery is dependent on completing the cycle whether it takes two days, a week, or longer.
Today, this cumbersome, paper-laden process impedes customer service excellence. But more importantly, it takes a bite right out of profitability and may be hampering growth.
To change that both West Paw Design and Cleanwaste partnered with the Montana Manufacturing Extension Center (MMEC) to learn about and implement Lean Office systems. Not only are both closer to achieving the nearly paperless office but also discovering other huge dividends like labor savings and improved customer service. The resounding benefit is that employees are now able to use the skills that they were hired for, spending far less time on the phone and faxing, juggling files, copying and physically retrieving documents.
Both Gallatin Valley companies are well known for environmentally friendly products and a continuing commitment to sustainability. In fact, West Paw Design won the 2008 EcoStar award for using sustainable materials in its diverse pet product lines and for several waste reduction programs. (Read more about West Paw Design's Commitment to the Environment). Its manufacturing processes minimize waste (currently as low as 2.4 percent), and its present facility was constructed in 2001 using the latest in energy efficient design. West Paw Design, in operation for more than 15 years, employs 34 people. Its products are sold worldwide.
Cleanwaste products were developed to help preserve the world’s pristine recreational wild lands by offering eco-friendly packaging plastics that are biodegradable, oxy-degradable, and compostable for its portable dry toilet system. It provides outdoor enthusiasts, truck drivers, emergency services, military, healthcare and industrial markets with an environmentally-sensitive way to manage human waste. Cleanwaste (formerly Phillips Environmental Products) has been operating for 10 years. It employs 12 full-time people and 20-60 home assemblers.
Process Expertise Helpful
Stacey Scott, MMEC’s Business Manager (now Assistant Director) and Kaela Kittredge, a University Technical Assistance program (UTAP) engineer, helped employees at the facilities learn how to identify, evaluate and make effective changes to processes that move orders from the front office to shipping and accounting. A short Lean Office overview that included Value Stream Mapping techniques (that sketch material and information flow on paper) helped them not only visualize their order entry processes but also where redundancies and wasted steps lurked. Kaizen bursts helped the Lean Office teams tackle and redesign problem areas quickly using inputs from people actually performing the work. MMEC also showed the companies how various operations could be integrated using software systems they already had, plus where to find additional tools to make the changes possible.
The Lean Office project at West Paw Design was driven by signs of increasing orders in 2007 (up by 34 percent in the last two years) and needing to control costs to remain competitive, according to West Paw Design President Spencer Williams. His company is the only large pet toy and pet bed company still manufacturing in the USA.
“My advice in this economic climate,” he said, “before you’re experiencing growth [as the economy picks up], try to stay with a vision for the future. Don’t let bursting at the seams force those decisions.” He also suggested asking what your potential growth area is and whether you are positioned to make every dollar you spend there more profitable.
Carri Roberge, a customer sales and service representative at West Paw Design spearheaded the Lean Office initiative there. Marci Yamasaki, also in sales, chaired the Lean Office team at Cleanwaste. Both say the projects got started by taking Stacey and Kaela on a tour through the basic life of an order, careful to detail all the things that can and do go wrong.
The tour observations and feedback helped the MMEC coaches create and present a Current State Map of how orders were actually processed at each facility.
“My jaw dropped [when I saw ours],” Roberge said. “Was that much time really spent on one order?” She credits Stacey as the real advocate behind “getting West Paw Design to think Lean in the front office.”
From the mapping process, West Paw Design could actually see where time and resources were being wasted. For instance, its shipping pick lists were being sorted during front office processes, then sent to shipping where the lists would be sorted again. “Neither department realized it,” Scott said. They saw that other documents were printed two and three times as the order progressed through the shop. Another example was seeing the amount of staff time spent re-contacting customers and playing phone tag to get needed information to finish incomplete and out-dated paper order forms that came in.
At Cleanwaste, they saw their Current State Map as “a giant spider web.” The challenge became exploring the complicated weaving of interactions and riddle out redundancies and wasted effort as well as integrate functions that have operated in silos. The project uncovered the fact that the company's information technology infrastructure was not being utilized to its fullest extent.
“It really helps to have an outside neutral party involved,” Yamasaki said. “It helped us make [the changes] happen in a neutral forum to meet and workout differences,” “Stacey [Scott] would ask us, ‘Is this what you are trying to accomplish? Would this work?’ It helped create the spark of interest in change – then we would take what we learned and run with it. It pushed us because we felt accountable by the next meeting.” Team members would research and make changes, then report on what each had accomplished or show a new option they thought would work better.
“Every time I go back to Cleanwaste, the list of action items is done with seven more things accomplished!” Scott said.
At West Paw Design, Roberge used the current state findings to begin interviewing everyone in the company about what frustrated them and what changes would make their roles there the best they could be. “No suggestions were too large or small.”
“Carri is a big proponent of the paperless office concept, and she has been drilling into the detail to make it happen,” said Williams.
Getting staff buy in to changes is critical, but it can be difficult, she said. Asking and including comments from everyone about their area of responsibility really helped achieve that.
Williams said it was enlightening to team leaders when they heard, “No, this doesn’t bother me as much as….” It made them aware that what someone does in one area impacts those downstream. “Carri was careful to consider that – it’s one of the dangers when measuring Lean impacts,” he said.
He reiterated the importance of staff buy-in and of having clear agreement on procedures. “You need to drill down, and it’s important to have a third party like MMEC come in and say, ‘Carri, I love you, but why are you making three trips across the room to do that?’”
At both companies, the staff feedback was used to hammer out the list of desired changes which became a “Future State Map.” An easy-to-use ranking tool taught in the overview of Lean Office, was used by the Lean teams to weigh each suggestion on
The rankings helped to prioritize action so the easy, high value steps could be changed first.
“[The future state] shocked us all – a visual snapshot of what the life of an order should look like,” Roberge said.
Kaizen Bursts Focus Efforts
The two Lean Office projects aimed at driving electronic activity so the order form becomes standardized and is always up to date, helping to mistake-proof order entry [pokeyoke], Scott said. MMEC led Kaizen bursts from items in the prioritized lists to focus and make them happen. The information technology departments were tasked with setting up functions in existing software to integrate and share files in order to accomplish goals.
“Companies often discuss changes but are afraid to try them. A Kaizen event helps make a small change happen quickly so results can be seen,” noted Bill Nicholson, MMEC Field Engineer from Kalispell and former Honeywell Lean Expert. It helps build courage and buy-in for more changes.
At West Paw Design where the Lean Office continuous improvement project has been in progress for several years, automation has significantly reduced inbound calls and the amount of order status emails. Standardized forms on the company Web site significantly reduced the number of older forms coming in. Internal wikis via the Internet keep everyone in the company well informed about new processes, feedback from dealers, new product ideas, etc.
These small changes make big impacts. Since the company averages 1,350 orders per month, just converting to invoicing electronically reduced printing by 16,200 pages per year, assuming each invoice was just one page, Roberge estimated.
But more than that, keeping files electronically rather than in paper folders and e-faxing right from the desktop added 30 minutes of productivity to each customer service/sales rep’s day. Calculated at 2.5 hours saved per person weekly, an entire extra day of output is gained each week. Roberge herself used to take a box of files up to the file room every other week but hasn’t had to for about eight months reducing related hazards of climbing stairs, too. “It reduced clutter and is very good for morale,” she said.
“Yes, we reduced labor cost and supplies, but the greater value is that we increased our sales & market penetration,” Williams said. “We reduced repetitive work and put more energy into professional staff development --- not easy to measure but very tangible in outcome. It fits our more holistic business goals.”
“We parlayed the Lean Office effort into much more,” Roberge agreed. “I used to do order entry 85 percent of time; now it’s 25 percent. I can now focus on growing sales in the natural market.” Another sales rep focuses on international sales; another in research and development.
She has enjoyed the process and progress so much she named her adopted, then four-month-old pound pup “Kaizen,” a lean term meaning continuous improvement -- “a perfect match for naming any dog,” she said.
More West Paw Design Results
ROI (return on investment) from Lean Office implementation so far at West Paw Design is more than 93 percent:
West Paw Design’s goal is to be paperless by January 2010. Additional office improvements, identified in the future state, are in the queue when budget can be allocated.
MMEC has been a partner in both company’s continuous improvement efforts in production and inventory, using Lean Manufacturing techniques. West Paw Design was an early adopter and has continued to drill into Lean waste reduction there. It began adopting Lean Office in 2007 and using efficiencies to handle increasing orders was able to raise wages and increase profit sharing to 10 percent last year.
Cleanwaste initiated a Lean Manufacturing project in to improve efficiencies in production in late 2007 in an effort to control costs during a transition period after company founders Pam and Bill Phillips passed away. CEO Mike Hetherington got the ball rolling. “When I came on board in 2007, a Lean project proposal with MMEC had not been exercised.” He initiated it using PTAC money that was available to improve systems to help meet requirements of government contracts. “That allowed us to get state of the art consulting. It is magnificent, what MMEC & UTAP engineers do.”
Hiccups in more efficient production were coming from areas like order processing, purchasing, engineering and sales. Those triggered interest in using Lean Office to smooth out bumps on the production floor and to begin cutting waste out of the front office. Cleanwaste chose to tackle the sales order process first. The company reported its best “year” in the first six months of 2009, with sales up 30 percent. The automation of many of its order entry processes is helping to meet growing demand.
“We love MMEC. It’s the best kept secret around,” Hetherington said. “We have ideas but need someone else to help us with how to get it done in the best way. MMEC does that.”
Cleanwaste Achieves Same-Day Shipping
While the project at Cleanwaste hasn’t been running long enough for statistical data, its staff has also noticed an appreciable drop in the amount of paper being used and handled across the office. Same day order fulfillment is now the norm.
“Prior to Lean Office, we had no such thing as same day orders. That hurts the customer and us,” said Marci Yamasaki, the company health care sales rep and chair of the Lean Office project.
“Before the project, filling an order was a real adventure,” recalled Cindy Mourer who has handled back end finished goods and shipping for two years. It involved a room full of filing drawers, many sticky notes, wire filing baskets and multiple hikes from the offices to the file room by most front office staff, accounting and shipping.
With the old routine, An order was touched eight times. Rekeying of data was not uncommon, Yamasaki said, and while invoicing was done by email, a paper copy was printed for filing. Files that were active, “could be anywhere in the building” creating time wasted on searching. “It was a three- day minimum between order entry, invoicing, shipping and sending a tracking number to customer – then the folder would have to be re-filed.”
Such scenarios are typical at many companies, but it is not ideal customer service today where expectations have changed.
“Shoppers have come to expect service as customer friendly as Amazon.com,” said MMEC’s Scott, “It’s a cultural shift, and it’s exciting to see these little companies doing it.” Relationships with customers improve when the order entry process improves with services like automated confirmations and tracking information. “Today these add to credibility; the customer feels comfortable and confident in the service.”
Automation Is Key
For Yamasaki, who joined Cleanwaste in fall of 2008 and had experience in companies using electronic systems, the paper-dependence was frustrating. She felt like she was not able to put her efforts into sales as she was hired to do. She also noted that paper filing and sticky notes are fraught with danger. They pose security and other risks.
Since working with Stacey at MMEC, their efforts, using automation, have bridged the gap between accounting, sales, customer service and shipping.
“Everyone can now access MAS, the accounting software, to enter orders to the system; we never have to take a paper order,” Yamasaki said. “If an order comes in and is logged into the system by noon, it ships that day, with the exception of very large orders.”
In eight short months, Cleanwaste staff are seldom in the store room filing and hunting for records, Scott said. The team figured out an electronic filing system and are using standard naming conventions so everyone files in the right place. “This is important because even electronic processing won’t work well without a system.”
MMEC identified electronic systems that could help; and, “surprise, yes we have that!” Yamasaki said. “We did purchase Starship, an interface for MAS that helped to integrate different shippers’ data instead of having to go to each shipper’s web site to ship and check freight quotes.”
Lean Improves Teamwork, Job Satisfaction
A Lean Office project simplifies and unveils the mystery of others’ jobs. This has benefited the Cleanwaste staff in performing as a team. “They are helping each other, working together, and even buffering each other now that they understand what each other does,” Scott added. “They see how workloads impact folks up and down stream.”
Staff morale has improved and the time savings has enabled them to use the skills they were hired for.
“Lisa McKee in accounting can actually be an accountant now rather than doing order entry,” Yamasaki said. Before, she sacrificed preparing reports that help with decision making for order entry, without question. “After all, orders are where we make our money.”
McKee estimates that she has cut time spent on order entry by three quarters, from a half day to less than an hour. “I now have new, higher level duties’” one of which is handling GSA contract management.
More Cleanwaste Gains
Everyone involved in the Lean Office project is pleased with the progress and outcomes so far. Carol Schott, who has been with customer service for two years noticed, “We are saving so much paper it is incredible -- and postage.
“I used to have stacks of statements on my desk and agonized over them. Now it’s only about one-fifth of what it was.” She loves having information at her fingertips when a customer calls, even though she said it required a high learning curve. Each desktop is now set up to e-faxes and email. “The capability was there, we just didn’t know how to use it.”
“We are more responsive on order entry, and it’s where it should be -- with the customer,” Yamasaki said. Others have no contact with the customer, causing less confusion and saving time. And best of all, she and others in sales now do more proactive selling, specializing to develop potential markets. The production and shipping departments have more time to prepare, especially for large orders.