October 21, 2010
Getting LEAN: Units learn to shed inefficiencies with new philosophy
Finance & Facilities has gone on a LEAN diet to become more efficient and responsive to its customers, creating culture change that empowers line employees.
LEAN, a process improvement philosophy, was made famous by Toyota about two decades ago, says Doug Merrill, project manager in the Office of Strategy Management who is spearheading LEAN implementation. Its hallmarks are customer focus and reliance on employees to embrace an environment in which quality improvement, initiated from the bottom up, becomes part of the organizational culture. Unlike some process improvement approaches, LEAN aims to bring about change quickly.
Finance & Facilities, like many campus units, confronts an environment of rapid change. Wherever she looked, Vice President V’Ella Warren saw units being challenged by tight budgets and customer needs that were, in many cases, growing.
When Warren decided to implement LEAN, late last year, she first presented it to the organization’s senior leadership. Each unit is developing its own approach to implementing LEAN, with the help of consultants.
Grant and Contract Accounting (GCA) is one example. Since 1990 the UW’s research awards have grown by almost 230 percent while the number of GCA staff has grown by just 24 percent. This has caused frustration among those working in the unit and also among some customers, says Sue Camber, associate vice president for financial management.
One particularly troublesome area is in closing out budgets for completed grants. Prior to the adoption of LEAN, the average time to close a budget was two years, with a backlog of 5,478 budgets that had expired prior to Nov. 1, 2009. Camber wanted to eliminate the backlog entirely.
Faced with such a challenge, the unit’s first LEAN team realized that simple tinkering with current procedures was not going to get them where they wanted to go. They needed to rethink how their work was organized, map out their processes, and figure out which steps could be shortened or removed entirely.
The result: within five months, the original backlog of budgets still open more than 120 days after the end of the grant has been reduced to 1,646. Employees expect the entire backlog will be eliminated in the next three months.
So how does something like this happen?
GCA staff have made a concentrated effort to close accounts, says Kirsten Defries, director of campus services in GCA. They set up a physical location where all closings are funneled, allowing the staff to interact, determine the bottlenecks in the process and suggest possible solutions. Staff are encouraged to break down the process into its components in order to identify the steps that are causing the most delays. Making the change activities visual is part of the LEAN method — a public board is festooned with notes, suggesting what steps in the closing process are most problematic and proposing solutions, as well as progress to date.
The success in closing budgets has motivated Camber to spread the LEAN philosophy. The GCA office is undergoing a complete physical makeover, eliminating cubicles and private offices (including Camber’s), and creating common informal spaces for impromptu problem-solving gatherings. Already, the outlines of organizational change are beginning to appear, she says.
“One of the things about GCA,” she says, “is that work in many areas is cyclical, and it doesn’t all peak at the same time. So we’ll be setting up several ‘streams’ for handling certain processes, and as work becomes more intense in one of those streams, we’ll be able to move people there to cope with the demands.”
As the LEAN process is spread throughout the organization, one challenge is to get input from all employees, says Lily Gebrenegus, assistant director. “Some people will speak up in large groups, some in small groups, and others, we need to ask their views,” she says. “One thing that has made this easier is a general consensus that our previous processes were broken and needed to be replaced, so people are not afraid to be critical of the status quo.”
“One thing we’ve learned,” says Camber, “is that if people have stopped bringing forth issues, then we’re not challenging them sufficiently. We’re helping people develop their skills in meeting ever greater challenges. It has been inspiring to see the creativity of our staff as they develop informed solutions to a host of process challenges.”
LEAN is intended to be implemented rapidly. Process is important, but action is primary. Teams are expected to quickly incorporate the LEAN approach into their daily work and communicate continuously to improve processes. Progress reports to management occur at 30 day intervals, and substantive change is expected at each interval. Consultants were brought in to make sure that leaders were given a common set of tools and expectations for implementing the process.
Since a key element in LEAN is the customer, another way in which LEAN is being used by Finance & Facilities is to pilot the possibility of shared service centers on campus. When Financial Management went to LEAN, they began working with the Division of Humanities in the College of Arts & Sciences to streamline ways of handling transactions involving payroll and procurement. Even at the pilot project stage, it was necessary to involve people from many departments in extended discussions, Merrill says.
Initially, staff in Financial Management feared that their counterparts in the college could not gain release from their daily activities for enough time to support the project. Quite the contrary: customers who had never been asked to comment on procedures that affected their work jumped at the opportunity to bring about constructive change. Although the project is still at an early stage, participants are optimistic.
Because LEAN encourages people to set ambitious goals, it is inevitable that some proposed solutions will not work. Managers need to make clear that that’s OK. “When things don’t go right, that’s when you learn,” says Merrill. “We’re encouraging leadership to give employees the room to fail, and to learn from those attempts.”
Merrill has already seen the LEAN process serve as a major growth opportunity for participating staff. “People who had been afraid of speaking in public are now out meeting with departmental clients, discussing changes and how their services can better meet the customers’ needs,” he says.
The ultimate goal here is continuous improvement — which can be supported from the top but really must begin with the people who are most deeply immersed in the activity. “We’re helping people to develop the skill set for solving problems, not just now but in the future,” says Merrill, “as well as the willingness to speak up and offer their ideas.”
More information about Finance & Facilities’ LEAN efforts can be found here.
