Over the past few months, we’ve discussed some basic philosophies of a lean organization. Things like understanding waste, defining the real “value” we produce, creating flow through the organization and making problem solving everyone’s job. From the feedback I’ve gotten, it’s clear that many of you can see the common-sense practicality of these theories. So it’s time to begin taking the next step: executing some of these things in your business through kaizen.

The journey toward creating a world-class “lean” organization happens through a couple of unique phases. First, a kaizen event – changing the work we do so that more “value” for the customer is produced and less waste is performed. Then, stabilization of process – working in the new way until it becomes consistent. And lastly, continual improvement – looking for flaws in the new way that generate waste and revising the work.

This cycle then repeats itself forever. The actual Japanese word “kaizen” means “incremental and continuous improvement,” which is the sum of the three phases above, although many have defined kaizen as “break to make better.” The more appropriate term for what I’m describing would be “kaikaku,” which is a short term, intense improvement effort in one area. Still, most people know this as a kaizen event.

A kaizen event can be executed in many different ways. In some cases, this event encompasses breaking the entire business, every element, and rebuilding it completely differently. In other cases, a “point kaizen” may be more useful. Point kaizen simply looks at a single area or process inside your business and rebuilds it. The downside of point kaizen is that although you may improve one area of the business, it most likely will have little effect on the overall performance or results (because the improvement in this one area still must be passed along to the next step, which is still inefficient; it’s like putting a supercharger on a beat-up Yugo).

Still, some larger organizations will use this method throughout each of their processes, one by one, and then begin to connect these steps to each other to create a complete “lean” business. The upside of point kaizen is that it begins to create the understanding in the organization by “doing.” If you recall, we’ve said that true learning of lean only happens by doing.

For the sake of getting you started, I’m going to outline a point kaizen.

First, Let’s Review
First, we must again review the fundamentals of lean (get out your back issues of BSB if you’ve missed the previous articles):

1. You must define “value” from the standpoint of the final customer. Get the group together, decide and write down who your customer is. Then, together, determine what it is they want from your organization. This is critical to get correct because everything you build will be based on it. Again, at the core of this philosophy is understanding who your customer is and what they want, so you can focus on delivering that. Any activity that isn’t what your customer wants and isn’t what your customer is willing to pay you for is waste — and must be eliminated.

2. You must thoroughly map out and understand the entire set of activities (tasks) currently required to perform the work from start to finish. In this case, we’re looking at a point kaizen, just one step of our process. The correct way to define this is “every step required to take a customer from the moment they require our services through completion.”

3. The customer/product must move along the value stream. It must flow. This refers to designing the new way. This says that in the proper sequence, step by step, all work must be performed. No reversals, no leap frogging. It must move like water flowing down a stream.

4. The organization must be structured so that the customer (who you’ve defined above) can pull value (what they want above) from the producer. This means that the new way must produce work only at the pace determined by the customer and that the work itself must be that which they want us to perform. This is a pull production system, not a push from the front. This pull system connects the steps of the process – the last step is pulled by the customer, causing the prior step to be pulled by the last, and so on … back to the first step. This eliminates the waste of overproduction (the mother of all the other wastes).

5. The organization must pursue not its competition but rather perfection. This refers to continual improvement efforts. Benchmarks and the pursuit of them will never lead you to discovering better ways, only to being as good as the best. Lean organizations are the leaders. They set the bar by creating new ways, by going someplace no one ever thought to — or knew they needed to — go.

Assembling a Kaizen Team
You’ll need to assemble a kaizen team for this exercise. I suggest you choose leaders in your organization, the influencers. Not just the good influencers either, also those who can be critical and skeptical of the organization. These folks show they care about the business. If they didn’t, they’d just shut up and keep working.
Three or four people will do, but if you can get more, do it. You’re best served by also having someone, maybe outside your organization, who’s not afraid to call bull*%$# on you — someone who can see through the status quo with an uncorrupted set of eyes.

I suggest you hold this event over the course of a couple of days, maybe a couple of mornings or afternoons during a week. You’ll need to stick to a strict timetable with deadlines to keep things moving. Because these are never easy to do alone, without support from someone who has been through it before, I suggest you think this through thoroughly before you start. Practice by yourself first.

Your Agenda for the Week
Here’s an example of what your agenda might look like:

MONDAY:

•  Hold a kaizen team meeting. Review the fundamentals of lean with the group. Make sure they know their role in the event is as organization leaders who will not only help create the new way, but also promote it in the organization and be able to explain it to others, along with the reasons behind why you’ve created it.

• Review the tools you’ll be using during this event.

   — Process elements maps
   — Spaghetti charts, motion studies
   — Time observation studies
   — Distance/time and yield improvement forms

• Define the customer exercise. As a group, discuss who your customer is. A customer should be anyone who requires your services and pays you for them. It could be a local dealership, mechanical shop or fleet. It surely is the guy who owns the vehicle, and it may be the DRP insurer as well (they pay you in volume … maybe). You may also consider a non-DRP insurer a customer, if you think they may add you to a program that will deliver additional volume. It may be a local agent or business. Take your time here and be thorough. All work from here forward will be built around your customers’ needs.

Next, discuss and determine what these customers want from you. The obvious thing is a repaired vehicle. That’s what we can clearly see because it’s outlined on the estimate and details exactly what and how much they’ll pay for the service. But they clearly want more than that. They expect a quality repair. (Some of you may argue that they don’t, but that’s OK, you decide). They want good service, which means good communication and timely repairs, etc. This is for you and your team to decide. Just be careful and be thorough because if you get this wrong, you might disappoint or lose customers. Take your time here. Leave a couple of hours to do it.

A great exercise is to discuss a different business and use your perspective as their customer. What is it that you want from their business? You’ll find that most customers want the same thing from any business: good quality at a fair price with good service.

Once you’ve completed the exercise, try to skinny down the list and remove redundancies. Post your results so everyone can see them. Share this information with the entire organization. It really is a list of what you stand for, so everyone needs to get behind it.

TUESDAY: value stream mapping

• Perform process elements mapping — 1 hour as a group
• Perform time studies (half the team) — 2 hours
• Make spaghetti charts (half the team) — 2 hours
• Summarize the results (create the current-state value stream map) — the rest of the day. You can send the team back to work and pull this together yourself.

WEDNESDAY: think about the new way
• Review the findings (current state review) — 1 hour
• Define the value and the waste — 1 hour
• Summarize the value vs. waste — 1 hour
• Construct rough draft of the future state. You can send the team back to work and outline this yourself

THURSDAY: design the new way
• Review the rough draft — 1 hour
• Brainstorm solutions (time/distance/yield improvements) — 2 hours
• Create future-state elements map — 1 hour
• Plan the details, 5-S activity

FRIDAY: implementation
• 5 -S implementation — half a day
• Review new process with shop

Walking You Through the Steps
We’ve already discussed step 1 — defining the customer and their needs. Let’s discuss step 2 – mapping the current value stream map. The first thing you’ll need to do is break down your business process into steps. If you were to think through all of the activities required (on average) that a customer and his vehicle must go through from the time you’re aware of his need until completion (including getting paid and closing the file), what would they be? As an example:

1. Making initial customer contact
2. Scheduling an estimate
3. Preparing an estimate
4. Scheduling the job
5. Ordering the parts. And so on …

This list will become your initial Process Elements Map. I suggest you create a form that you keep record of, just a simple one-page document that lists each step from top to bottom. As you move through the kaizen event, you’ll be measuring some specific aspects of each step of your process. They will be:

• Time required
• Distance traveled
• Yield (the % of time the activity is complete and correct on the first try)
• Value-added or non value-added (waste)

Leave room on the right-hand side of each row you create on your form to record these items, and label each column with the above information. You’ll want to talk this through with your team to be certain you’ve captured all of the steps of your business. This will become the list of steps that you need to analyze and redesign.
In a point kaizen, you’re only going to take one of these steps to work on. So for the sake of this exercise, let’s choose the parts process.

You’ll now need to begin to break down this process step. Start with a new process elements map that’s specific to your parts process. As a group, you’ll need to discuss the tasks that are required to perform this step of your process. It’s important to capture every task that you perform inside of your current parts process. Start with some scrap paper or a chart and begin to lay them out. Here’s an example of how someone’s parts process may look:
After the estimate is written and the job is scheduled …

• A note to order is written and attached to the customer’s file
• The file is sent to someone’s desk
• The parts person prints out required parts list
• The parts person researches what type of parts are available
• The parts person calls several vendors to check availability
• The parts person waits for call backs
• The parts person decides on the vendors
• The parts person generates a purchase order
• The parts person faxes the purchase order
• The parts person creates a note about the status for the file
• The parts person moves the file somewhere while he waits
• A parts driver arrives and unloads some parts
• The parts person locates the file
• The parts person locates the purchase order
• The parts person checks the parts against the purchase order
• The parts person signs the invoice
• The parts person moves the invoice to a place to be received
• The parts person moves the parts somewhere
• The invoice is received into a management system
• The invoice is photocopied
• The invoice is filed away somewhere
• The parts are delivered to the technician
• The technician opens the parts
• The technician identifies damaged or incorrect parts
• The whole process starts all over again
• Additional parts arrive — some above steps are repeated

I can’t take any more, but you should get the picture. The tasks inside of the step need to be thoroughly understood. Think of your business like the diagram below …

*The Sum of the tasks equal the step
**The Sum of the steps equal the process

You need to capture the tasks, to understand the performance of the step, to understand the performance of the process. You may need two or three sheets of paper to document the tasks required to perform the step called parts.

Take your time here and document what actually happens! You’ll find that there are always three different realities: the way it’s designed to happen, the way you think it happens and the way it actually happens. Capture the reality!

Keep an open mind, and let the group speak the truth. Once you think you’ve got it all, make a formal process elements document for parts. List out the tasks on your sheet in the order they happen. This list now needs to be measured.

• The first measurement: TIME. You’ll need to record the average amount of time it takes to perform each task. Don’t worry about the variances in time due to the size of jobs or special circumstances. Just do it! Don’t get hung up! This will require a time observation form. Make a form that lists the name of the task at the top with rows going down to record the time studies. The best way to measure the time is to go and watch the task being performed. Use a stopwatch or something with a second hand. Capture as many time trials as possible. The more the merrier. Do the work yourself if you need to. Don’t forget to record the time of a waiting task. How long do you wait for parts or a file? You might be able to capture this data from your records. Take an average of the time once you’ve finished. Record this number in the time column of the task on your process elements form.

• The second measurement: DISTANCE. There are two different things to capture here. The distance a person has to travel to perform this task, and the distance the product has to travel during this task. (The product may be the paperwork in this case). The best way to gather this information is to go and watch the task happen and measure. A wheel-style measuring tool works best. If you don’t have one, pace it off. If people or product take a different path sometimes, record it and average it out once you’re done. Be certain to take separate measurements for the people and the product.

You’ll need to create a spaghetti chart for this exercise, which is simply a piece of graph paper or a grid where you can draw out the movement of people and product. You’ll want to sketch out the layout of the area you’re working in so that visually, the movement can be properly recorded. Write down the distance on each line you draw. It looks likes spaghetti once you fill it out. Once complete, record these numbers on the distance column on your process elements form.

• The third measurement: YIELD. Again, this is the percentage of time the task is performed and, on the first attempt, is correct. So if you receive the wrong part three out of 10 tries, the yield would be 70%. Or if the file is missing information needed to order the parts five out of 10 times, the yield is 50%. This measurement may be subjective. That’s OK. If you can look back at historical data to capture it, do so. All you want to reveal is the quality of your process today. This measurement will become a baseline for improvement. Once you’re complete, record the percentage on the yield column of your process elements map.

It’s a good idea to break this measuring activity up by teams. Have everyone take a specific part, and monitor their progress. Do NOT get hung up on accuracy! You’ll find that your process is so bad that ultimately it won’t matter much. Keep people moving. The real value in this exercise is in exposing the waste you’ve built into your business.
Once you’re complete, you’ll need to summarize the performance of the step. Add up all of the times and distances, and record them on the bottom of the page. Multiply the yield of each task by the next one until you’ve reached the end of your list. This will give you a number called the “Rolled Through-Put Yield.” This indicates the percentage of time that every task is performed together correctly. It’s usually a ridiculously low number. That’s OK. It’s the truth, and the truth will set you free.

Once you have the results, review them with the team. It’s an eye-opening experience! You’ll find that people walk an incredible distance to perform a seemingly simple step of your process. The product (parts and paperwork) will also run a marathon. The amount of time might shock you as well, but not as much as it will once you go through the next step — determining what tasks actually add value.

• The last measurement: VALUE. You’ll all need to understand a couple of things here before you can proceed. First, when you began the exercise, you wrote a list of the value that your customer required from your business. Make sure to review this with the group. Look at each task and ask the questions of the group,  “Does this task provide value to the customer? Does it fit into the list we created?”

For example, the task of walking to store the parts somewhere may not provide any value to the customer, according to your list. The task of checking to see if they’re correct might (refer to my prior article on value).
Also, you need to be familiar with the seven types of waste (defined in a prior article). Ask the question for each task listed: Is this task waste? Does it fall into one of the seven categories?

With the group gathered together, review each task one by one and decide if it’s a value-added activity or a non-value activity – and if so, what type of waste it is. This will take some time and generate a lot of discussion. Keep the group on track and make a final ruling in cases where consensus cannot be achieved. Don’t bull#%& yourself. If you’re going to improve, you have to face the facts. Very little of what we all do adds any value to the customer requirement.

There’s also another consideration here. These are the tasks you discover that have no value, but you’re required to perform them, either by law, by contract or by some other currently impossible hurdle. You’ll need to define these as “required non-value-added activities.” Just be careful in using this category. Only use it where you must because these are still non-value-added tasks.

As you move along, record the results. At the end of the row for each task, indicate value, non-value or required non-value and list the waste type.

Now, once you’re complete, look at the list again. How many tasks listed are value added? It will be a very low percentage. Sum up the distance and the time required to perform these value-added tasks. List the number of value-added steps and the number of non-value-added steps. The difference between these numbers and the overall numbers is the waste. This is the stuff that you must now begin to eliminate.

Facing the Truth
It’s always an eye-opening
experience for those who take this scientific approach to improvement. The point is that these numbers don’t lie. The simplicity behind this is that now, you have an accurate, itemized list of what needs to be corrected in your business. It’s a list that everyone involved can clearly understand because they were the ones who created it. It generates a level of buy-in that can actually move the business forward.

Next month, I’ll take you through the next step: creating the future state. The question you need to ask is: “How can we do just the value-added stuff and not the waste activities?” And as for the required non-value activities: “How can we reduce the effort required to perform these tasks and, over time, eliminate them altogether?”

Until next month, good luck — and, as always, drop me an e-mail if I can help.

Contributing editor John Sweigart is a principal partner in The Body Shop @ (www.thebodyshop-at.com). Along with his business partner, Brad Sullivan, they own and operate collision repair shops inside new car dealerships, as well as consult to the industry. Sweigart has spent 21 years in the collision repair industry and has done everything from being an independent shop owner to a dealership shop manager to a store, regional and, ultimately, national director of operations for Sterling Collision Centers. Both Sweigart and Sullivan have worked closely with former manufacturing executives from Federal-Mogul, Morton Thiokol and Pratt & Whitney in understanding and implementing the principles of the Toyota Production System. You can e-mail Sweigart at [email protected].