The Lean Office Transformation: Understanding When and How to Automate Certain Tasks

We kickstarted a digital transformation and lean learning initiative for a mid-size manufacturing company in Singapore.

  • Our mission was to help this company either Eliminate, Automate, or Outsource, which required a systematic approach to understanding the root causes of waste in its office processes.
  • Indirect labor costs form a significant component of the cost structure in a manufacturing setup, especially so in high-cost countries like Singapore.
  • Together, with this organization’s team members, we found ways to eliminate waste from transactions in the office area. We knew we could automate some of the tasks with the help of IT systems and/or outsourcing activities offshore, but first needed to understand the larger value stream.
  • First, we created a Value Stream Map to identify value-added and non-value added activities. For example, in the case of the purchasing process, we divided activities into planning and purchasing. For each activity, we did a bottoms-up roll-up of what constituted real value-added activity from the manufacturing site. Various activities affected value-added processes, products, or customers. The activities in the planning function required interfacing with the customer teams. These needed to be in the site versus activities like purchasing, which involved running MRP, placing POs on suppliers, follow-ups, and generating shortage reports. The latter could be outsourced to the more cost-effective, back-end operations offshore.
  • After we optimized all of these processes and eliminated a significant number of non-value added steps at the site, we outsourced new processes to back-office operations in India/China.
  • 30% IDL improvement
  • 200 bps cost reduction
  • The beginning of an intentional digital transformation in service of creating value for customers and improving business results

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