12 April 2007
Lean Approach Focusing on the "Seven Wastes" Improves Bank's
Mail Processing by 20%
oee, a leading international operations management consultancy in the financial services sector, has helped a leading retail bank to improve efficiency in an already well run Group Mail Processing Center (MPC) by 20%; through the implementation of a Lean operations approach focusing on the concept of the ‘Seven Wastes’.
The ‘Seven Wastes’ focuses on the main sources of waste in industrial scale processes:
- Transportation – carrying work from one area to another driven by poor layout;
- Inventory – Work being held up at key points in the process;
- Motion – unnecessary movement by staff, often due to poor layout;
- Waiting – mismatches in start and finish times of processes;
- Over-production – parts of the process producing faster than necessary;
- Over-processing – tasks not required by customers;
- Defects – poor preparation resulting in jams
Graeme Fry, Director at oee, said: “We work closely with many of the leading banks and financial institutions. In this case oee was asked to help radically improve customer service and reduce costs in an already well-run operation, but one which had not previously had a Lean operations approach applied to it. We found that introducing the Bank’s MPC team to the concept of ‘Waste’, with a particular focus on the ‘Seven Wastes’, was a useful way of structuring this particular project.”
The Bank’s MPC played a vital role in the end-to-end process of handling customer interactions, many of which the bank promised to complete on the day of receipt. The Bank’s management realised that they needed to provide a faster and more reliable service to their customers, to help improve the proportion of requests achieving the one day service.
As the handler of the entire bank’s branch mail, the MPC was charged with delivering sorted items, many of them in scanned image form, to many internal customers. Although great efforts were being made, customers were often unhappy with the timeliness and reliability of delivery that the existing processes achieved. The MPC was an enthusiastic department very focused on meeting daily targets. However, the operation had not been introduced to the principles of Lean Thinking, leaving them struggling to find ways in which they could improve performance.
Graeme Fry said: “During oee ’s nine-week involvement we introduced the MPC to the concept of Waste, focusing on all activities that did not add true value to the customer. The concept of the ‘Seven Wastes’ helped us to structure the project to identify opportunities to improve efficiency and process reliability across the
board.”
Work was undertaken to eliminate unnecessary process steps. An analysis of end-to-end process showed a ‘bow wave’ of work moving along the value stream. Poor flow in the MPC, and also in downstream processes, was resulting in a ‘feast and famine’ scenario. For the first few hours of the shift sub-optimal workflows resulted in too little mail being delivered to customers who were being starved of work. Suddenly midway through the shift large batches of work began being delivered and downstream customers were unable to cope.
The overall process flow was significantly improved by ‘collapsing’ the time taken for the first item to pass through the process from 2 hours to 20 minutes. As a result the flow to customers became more reliable, with a predictable and constant output rate being achieved throughout the shift.
Graeme Fry concluded: “Working with the Bank’s management team, we were able to significantly improve customer satisfaction through earlier and more reliable delivery of work items. The new process lay out was designed, purchased and implemented within the nine week period. This was achieved simultaneously with a 20% improvement in efficiency. The beauty of this type of approach is that it can deliver results of this magnitude when applied to pretty much any process set up.”
