by Tilo Schwarz | Tips for the Kata Coach | Episode 7
This article discusses a helpful metric for administrative processes to evaluate the independent performance of each process step regarding lead time.
For new readers: Every Monday I intend to share hands-on tips for better coaching with the Coaching Kata. This episode is #7 in a series of articles about Denise, who has taken on her first management position as a department manager at PowerPump Inc. Denise intends to develop her team through coaching. Read Episode 1 to get into the story.
Recap of the last episode: After her coaching cycles in the morning, Denise meets with Jason for lunch. Jason, head of sales administration, has recently joined the company. As he and Denise have similar ideas on how to manage their teams they regularly talk about their management experiences. (Read Episode 6 for details).
At lunch in the canteen, Jason tells Denise about his attempt to start with Toyota Kata in his sales administration team. His main problem was that his team worked on many different tasks during a day. "In production, you have it a lot easier," Jason said. "The teams in a production line always do the same things throughout a shift."
"What are your main processes?" Denise asks. They had already discussed this earlier. To find out, Jason had conducted an activity structure analysis. Everyone in his team had tracked, over several days, how much time they used for each activity.
The following picture had emerged: Everyone in the team used about one-third of their time for telephone calls with customers. Mostly these were requests for quotations or queries about a previous offer.
How they spent the rest of the time differed between the team members. For three team members, updating the online catalog and system data was the second most time-consuming task requiring one-third of their time. Two other team members spent about 25 percent of their time on project control and managing due dates for complex installation projects. One other team member supported the sales force regarding technical queries regarding calls for bids.
With the remaining tasks, Jason had noticed that everyone in his team spent about 5 percent of their time writing up and pricing offers for projects that the sales force team could not do themselves. With the current size of Jason’s team, this corresponded to one person full time. Often there were complaints from the sales team that customers had to wait a long time for quotes for projects. And this was although sales in the project business already accounted for 20 percent of total sales.
Jason had therefore decided to focus his first improvement efforts on the process of quoting in the project business. Grasping the initial condition had revealed that the lead time from inquiry to submission of an offer was 5 to 8 days. He aimed to reduce this to 3 days in the next six months.
"My problem is," he told Denise, "that the lead time for a quotation is not completely under our control. To create an offer, we essentially carry out two work steps. First, we develop the technical concept; then we pass it on to the finance department for the final calculation of the pricing. It can be held up there for a few days. Then we finish the offer and complete the corresponding text. The measurement of the total lead time is not suitable for defining our next target condition since it incorporates the delay in the finance department.“
Denise suddenly recalls her internship at a bank where she had been working for three months prior to university. There she had learned about ‚same day processing‘ which was an accounting principle at banks. All monetary movements had to be booked on the day of their occurrence. Due to the high level of automation, this was easily possible nowadays. In earlier times this had been a serious challenge, especially on busy days. She explained her idea to Jason. ‚Same day processing‘ means that every new task your team gets today is completed today.
You could measure the same day processing rate, for each of the two process steps your team conducts. In other words, the percentage of inquiries that are completed on the same day they arrive, for each process step. Doing so, you would have a simple metric for each process step that is independent of other process steps and easier to measure than lead time. The number of incoming tasks, minus the number of open tasks at the end of the day, divided by the number of tasks received that day.“
„That's great,“ Jason replied. "If we achieve a 100% ‚same day rate‘ for our quotes in both process steps, this sums up to two days in lead time. If the finance team strives to reach the same for their process steps, we would have a total lead time of three days. That's exactly where I want to go“.
Next week: Read about Denise’s checklist for defining a good target condition.