An Article From the Archives:
When we think flow in a manufacturing environment, we often think only about production and material flows, but don’t forgot your admin areas when you are thinking about application of the technique. In this article, originally published in our February 1997 Productivity Newsletter, we learn how Aeroquip successfully applied the flow technique to their quoting process.
From the standpoint of a lean manufacturer, the process of producing a quote on a part for a customer is no different than actually making the part. You think in terms of flow, value-added, teamwork, and multi-skilled employees for both processes.
Like a part, a quote is “made up of various component parts that are brought together into an assembly,” said Jeff Finch, vice president of sales and marketing at Aeroquip’s industrial division. “Instead of having a linear process where various operators do their piece of the work on the assembly, you bring the assembly into a cell and create it start to finish.”
The division, which makes hoses and fittings for the heavy-duty truck, construction, and agricultural markets, now makes customer quotes “the same way we build metal components,” he said. A team of multi -skilled employees in customer service processes many quote requests from start to finish in a fraction of the time it took to shepherd quotes through several functional departments. But it wasn’t always that way.
In the simplest cases, customer service representatives entered orders called in by customers. But many big industrial customers sent in requests for quotes with a bill of materials or engineering drawings, Finch explained. Aeroquip analyzed the requested part, then told the customer how much the part would cost and when it could be delivered.
Very often these requests were for unique applications. Aeroquip can make a wide variety of hoses based on length, fittings, or the angle of fittings. Aeroquip will design the hose to fit the customer’s application.
“It’s a fairly scientific process,” said Finch. “We wanted to respond very quickly to the quote when it came in.” Such a service would give Aeroquip a competitive advantage by helping its customers get their products to market faster. “Speed determines success,” said Finch.
The average quote time had been one to two weeks, depending on the complexity of the desired part. The goal was to respond within 24 hours on average. In the best cases, Aeroquip wanted to give customers an answer while they were still on the phone.
The company put together a cross-functional team in customer service as a pilot project for streamlining the quote process. The eight-member team, or “tiger cell” as it was called, initially included representatives from applications engineering and pricing who trained customer service representatives in identifying and pricing parts. (Ultimately, these specialists returned to their areas because many quote requests contain a level of complexity that requires their special skills.)
The objective of the cross-training was to transfer some skills from the specialty areas to the cell so it could generate some quotes at the initial point of contact with the customer. By bringing together these skills, the customer service tiger cell resembled a manufacturing cell equipped with machines that had been scattered through several functional departments.
Making Value Flow
Besides training from specialists, tiger cell members also received instruction in value-added manufacturing principles and process mapping. This would help them recognize where value for the customer was created in the process and how to make it flow uninterrupted from start to finish.
Equipped with their new skills, team members first reviewed existing process maps of the quote request procedure. While informative about the steps needed to create a quote, the existing maps did not give much information about the value of the steps or lead time, according to Frank H., senior management consultant at Productivity Inc. who trained the team in value-added manufacturing and process mapping. He noted that traditional process mapping focuses too much on tasks and not enough on moving a product-or quote-through the process.
Creating a new process map that displayed lead time and value-adding activities would help the company “set a target for what we wanted to achieve,” Finch said, by gauging actual, worst-case, and best-case quote times.
The team reevaluated the quote process by “walking” a quote through its entire journey from when a customer called until the quote was in the customer’s hands, said Frank. The team focused not only on the duties required to process a quote but also on:
- The time a quote request spent traveling from desk to desk
- The distance a request traveled
- The time a request actually was worked on.
Too Much Traveling
After gathering this information, team members made it all visible by creating a new process map. They taped large sheets of paper on the walls of a meeting room and drew a horizontal line from left to right, divided into increments of one hour, explained Frank H. Members marked value-added steps as time blocks above the horizontal line and nonvalue-added steps as time blocks below the line. Making the problem of long lead times visible in a time line process map gave all team members a chance to assess the waste in the process.
“The first problem was that we needed more paper and wall space,” Frank H. said. Obviously, there were far too many non-value-added steps. The quote traveled too far, and too many people touched the quote.” Observed Finch, “We found out that there was way too much queue time or waiting time as a quote moved from desk to desk.” For instance, a quote would travel from customer service to application engineering. Besides designing the part, engineering would go to purchasing or manufacturing for information on availability and cost. Then the quote would go to pricing. Finally, it returned to customer service, which would contact the customer.
Just physically locating this expertise together in a cell would speed the
process by removing the nonvalue-added activities of walking quotes from one office to another or putting it into the inter-office mail, Finch noted.
Traditionally when a process takes too long, companies ask people to work faster or they try to automate the process. But in this case, Aeroquip asked the team to develop ideas, first to eliminate or minimize the nonvalue-added steps and then to do the remaining value-added work more effectively.
After generating ideas, the team prioritized them by giving preference to those involving little or no cost, explained Frank H. The team tested the ideas, measuring results and graphing them on a wall in the work area for everyone to see. It implemented successfully tested ideas. Almost immediately the quote times began to drop.
An audit of the improvement effort after two months showed a “‘strong improvement” in quote response time, according to Frank H. In addition, team morale was positive and the faster response pleased customers. He identified these four factors as critical to the effort’s success:
- Process owners created their own solutions to problems
- Decision making authority was pushed lower in the organization
- Cross training increased skill and worker morale
- Performance was measured and graphed by the process owners
Finch called the tiger cell “a big first step” toward the ultimate goal of achieving a 24-hour response on most quotes. “We’ve made substantial progress in reducing the cycle time on quoting,” he said.
Finch said the effort was meant to bring as much information as possible to the initial point of customer contact, not lessen the important of specialists. He said people realize the cell provides a better way of servicing customers and ended a lot of rework loops and delays. “I think everyone believes in and sees the benefit of this sharing of knowledge,” he said. “Our feeling is that as we increase the velocity of quoting, we will increase the overall sales, and good things happen when sales go up.”