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Does A Lack Of Physical Inventory Make Office Work “Different”?

by Ken Eakin
January 10, 2020

Does A Lack Of Physical Inventory Make Office Work “Different”?

by Ken Eakin
January 10, 2020 | Comments (7)

The intangible nature of office work makes it particularly challenging to improve from a lean point of view. The inputs and outputs of office work are either stored digitally, on servers, or else mentally, in people’s heads. There’s no real inventory to speak of. There are no “materials” other than information (even money is stored as data). While office workers understand the difference between work in process and completed work, neither of these occupies any physical space. The work has no mass. You can’t see it moving electronically from one process to another. And, most importantly, there is no material cost to storing terabytes of data on servers. 

This is significant because much of lean thinking positions the cost of excess inventory as one of the major raisons d’être of a lean transformation. By establishing pull systems and creating (ideally) single-piece flow of work throughout every value stream, companies avoid overproduction. This reduces the amount of parts, raw materials, work in process, and finished goods needed to be kept on hand. Inventory turns increase. The cash portion of working capital improves. Often, with less inventory needed and some creative rearrangement of equipment, the physical footprint of the plant can be reduced, leading to even more cost savings. 

Many stories of lean manufacturing transformation have chronicled companies producing physical goods that stand to benefit immensely from such improvements. Not only does their bottom-line improve, but customer lead times shrink, and workers are more engaged with value-adding work. They can respond more quickly to changes in customer demand. Additionally, fewer finished goods need to be transported and warehoused throughout the extended value stream, thereby lowering the total cost of the product. Everybody wins.

The problem is that employees working in office towers, far from any factories, cannot relate to these stories extolling the benefits of just-in-time delivery of small batches of parts, improved inventory turns, and a reduced need for buffer stocks.

Does this mean that there is no overproduction in offices? Does this mean lean is irrelevant? Not at all! On the contrary, since storing digital “inventory” is essentially free, people create far more of it than necessary. Worldwide, around 300 billion emails will be sent every day in 2020. There are currently 40 times more bytes of data in the digital universe than there are stars in the observable universe. Far from having no inventory, office workers are drowning in it. Just like factories that store too many parts on site have to devote more time and effort to find them, offices struggle with getting the right information in front of the right people at the right time because, in large part, there is just so much of it to sort through.

As Orest Fiume has said, it is time, not inventory, that is the true unit of measure of lean. And the value of gaining more time applies equally to offices, factories, hospitals and any other type of workplace. In office work, if we reduce the amount of work in process and focus employees on the vital few high priority projects and tasks, we also reduce the amount of time and effort required to find, review, select, extract, transform, analyze, synthesize, paraphrase, illustrate, present, and distribute all the information people need to do their work. As a result, decisions are made faster, the lead time for satisfying customer demand shrinks, and overall productivity improves, just like in a factory

Salaries, not inventory or capital equipment, are the biggest single expense that office-based businesses have. So time really is money, as the familiar proverb says. But it is so much more than money. Gaining time reduces overburden on employees, allowing them a greater work-life balance, and freeing up their human capacity to develop new processes and products (innovation) or to tackle new problems (continuous improvement).

A reduction in the amount of information “inventory” required for the effective execution of office work does not yield the quite the same improvements in working capital as does reducing physical inventory in a factory, but it carries all the other benefits that lean brings to every business: improved lead times, gains in capacity for growth and innovation, reasonable workloads, and greater productivity. When lean’s benefits are framed as gained time, rather than reduced inventory, it becomes a lot more relevant to office workers.

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7 Comments | Post a Comment
Jean Cunningham January 10, 2020
2 People AGREE with this comment

I totally agree that lean principles can improve every part of a company, in every industry.  Most of my work has been in office environments or what is called Beyond Manafacturing.  

However, I think it would be a mistake to ever imply that the reason for lean in manufacting was to reduce inventory. Yes, inventory reduction is an outcome of small batch and pull, but not the goal.  The goals of lean are customer value and employee engagement that allows for sustainlable business results.  The methods are many.  

Thank you for shining the light on the office and recognition that all areas of the company can focus on value creation.



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Ken Eakin January 10, 2020
1 Person AGREES with this reply

Thanks Jean. I agree with you. It's a mistake to say that lean is about reducing inventory.  Yet when people hear the word "lean", they think "less" (or absence of fat)-- and typically their first thought is "less people".  To allay their fears, I've heard consultants say, "It's not about 'less people', it's about 'less inventory'".  What I was trying to convey in the post was that it's really about "gained time" in all industries and that the office is no different.



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Andrew Bishop January 10, 2020
3 People AGREE with this comment

Having learned about lean from manufacturers but practiced it in bureaucratic settings in diverse, non-manufacturing industries, I’m a firm believer in the maxim “We’re different, it won’t WILL work here”.

Time is indeed the key – consider the information handoffs when a patient is discharged from a hospital to a home health agency.  Overly complex processes, poorly specified requirements, incompatible information systems, etc., etc., lead to delays in information critical to the start of care at home – but the patient is already there!  Risks to patient safety are paramount; there are also significant financial risks to the agency.

The key is sticking to basic principles which apply just as much in this setting as in an auto plant.  There may not be a kanban card in sight, but the four rules (standards, pathways, connections, improvement) are still good tests of systems and processes and the development of capabilities of associates is still the path to improvement.



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Bob Williams January 12, 2020

Projects in the office started but not finished (inventory waste) definitely has parallels to physical inventory. Project value to customer is undelivered and cost of assets and people for the producing company is not recouped.



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Ken Eakin January 12, 2020
1 Person AGREES with this reply

Yes, exactly.  Time is money.  It's not the material cost of the inventory but the cost of wasting the customer's and employees' time, as well as the cost of not getting paid sooner (presuming terms are "on delivery").



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David Armstrong January 21, 2020
3 People AGREE with this comment

What I see missing here is any mention of rework.

Rework gets absorbed as a corrective business function and not eliminated.  It is a tremendous drain on productivity.

 



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Ken Hunt January 21, 2020
1 Person AGREES with this comment

Servers are a large part of complexity in the office. 5S the servers and you will see the resulting reduction in old data, unused files, etc. Try doing a Spaghetti chart before and after server cleanup and you will see drastic results. The rule of thumb I always used was no more than five mouse clicks should be necessary to find a file or folder. 



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