Lean is about maximizing value to the customer while continuing to focus on process improvement. Incremental improvements gained over time through the execution of kaizen events (Japanese for continuous improvement) provide the foundation for a lean environment. Implementing lean principles at Amway, in our manufacturing and supply chain areas, increased capacity, standardized processes, shortened lead times and reduced costs.
By applying similar lean principles to our everyday IT Asset Management (ITAM) processes, we have realized these same benefits. ITAM kaizen events were conducted on inventory management, disposal processes and computer lifecycle management. These events generated more than $227K in hard savings and returned more than 6,000 hours of labor capacity at Amway Corporation. A continued focus on adopting lean principles within ITAM will not only reduce cost and increase labor capacity but, more importantly, improve service to our customers.
Proper inventory management drives down on-hand costs, frees up valuable warehouse space, increases product turns and creates an efficient flow within a warehouse operation. However, in many organizations, the decision to place an order is based on budget with little regard for customer demand or lifecycle management. This leads to aging inventory, inventory stockpiling, a need for additional storage space and lack of control around a collective group of assets.
IT Asset Management Pre-Kaizen: Prior to conducting the ITAM inventory management kaizen event, our organization focused on placing large orders on a quarterly basis as budget dollars were made available. As inventory levels rose, negotiated extended warranties eroded as equipment sat in the warehouse awaiting deployment. Images loaded by our supplier became stale, which increased the level of complexity of the deployment process.
IT Asset Management Post-Kaizen: Following the kaizen event, ITAM discovered that the implementation of lean principles such as visual minimum reorder triggers and JIT (Just-In-Time) delivery would enable a transformation in the inventory-replenishment process: from budget-based to customer demand based. This resulted in more than 60 percent reduction in on-hand inventory, increased inventory turns from two to six per year and adoption of the FIFO (First In, First Out) process, all of which ensure maximum use of warranties (Figure-1). As an added benefit, required warehouse space was reduced by 20 percent.
Figure 1: ITAM Warehouse Post-Kaizen
PC Lifecycle Management
PC Lifecycle Management Pre-Lean: With inventory management and warehouse controls in place, our focus could shift to the review of our processes around PC lifecycle management. Historically, PC integrations were carried out by more than 20 desktop support specialists. After mapping out our current-state processes, we discovered a lack of standard integration processes, variation in finished integrations and limited visibility into customer demand.
PC Lifecycle Management Post-Lean: The first two issues were simply resolved through development of a standard integration procedure and checklist. This ensured that, regardless of who was executing the integration, the quality of the finished good would be the same each time. These procedures and checklists are reviewed on a continual basis to further refine our process.
Customer demand, production flow and TAKT time are not often applied in IT. Processes such as building to demand, just-in-time delivery and production planning are all critical to the success of lean manufacturing, or in our application a lean refresh cell.
To gain efficiency in the PC integration process, a lean manufacturing cell was constructed (Figure-2) that provided capabilities to image multiple machines to meet demand. JIT (Just in Time) replenishment of PCs is used to feed the lean cell from the ITAM warehouse through a pull mechanism (Figure-3). By taking time to understand our customer demand, efficiencies in the integration process were obtained while still maintaining inventory control.
Figure 2: PC Refresh Lean Cell
Figure 3: JIT Cell Replenishment
But what is TAKT time? TAKT is not an acronym but rather the tempo or pace of your output to meet your customer demand. For example, in our case, data showed that roughly 1,600 people required a PC refresh in 2012. A typical organization on average works 2,000 hours a year. At this point, it becomes a simple exercise in math to determine the pace in which we need to complete a PC in the lean refresh cell. By dividing 2,000 (hours/year) by a demand of 1,600 (computers/year) we can determine the number of PCs that must be built each day to meet customer demand. Based on this calculation (calculation-1), just over 6 computers per day will need to flow through the lean cell in order to meet the customer demand of 1,200 computers in 2012.
Calculation 1: TAKT Time
On the back end of our new lean PC Lifecycle Management process, Amway partnered with an IT asset recycling facility to reclaim old equipment collected during our PC refresh. To avoid accumulation of excess assets which occupy valuable space and creates clutter, pick-up occurs weekly. To maintain organization, a clearly labeled and marked location has been established for disposals (Figure-4).
Figure 4: Dedicated asset disposal area
Applying simple lean principles to supply chain activities within IT has proven to render measurable cost-savings and more efficient operations. Critical to the success of a continuous-improvement program is the empowerment of the staff who executes these activities. Once the initial improvements are implemented, don’t stop looking for lean opportunities! Encourage staff to be vigilant about identifying further process-improvement opportunities.