Does the types of waste or muda identified in lean training such as inventory, over production, and over processing translate into government “speak”? Of course they do but some translation work must be done.
When James Womack and Daniel Jones published their landmark book, Lean Thinking, they introduced a Japanese word into the manufacturing lexicon. The word is muda or what we would call waste in modern English. There are seven types of muda enumerated by the authors and the founders of lean principles. Each type of muda makes perfectly good sense in a manufacturing environment but may require some translation for a government application.
What we observe in much of lean training in government is that the language is so different that government leaders just tune out. This is not a negative hit on government leaders and workers. It is just the reality that all organizations have a unique language. So let’s look at those types of muda and see if we can make the translation. The specific example we will use in a government environment is payment of invoices and the awarding of financial aid in a college or university. Government does a lot of this. Let’s also remember the definition of muda = any activity that consumes resources but creates no value.
Producing too many parts for an assembly line is clear waste. But it also applies in a payment to grantees. Think of regulations as parts of an assembly line. If a process is designed that goes beyond what is required by a regulatory body, it has the same effect as producing too many engines for the assembly line. A State transportation agency providing federal funding to local municipalities for public transit must meet certain regulatory requirements. If errors are made penalties are the usual result. But in one agency the tendency was to error on the side of over regulation. There were so good at it, that when the feds were not sure of their own regulations, they just asked the State transportation group.
A part sitting in inventory, waiting for installation creates no value for the customer. But does the same concept apply to paying invoices for grantees. Think of a single invoice, sitting on not one desk for a review but five desks. One school district found that it was taking up to 6 months to pay staff for the extra work they did like driving students to the debate tournament. Once they figured out all the points of waiting they figured out how to get it done in 10 days.
Transporting a single part to multiple warehouses clearly creates no value. But moving paper documents around an office has the same impact. In one of our lean engagements it was discovered that every invoice passed the desk of the same person 6-7 times. And this was just one person, this happened with multiple people. So do the math. Assume every invoice must pass 3 people 6 times. That is 18 touch points at a minimum! That is also 18 points where invoices get lost. Clearly, this is muda.
Manufacturing parts for an airplane that goes beyond the design specifications is clear waste. In the same way, many government processes are designed for the once in a million event. A workers compensation insurance trust sets up the same invoice payment review process for a $25 invoice as it does for a $2,500 invoice. The smallest invoices must go through three levels of review just like the largest invoices. While there is clear value in a comprehensive review of large invoices applying the same review requirements to very small invoices means the cost of paying the invoice is more than the invoice itself. One government workers compensation trust dramatically improved their speed of payment by setting up simple business rules. Smaller invoices went through one review process, larger ones went through a different one. The result was faster payment, stronger negotiating power with medical providers and better business intelligence to serve their ultimate customer.
A warehouse full of parts clearly creates no value for the customer. In the same way, money sitting in a bank can be inventory. If it is not put to immediate use building roads, paying medical claims, or getting a student off to university it is creating no value for the ultimate customer. When an Office of Financial Aid cuts in half the time it takes to process an application, money is going to work for the benefit of the intended student – faster.
The constant movement of parts is something that manufacturing organizations are just now understanding as muda. Parts get lost, parts don’t arrive on time, and parts get broken. In the same way, invoices and paper documentation that moves around has the same problems. They get lost, issues are not resolved on time, and there are multiple points in the process that will cause late payment. One office of financial aid stopped the movement merry go round but only giving 10 application packets for financial aid to each processor at a time. They could not get more until the 10 were completed. The results were fewer errors, no lost files, and staff were happier – they could see progress on a daily basis.
We understand that buying anything that has to be returned because some small part is defective is irritating and expensive. The same applies for an invoice payment operations. Errors in coding and data are just as expensive. A simple error in data entry is a small thing to fix early in the process. But towards the end it can be catastrophic. On Office of Financial Aid designed two simple check lists. Much like airline pilots go through a check list for every takeoff and landing, this Office designed two check lists to catch errors before they had catastrophic impact. Besides fewer errors, they also realized that the check lists resulted in more standardized work because every knew the process.