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The $10,000 Paper Clip

Author: Kurt Middelkoop

Posted: September 2019

Recently I was facilitating an E3 (Economy, Energy, Environmental) workshop with a local company. We spent time learning about lean and how to identify value and non-value add activities. After covering these basics I led the group out of the classroom to conduct a Gemba walk so they could put the lessons learned to practice.  As all LSS practitioners know, direct observation of work activities is fundamental to lean.  

On the way to the production area I reminded the group that lean wastes were found everywhere, not just on the shop floor.  The group passed by the accounting department and one of the class participants offered to show us her process of entering invoices into their system.  The group stood around her workstation as she described her process to the team.  Step one was to remove the paper clip and…..

We stopped her there and asked a basic question: Why was the paper clip on the invoice?  After observing the entire process, the team agreed that placing and removing the paper clip was considered a non-value added (NVA) activity and could be eliminated.  Her supervisor in the area came over and asked us what we were doing.  We explained to her that we were looking for opportunities to improve the organization and were questioning why there was a paper clip on the invoice. 

The supervisor immediately became defensive and asked us why we were wasting our time concerned about a paperclip as there were other issues that were more important.  She told us we were wasting time standing around watching her staff process invoices.  The team stood there silent. 

After the supervisor left the team decided they wanted to dig a little deeper. We learned there were four employees each entering over 160 invoices a day.  The time measured to place and then later remove a single paper clip was 15 seconds. That translates to about 40,000 paper clips being removed per year. From a time standpoint – always important in lean – it is equivalent to roughly 2.7 hours per day and 670 hours per year. This is akin to one person spending over 16 weeks every year doing this one NVA activity.

After some discussion the team also determined that the invoice could be processed successfully without the use of a paper clip.  Annual labor cost to place and remove paper clips was $10,000.  The team stood there silent.

What are the lessons from this story?

  1. Always start by spending time in the Gemba. Observe all activities very carefully, no matter how small. Try to see the process with a fresh set of eyes. This is where having some team members with little or no process knowledge can be an asset.
  2. Ask Why. There are multiple facets to this question. It starts with ‘Why must the activity be performed?’.  Use the 5 Whys approach if a deeper dive is needed.
  3. Seconds count for activities which occur many times per day. These type of NVA wastes are frequently overlooked. It is important to determine not only the length of time for each NVA activity but also the number of occurrences per shift or day. In addition to asking Why during a Gemba walk additional questions to ask include How long does an activity take and How often does it occur.
  4. Communicate and set expectations. When doing a Gemba walk be sure to let the supervisor know in advance of your plan. Better yet, educate supervisors and managers about lean concepts. That way they will understand waste identification is part of a lean culture.

More about Kurt Middelkoop:

Kurt Middelkoop has spent the past 34 years working with organizations to help them become better at what they do. His focus is to teach others how to see things that they often overlook to help increase both profitability and competitiveness. He has a passion for helping organizations succeed and understands the difficulty of making behavioral changes necessary for growth. His background as a small business owner and manufacturing engineer in the defense industry bring him a good understanding of the daily issues and pressures organizations face to remain competitive. Kurt presents a holistic, integrated approach advocating Sustainable Manufacturing practices (economic, environmental, and social). His career efforts have helped organizations save over 28.6 million in savings.

Comment (1)

  • Tom Pryor

    Kurt, you bring back great memories of my days implementing Activity Based Costing in companies during 1990-2010. Just as you recommend, we labeled activities a value or non-value added. While I agree that the paper clip task is waste, so is entering the invoice. Even the pest control man who sprays our property enters is completed work on his iPad and emails me the invoice. No activity is needed at his home office.

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