Three Tips to Help Your Firm Get Lean

Reprinted with permission from The Networker, a Moore Stephens North America publication, Summer 2008

By using Lean concepts - reducing inventory, streamlining work flows and analyzing every process - America's top manufacturers have improved their ability to efficiently and cost-effectively meet their customers' needs.

But can the principles that help a manufacturer produce a widget really help those of us in the service industry? You bet.

Just as a factory produces a widget, your firm also creates products. If you produce a tax return, for example, you start with the client's information as the raw materials and use your staff and equipment to process it. The filed tax return is your product. And since you have a product, a work flow and a process, you, too, can apply Lean principles.

By implementing Lean in your firm, you can speed up processes and decrease waste. (Waste is any non-value added activities from the eyes of your clients.) When you think about waste, think about what your clients would or would not be willing to pay for. Realize that, on average, 90 to 95 percent of process time in service processes is waste. So take a good, hard look at your processes and ask yourself: "Does everything - everything - we do add value to our clients?"

Use a team-based problem-solving method to most effectively reduce cycle time and increase capacity. By matching a team of people who actually do the work with a trained Lean facilitator (Black Belt or Master Black Belt), any process can be attacked to eliminate waste and improve efficiency. The people doing the work, from bookkeepers to preparers to partners, are engaged and empowered to develop world-class processes.

Rea & Associates has applied Lean principles to a number of areas, including tax return preparation, bookkeeping, payroll services, pension services and GAAP conversions. Along the journey, we recognized the common problem areas that service firms share, and identified the best practices to resolve these service inefficiencies.

Manage the Front Door

Manage the front door by avoiding the inefficient collection of information coming into the office. If you start with insufficient or incorrect information, wasted time and effort is sure to follow.

A manufacturer would never produce an order that only includes half the specifications and raw materials. Your firm should operate the same way. How can you start managing your front door?

  • Develop client-specific checklists to request information (avoid one-size fits all) - in other words, you will invest time to ultimately save time.
  • Use terminology familiar to the client or their industry when making requests.
  • Empower staff to screen information received before pushing the project through to production.
  • Notify the client as soon as you realize you received missing or incorrect information.
Specialize, Then Generalize

Some say becoming a specialist is great, while others argue that generalists are better for business. Why not specialize in a specific area, but be able to perform all of the tasks within that specialty?

If a staff member's time is divided between multiple disciplines, he or she will automatically become inefficient. This person cannot put time into professional development of a specialty and a work process that flows, because they are constantly "switching gears." Let's say a staff member concentrates only in the cash accounts area of a financial statement conversion and must have someone else prepare other sections and the statements. This work arrangement quickly becomes inefficient as the firm receives additional work. If this staff member specializes in all areas of compilation, he or she provides more efficient service to the firm and the client. There is less waiting time and fewer bottlenecks.

Bust the Bottlenecks

Just as a bottleneck of traffic blocks the onramp to a freeway, the flow of your product - whether widgets or tax returns - can slow to a crawl due to inefficient work processes.

Chances are, you'll identify bottlenecks in the review and processing/assembly areas of completing tax returns. We sure did.

So instead of sending all tax returns to one staff person to complete a specific task and then proceed to two others performing similar sequential steps, the process now places the returns into a work pool where the three staff members share the entire task and complete this step without a wait time.

Our firm has also established work level categories (A, B and C) in order to divide and assign work assignments and reviews to staff members according to their experience level. The use of a triage concept for the work flow and utilization of visual management (labeling and channeling work flow) has led to greater throughput and capacity.

When you gain efficiency, you gain capacity. Who doesn't want to do more with less? As you can see, you don't have to make widgets to use Lean principles. Efficiency is a goal everyone shares!

Lean CPA
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