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Source: Business-improvement.eu
QRM: Cellular organization
Part of a publication board of a QROC at VirupaMultidisciplinary teams deal with office processes for specific customer groups
Virupa breaks the Response Time Spiral

By Dr Jaap van Ede, editor-in-chief, 02-09-2014

Virupa Visual Solutions, one of the major Dutch sign companies and experts in the field of in and outdoor advertising, experienced significant growth in the last twenty years. Keeping up the level of turnover, however, was taking up increasingly more energy. The root cause were the business processes, which had been compartmentalized into function-based departments. This resulted in increasingly more work in progress, backlogs and rush orders to 'fight fires'. That way other orders were slowed down, and new 'fires' developed!

In QRM jargon this is called the Response Time Spiral. To break this, Virupa disbanded the office departments and replaced them with four Quick Response Office Cells (QROCs). In each QROC a multidisciplinary team deals with all the processes and administration for a specific group of customers. In fact, this is how Virupa worked in their early days, because it looks as if the office is divided into mini offices. New is however the introduction of performance-based assessment and visual management. This is the basis of a large degree of self-management in the QROC's.

In addition, Virupa has come up with a QRM innovation: a QROC containing a flexible pool of workers. Production people in this pool temporarily help out when new orders in the office reach a peak. When this peak is under control, they move back to their normal work.

Virupa Visual Solutions offers sign solutions, i.e. all visual expressions in shops ranging from billboards to vehicle graphics and from price signs to digital displays. 'Fixed formula customers, such as do-it-yourself stores and retail chains, are supplied with a complete package of visual signs for their stores,' explains Jos Migo, project manager and QRM coach at Virupa in Aalten.

After a company visit to Bosch Scharnieren, the first Dutch company to start with Quick Response Manufacturing (QRM), Virupa felt good about this improvement method. The enthusiasm increased further after having participated in a master class at the Applied University Arnhem & Nijmegen (HAN), given by Rajan Suri, the inventor of QRM.

Response Time Spiral
'Suri's decription of the Response Time Spiral hit the nail on the head. It seemed as if we needed increasingly more energy to generate the same turnover. The amount of work in progress was too big, resulting in delays and rush orders that in turn slowed down the other activities. A vicious circle of increasingly more rush orders and more delays developed. Luckily, we have a "do culture", so the orders were still completed on time. However, the situation on the shop floor became extremely stressful and we had to fight increasingly more fires.'

Virupa has grown rapidly over the last twenty years. In the initial phase, there was a single small team that responded quickly to individual customer needs. However, when the staff expanded to about 100 persons, the company was divided into function-based departments, such as sales, administration, project management, calculation and production. 'A logical choice for a growing organisation it seemed, but in hindsight we had better refrained from it!'

Soon, coordination problems between the departments started to cause major delays. 'Information transfers were incomplete and knowledge became scattered over the company. Local optimization is another characteristic of having departments. An account manager visits, say, the production department to ask for an earlier delivery time. This may be nice for one particular customer, but other orders are inevitably delayed. As a result there is a higher probability of new "fires" breaking out. It is much better to have quick deliveries for each and every customer.'

Virupa returned to the time when there were no boundaries between departments. Mini offices were formed, so-called Quick Response Office CellsVirupa returned to the time when there were no boundaries between departments. To that end, mini offices were formed, so-called Quick Response Office Cells (QROC's).
New is the implementation of performance measurement and visual management. On this photo the publication board of a QROC.

Back to the basics

Virupa wanted to get back to the basics, without frontiers between the departments. QRM divides the company into cells that can be seen as mini companies, although these may supply each other too. Each cell consists of an independent and multidisciplinary team. This team deals with a specific series of tasks, be it production or office tasks. 'You could say that our company used to be structured as one single team. That is why we immediately recognised the benefit of QRM. It makes a big company just as agile as a small one, while keeping the economies of scale.'

The reason to start with QRM had initially been internal problems. 'Now, three years later, we notice that our customers also ask for shorter delivery times. And in case of tenders, it is also important to be able to act quickly and efficiently. Sometimes delivery times are part of the criteria to win a tender. Short lead times are even beneficial when there is no need to deliver fast, because it allowes customers to make last minute modifications.'

In 2011, a two-year QRM project was started. It was subsidized by RAAK (a program to stimulate innovation from the Dutch government) and aimed at exchanging knowledge between HAN and a dozen SMEs. 'HAN considered it as an opportunity to establish a QRM Centre, and Rajan Suri wanted to disseminate his ideas towards Europe. Because we wanted to start with QRM, it seemed a good idea for us to participate.'

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Grey and white time
To promote QRM among the staff of Virupa, Richard Westerman organised two workshops on behalf of HAN. 'Twenty people from different departments participated. The first workshop introduced the principles of QRM. In the second workshop, four work groups were formed, with five participants each. The groups all prepared a Manufacturing Critical Time map for one specific case. Each group identified the so-called grey and white time from order to delivery.'

At that moment, Virupa was not yet measuring lead times. However, all groups estimated that the touch time, i.e. the percentage of grey time, was only around 3%. All the rest was white time. In other words: waiting time. The most substantial delays occurred during administrative tasks.

'A student of HAN attached a form to some orders. Next, our staff noted when they started to work on these orders. The outcome of this experiment confirmed the findings of the workshop.  Later on, we introduced a - less complicated - system to registrate lead times. Our staff now places a time stamp at critical times, such as the first contact with the customer and when the order is released.'

Quick Response Office Cell
Because the office processes were the source of most delays, improving those processes got priority. Mini companies in the office, established with QRM, are called Quick Response Office Cells or QROCs.  A QROC consists of a small and dedicated team, which has competences to deal with all office processes for one specific market segment. QROCs have a large degree of self-management, be it within specific boundaries. Each team is jointly responsible. As a result, conflicting interests are history, and everything goes much faster. Supporting tasks which are generic in nature, such as invoicing, are often not included in the QROCs.

'In our case, in a QROC work five persons: an internal salesperson, an administrator, a calculator/work planner and an internal as well as an external project leader. Often, we built long-term relationships with customers. Sometimes those customers initiate a big project first - think of the redesign of their shops - and place an additional order later. Then it is crucial to have knowledge of that customer's history. Therefore we decided to establish QROCs for groups of about 15 customers. There are now three QROCs for retail chains and there is one QROC for smaller companies. As soon as a customer order comes in, the respective QROC performs all the activities until the order can be released. After this the order is delivered from stock, or a production order is started. Our QROCs all have their own colour.'

The transfer of orders between the accountmanager and the QROC-team takes place at this intake tableThe transfer of orders between the accountmanager and the QROC-team, which deals with all the administrative tasks until the order is released for production or delivery from stock, takes place at this intake table.

Intake Table
To gain new customers and to allot them to the respective QROCs, the position of account manager has been maintained. 'Each customer now has one account manager and one QROC. The account managers fully concentrate on customer relationships. So they no longer walk into production, to ask for shorter delivery times.'

The account managers used to fill in numerous documents. Later on, it invariably turned out that the information was incomplete. 'To prevent this, the transfer of orders from an account manager to a QROC now take place at an intake table, face to face. This ensures that everything is clear and complete. Direct contact often yields better results, than paperwork which is exchanged between departments. This is another reason why the QROCs work so well.'

Virupa made their own translation of the book Its about Time of Rajan SuriPilot Project
In June 2013, one QROC was formed as a pilot project. 'Working in a QROC means a huge change. You have to look over the boundaries of your own share of the work, and bear joint responsibility for the total result. Therefore, much attention must be given to managing change and developing the team. One of the options we had, was to appoint a QROC manager. However, that would have prevented the development of self-managing teams. Therefore each QROC now has a temporary coach.'

The coaching group also acts as steering group for the total QROC implementation. A self-developed change management tool is the process board. This can be found in every QROC. 'This board visualises the processes for which a specific customer team is responsible, and how these processes relate to the activities in the rest of the company. The steering group also uses the process board to indicate which improvement initiatives are underway within the company.'

In addition to coaching, QRM manuals contribute to generate enthusiasm. 'We have made our own version of Rajan Suri's book It's about Time. That took us half a year, but it was worthwhile.'

The pilot project started enthousiasticly, but later the good feeling disappeared. 'The development came to a standstill, and we were unable to find out why. Therefore we contacted leadership coach Paul Zonneveld. He organised a so-called organisation representation meeting, to help us to visualise the group dynamics.'

An organisation representation meeting is a kind of role play in which staff and/or departments are represented by (hired) outsiders. These persons can express their feelings freely. The question arises however, how important their meaning is, because these people don't know anything about the company. The clue is, that the customer (here Virupa) positions the representatives in the room. The hypothesis is that the results you get with these positions are universal.

'It may seem astonishing, but it really worked! One of the people played the role of Jan Nales, our new Commercial Director. He entered our company with a lot of knowledge on process improvement from Unilever and Grolsch. However, this raised doubts in the QROC. These doubts increased when Elwin Bullée, our Operational Director who had introduced QRM, litterally distanced himself from the QROC. At some point he literally stood on the threshold of the room. That made it logical that the people in the QROC started to make remarks like "after this, I'll simply go back to my own department".

'This gave us the insight that Virupa needed an unambiguous QRM focus. A lack of clarity and certainty had a paralyzing effect on the pilot project. Now, the question was: how to join the forces again! Our solution was to stop the pilot project. Instead, we introduced all the QROCs at once. That way it became obvious that this would become our new way of working. In addition, Elwin Bullée and Jan Nales were given the role of team coaches.'

The four QROC's with the customer teams and the QROC with the standard tasks team
The four QROC's with the customer teams and the QROC with the standard tasks team (in green). The account managers of the sales team (in Dutch 'verkoopteam') deal with customer relations.

Standard Tasks Team
The above diagram shows Virupa's way of working since March 2014. All office departments disappeared, and were replaced by four QROCs.

The working processes in the warehouse and on the production floor have remained the same. One special QROC has been established however, the Standard Tasks Team. This team can provide assistance in carrying out simple office tasks, for which no specific customer knowledge is required. 

'The number of orders regularly peaks. This first creates a heavy workload in the office and later on in production. In order to absorb these peaks, we have established this Standard Tasks Team. Unlike the other QROCs, it consists of parttime workes. Normaly these people work in the warehouse or in production, but they have been trained to deal with simple office tasks. As soon as orders peak in the office, they step in. Later, when the peak shifts towards production, they resume their normal tasks.'

The Standard Tasks Team for example handles orders that come in as an EDI message. 'Previously, those EDI orders sometimes remained unaddressed because fire fighting absorbed all our resources. Customers did not understand that, because they don't expect a strong variation in lead times. Since the Standard Tasks Team took up its activities, all EDI orders are processed within 4 hours'.

In other fields too, the QROC's are starting to pay off. 'We don't have exact figures because we were not used to measure lead times. However, there is much more calmness in our company now. The managers spend much less time solving everyday problems, so they have time to develop a long-term strategy.'

Visual Management is very important in a QROC
Visual Management is very important in a QROC. In a single glance it is clear what the status of specific orders is. Orders in red maps require a lot of work.

Visual management
When asked for tips for other companies that want to introduce QROCs, Migo emphasizes the importance of visual management. 'As soon as you visit a QROC, it should be clear in a single glance if there are problems or not. For instance, we put orders in a red map if these require a lot of work, otherwise they are put in a green one. During processing, the maps move from the left to the right. Additionally, each QROC has a publication board with the actual lead times and other performance indicators. Because sign products are our specialty, we could shape our QROCs attractively. For instance, there is a sign with all customer names on the door.    

Finally, Migo comes up with another important hint. "Keep things simple, avoid complexity. We all have a tendency to make solutions too complex. Keep it simple and you will get results quicker.'

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