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What is Value Value-Added ?

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Lean and Eliminating Waste

Value Added Non-Value Added

Typically 95% of all lead time is non value-added

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Lean focuses on the elimination of Waste

Typically, 90-95% of Total Lead Time is Non value Added activities and Waste
Value Added
Hand offs, Multiple reviews, waiting and more waiting,Rework, Checking Status, Multiple approvals, extra copies, searching for information, finding the right person with the right information, expediting, getting dumped..

Does this look familiar? Typically, we tend to focus on and improve the Value Added rather than attacking the Waste..the larger opportunity

Value vs. Waste

Three elements of Work: Value Added Activities: An activity that transforms or shapes material or information And the customer wants it And its done right the first time (Required) Non Value Added Activities: Activities that cause no value but which cannot be eliminated based on existing technology, equipment or thinking Regulatory, customer mandated, legal Necessary because of risk tolerance, buffer Waste.Non Value Added Activities: Activities that consume resources but create no value in the eyes of the customer If you cant get rid of it, it turns to Required, Non Value

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Lean Thinking

--- Defining Value

Waste adds cost and time

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Definition of Waste
Anything that does not add value to the product is waste and must be reduced or eliminated

Japanese Waste Definition: 3M

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What is MUDA?
Muda means any wasteful activity or any obstruction to smooth flow of an activity Activity = Work + Muda Expenditure = Cost + waste

That is, for each activity there is expenditure and every work there is a cost associated. Any expenditure on the Muda is a waste!

What is Mura?
Mura = Inconsistencies in the system Happens sometimes? Happens some places Happens to some people One side is ok; the other side is not ok

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What is Muri?
Muri = Physical Strain Bend to work? Push hard? Lift weight? Repeat tiring action? Wasteful walk? All this is Muri

Japanese Waste Definition: 3M

1 Ton X 12 = 12 Tons

Truck Capacity = 4 Tons

How should I transport these materials?

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Japanese Waste Definition: 3M

The operator loads 6 tons and makes 2 trips to The operator loads 2 tons and makes 6 trips The operator loads 6 tons and makes 1 trips then loads 4 tons and make a trip then loads the balance 2 tons

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Japanese Inventory

Japanese Inventory

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Excess Motion

The brick weighs about 2.3 kg. How much is the worker actually raising and lowering every time he bends over for another brick?

Bricklaying, after Frank Gilbreth

Lesson: waste can, by long habit ("living with it," "working around it") become built into a job.

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fabric folding operation

This shows the value of videotaping real operations (e.g. for kaizen blitz, SMED).

Henry Ford principle: "Pedestrianism is not a highly-paid line of work."

Office Waste
Examples?!
NVA Processing Overproduction Inventory Waiting Defects Excess Motion Transportation Underutilized People Too many approval levels Premature quotes Filled In-boxes System downtime Order Entry errors Poor office layout Movement of paperwork Limited functional responsibilities

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7 Wastes in the Office

Waste
Defects Inventory

Definition
ANY rework of product or information is waste. Excess stock of anythingextra copies, extra supplies, extra files etc. All motion should add value to the product or service for the customer. Ineffective layouts or processes create more walking, reaching then necessary. Waiting for people, paper, machines or information

To eliminate this waste

Motion

Waiting

Establish standard work procedures and forms Mistake proof Produce only enough to satisfy the work requirement of the customer. Standardize work locations & quantities. Eliminate queues. Standardize folders, drawers, cabinets, locations etc. Color code as much as possible. Arrange files and information for easy reference. Arrange work areas and equipment into central areas. Review and standardize signatures Cross train so that work can continue to flow even if someone is out or busy Balance the workload Make sure equipment & supplies are available.

7 Wastes in the Office

Waste Motion Definition
Unnecessary work movementssearching, walking, carrying, lifting, reaching, choosing, arranging

To eliminate this waste

Transportation

Overproducing

Standardize folders, drawers, cabinets Color code Arrange files for easy reach and use. Arrange work areas to support the flow of your process. Update forms and document layouts Eliminate the ings Moving materials and information Make the distance traveled as short as possible. from place to place. Using Eliminate temporary locations. temporary locations. Review the office layoutwhere are you wearing down the carpet. Duplicate equipment if an analysis of savings supports it. Producing a product, service, Establish a work flow sequence geared toward the downstream or information before the customer customer needs it. Create standards/ metrics. Create signal devices

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The Need: The 8 Wastes

Unused Employee Creativity Defects Over Production Material Movement Inventory Waiting Motion

Extra Processing

Lack of Training Current Roles & Responsibilities Office Layout

System Limitation No Standardized Work Performance Measures

Identifying Root Causes of Visible Waste

Operational Innovation
Anything that does not add value to the product is waste and must be eliminated Value Adding activities
Room readiness Food on time Registration open at customer specified times

Non-value adding activities

Booking an event in computer system Internal sharing of information Accounting procedures

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Get the Waste out

--- Understanding and Eliminating Waste

Evaluate the processes, where is the waste?

Elimination of Wastes and Continuous Improvement

The Secret: Be Systematic
Work with a versatile team Measure, evaluate Find the 5 Whys Follow up Standardize, make uniform Simplify Combine Prevent Make waste ugly

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Improving Performance Time People Rs Process

More

Faster

Results
Better Cheaper

Improving Performance

Time
People
Process

More

Faster

Results
Better Cheaper

Rs

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Improving Performance
The same...

Time People Rs
or less

IMPROVE

More

Faster

Process
IMPROVE

Results
Better Cheaper

When the delivery lead-time is bigger than the manufacturing lead time:
This is life! Delivery lead time Manufacturing lead time

If not, its torture Delivery lead time Manufacturing lead time

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What is the solution?

False appearance of a solution Delivery lead time Manufacturing lead time

Generate and support stocks

Solution Delivery lead time Manufacturing lead time

How to reduce the manufacturing lead time?

Delivery lead time Manufacturing lead time

Identify and eliminate all wastes in our operation processes Example: manufacture a

Total operations: Mfg. lead-time: 40 days = Difference:

6 hours 320 hours 314 hours

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What are processes made of ?

Delivery lead time Manufacturing lead time

Example: manufacture a Total operations: Mfg. lead-time: 40 days = Difference:

6 hours 320 hours 314 hours

Storage,

98%

Transport, Waiting time

Kaizen Example
Shrinking Lead Times
Order Lead Times Manufacturing Lead Times Delivery Lead Times

Order Lead Times Manufacturing Lead Times Delivery Lead Times

Reducing the overall time from receiving the order to delivering the product makes your company more responsive to the customer. This can become the deciding factor when the customer makes their selection. As can be seen, manufacturing is only one part of the entire process. Inputting, processing, and issuing orders is an area for improvement, as well as, assembly, loading and delivery to the customer`

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Kaizen Example
Wheres the Time in Lead Time
This timeline represents an overall lead-time, with very little time spent on adding value to the product.
Non-Value Added Time (NVA) 99% of Total Lead time Value Added Time (VA) 1%

Common Improvement Efforts

Concentrated on reducing VA time, with no attention given to NVA.

VA 1/2 %

Non-Value Added Time (NVA) 99% of Total Lead time

Results of Common Improvement efforts, did not improve response time. VA time is reduced, but, the costs for those improvements in lead time was substantial.

Kaizen Example
Wheres the Time in Lead Time
When we look at attacking the NVA Activities in the Timeline and compare that to the original timeline:
Greatest Opportunities are actually here!

Non-Value Added Time (NVA) 99% of Total Lead time NVA Time 95% of Total Lead time VA 5%

Value Added Time (VA) 1%

Great Job!!

This shows a 5X improvement in lead time

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Focus on Blockages to Flow & NVA

Value-Add activity

Non-Value-Add activity
Time

Eliminating Non Value Add has a major impact on

Quality, Cost and Service Delivery

Right First Time Every Time

Everything must be of acceptable quality
Sub-standard items or information will cause delays

Accept no defects Make no defects Pass no defects

Find the root cause of defects fast
Ask the 5 whys and 1 how

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Flexible Staff
Focus on giving the next in line what they want when they want it Be prepared to
do what needs to be done to keep the work flowing smoothly learn new skills and new ways of operating

Standardisation
Standardisation
Current best way to do the task
Least waste way

Everyone must adhere to the procedure

Until it is changed for all

Procedures must be continuously upgraded

Continuous search for improvement

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Why Standardise?

Performance

Business as usual

Kaizen or continuous improvement Standard Operating Procedures

Time

Pull Process
Typical Business: Push Process
WIP Bottlenecks

Push

Space Finished Goods Inventory

Waiting

Imagine each Paperclip represents an individual process within the Value Chain

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Pull Process

Customer Pull

Reduced bottlenecks Reduced work in progress Reduced operating space Improved quality

Do MORE with LESS

Staffing Waste

Productivity Productivity

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Typical Problems Observed in Organization

Value: From the perspective of the customer Understanding Customer Requirements Example: Not meeting timing needs

Flow: No Waiting No Rework Information Available Many handoffs, Interrupts, Waiting for decisions and approvals

Work: Standardized Built in Quality Significant Rework, Standards not being followed (workarounds) or no standard Manage, Improving and Learning: Milestones and Checkpoints, Learning Embedded Over processing, no management corrective action, limited feedback

Value-Stream Improvement vs. ValueProcess Improvement

VALUE STREAM
PROCESS
Distribution

PROCESS
Underwriting

PROCESS
Rating

PROCESS
Policy Writing

Initial Customer Contact

Insurance Policy Writing Process

Delivery to Agent

Value Stream = ALL steps, both value-added and NVA, required to complete a service from beginning to end.

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Making the Work Flow

Step 1 Value Stream Chunks or Loops Step 2 Apply basic Lean concepts
Reduce handoffs by combining steps Eliminate waiting for decisions with a proceed unless halted agreement Maximize flow by managing interrupts

Step 3 Apply Lean tools

Standard/balanced work reduce variation in work Visual workplace identify problems (defects, backlog) Built-in-quality eliminate rework Pull systems a method to control process flow by replacing only what is consumed Reduce handling, storage and paperwork Production based on consumption

A Shift in Mindset
Over Producing LEAN Transport

Waste

Inventory

Waste
Motion

Defects Over Processing

Waiting Waste is not defined or easily visible. Reacting to big issues. Reactive improvement.

Waste is visible. Identify small opportunities that together create large overall change. Continuous improvement.

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