Value added vs. waste

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Insights

  • A key focus of the Lean approach is to eliminate / reduce waste from processes.
  • This starts with determining which steps in the process add value from the consumer’s perspective. The question to ask is whether the step transforms the product or service in a way that is valuable for the consumer (ie they would be prepared to pay for it). If the answer is no, then the step is waste.
  • Time spent actually adding value typically represents less than 20% of the total time a product or service spends going through the processes (lead time). Identifying the >80% of waste enables us to challenge our current process and find ways to improve.
  • 8 types of wastes to look for in a work environment are:

Overproduction

  • Producing more than is required or earlier than needed. This ties up precious resources working on the wrong priorities and results in many of the other wastes below.
  • The Lean systems to create a smooth work flow at the pull of the customer or downstream process are designed to reduce overproduction.

Waiting

  • Waiting for information, products, personnel, parts or equipment all result in wasted time. Idle time is time during which value is not added to the product.
  • Lean problem solving focuses on identifying the root cause of the problem and fixing them with sustainable solutions.

Unnecessary transportation

  • By streamlining transportation of materials or information, you can reduce multiple handling, delays and unnecessary handling.

Over processing

  • Processing that does not add value to the customer.
  • Lean analysis reveals unnecessary steps or elements that do not add value to the work or product.

Excess inventory

  • Inventory is used to buffer variation in demand and supply. As this variation is reduced by Lean improvements, the amount of work in progress is reduced. Excess inventory ties up cash and adds costs in management, handling and storage.
  • Lean inventory management methods will prevent the holding or purchasing of unnecessary raw materials, performance of unnecessary work-in-progress, or the production and storage of unnecessary product.

Unnecessary motion

  • Lean analysis reveals unproductive actions and motions performed by your personnel. For example, unnecessary trips to inventory to collect parts could be eliminated by storing the parts closer to where they are actually used.

Defects

  • Errors resulting in defective products or services. This includes customer problems, scrap, rework, obsolescence and inspection.
  • Lean processes have systems to not accept defective inputs, not produce defects and prevent them from being passed on.
  • Lean analysis helps to identify errors in the production process and helps eliminate the production of defective units that cannot be used or sold.

Human talent

  • This 8th waste was added after the previous 7 to recognise the waste of not engaging the workforce in solving problems and improving processes.
  • Lean creates a problem solving and improvement mindset in the workforce and provides people with the skills and confidence to take ownership of their work and responsibility for improving it.

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