LeanSigma ® Fundamentals Module 4 – Specify Value

Our first step to Lean is understanding what customers value. Specify Value – from customer perspective and express value in terms of a specific service Identify the Value Stream Establish Flow Pull from the Customer Continuously Improve the Process to Perfection © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 2

Customer needs aren’t always clear. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 3 Marketing Defined ItSales Ordered It Management Ordered It Engineering Designed It Manufacturing Produced ItCustomer Service Installed ItTechnical Support Repaired ItWhat the Customer Wanted

Kano models help us differentiate client wants. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 4 Want to understand which service elements drive customer satisfaction Service Element Customer SatisfactionHigh Low Absent Fully Implemented Excitement Threshold Performance Must Haves Satisfiers Delighters

Mapping helps us see value. 5 Value-added activities (VA): 1.The customer would pay for them 2.Transforms (output looks different than input) 3.Are done right the first time Non-value added activities (2 types): Non-value added activities (NVA): 1.Customer wouldn’t pay for them 2.Don’t transform Necessary non-value added activities (Necessary NVA): 1.Customer wouldn’t pay for them 2.Necessary to run the business (time tracking, financial reporting, regulatory requirements, etc.) Maximize Eliminate Minimize time required All 3 criteria must be met to be value-added

Value-added activities are often <10% of the entire process in most companies. IMS value-added examples: Deliver report Interpret data trends Gather order requirements Answer client questions 6 NVA VA Necessary NVA

Some activities that don’t meet core value criteria are still important to the business. Audits, time-tracking, status meetings, etc. are necessary to run the business, but customers don’t value them. Activities that aren’t important to customers or the business are waste. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 7 Minimize time spent Eliminate

Waste comes in many different forms. (Tim Wood) Identify and eliminate waste Excess Transportation Excess Inventory - materials and information Unnecessary Motion Waiting Over-producing Over-processing Defects and loop-backs © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 8

Moving materials (Transportation) © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 9 Characteristic: Poorly designed floor space Lack of communication Inconsistent schedules Large batch sizes Bottlenecks Example: ing files back and forth Use of large carts to move work Definition: The movement of material or information from one function to the next that does not directly add value to the service

Waste of Excess Material/Information © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 10 Definition: Any supply in excess of customer requirements necessary to produce services Characteristic: Too many forms or paper Too many copies Extra space for storage Example: Excess paper reports Needless cc: on Two forms used with the same information Duplicate copies of the same file

When you remove the excess work-in- process, other wastes become visible. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 11 “Now You See It!”

Waste of Excess Motion © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 12 Definition: Any movement of people or equipment that does not add value to the service Characteristic: Looking to find information, supplies, or equipment Multiple work stations to perform one task Too much search or walk time Example: Pulling information from various sources to add into one Walking back and forth to an inconveniently placed fax machine

Waste of Waiting © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 13 Definition: Idle time that is produced when two processes are not synchronized Characteristic: Unbalanced workloads – some steps take much longer than others Process flow stops due to unplanned interruptions Queues or idle time Capacity doesn’t match volume Example: Queues Idle Time

Waste of Overproducing © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 14 Definition: Producing more than needed or producing faster than needed Characteristic: Extra information, supplies, or equipment Unbalanced workflow Large batch sizes You produce “just in case” you need it. Example: Running analyses before they are needed Preparing mortgage docs before they are needed Preparing a special report just in case the client asks for it again.

Waste of Overprocessing © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 15 Definition: Ineffective use of resources to produce a result Characteristic: Bottlenecks Lack of understanding customer needs Endless refinement Redundant approvals or checks Example: Reports produced, but not used Recording the same information on four different forms in a chart/system Reworking a powerpoint deck over and over because the end-user’s needs are unclear Assigning work to an over-qualified resource

Waste of Errors and Rework © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 16 Definition: Rework or repair a service to meet customer’s requirements Characteristic: Extra manpower required to rework, revalidate, repair Missed deadlines Poor customer relations Reactive vs. proactive Unpredictable process outcomes Example: Encoding errors Late deliveries Rerunning jobs that fail

5S is a technique that can remove waste A process and method for creating and maintaining an organized, clean, high-performance workplace A conditioning discipline for improvement The 5 Steps –Step 1:Seiri - Segregate & Discard –Step 2:Seiton - Arrange & Identify –Step 3:Seiso - Clean & Inspect Daily –Step 4:Seiketsu - Revisit Frequently –Step 5:Shitsuke - Motivate To Sustain © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 17

Example © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 18 Before After

How Is 5S Done? 5S is accomplished by following all of the steps. Don’t skip a step! 5S is a team oriented process between the members of the work area. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 19