1. Concepts Of Value And Waste

2. By the end of this module, the participant should be able to:
Module Objectives
By the end of this module, the participant should be able to:
Describe the five principles of Lean
Understand concept of Value-Added and Non Value-Added activities
Describe the eight types of waste
Explain why it is important to make waste visible

3. Lean Thinking Simple changes to processes make huge contributions
Lean improvements are made by the people that do the work
It is easy to understand and implement
Reduces workload
It makes your organization more competitive, and a better place to work

4. Examples of Lean Metrics
Measuring process performance is a key aspect of Lean thinking. Below are a few examples of the types of Metrics used to measure Lean Business Processes:
Scrap
# Units produced
Cycle Times
Profit
Productivity
ROIC
Capacity
Backorders

5. The Role Of Lean Thinking
The methods of Lean Thinking provide an efficient way to reduce operational waste, save time, save cost, and extend capacity of existing resources.
...and a lean value stream for the
same process:
Desired
Outcome
A typical waste-filled value stream...
Task Waits
in Queue
Deliverable
Created
Unnecessary
Task
Approval
Cycle
Error-Correction
Loop

6. Removing Obstacles To Improvement
Poorly defined organizational roles and responsibilities
Chaos resulting from firefighting and expediting
Habit of managing through a functional organization
Lack of well-defined and efficient processes
Poor utilization of valuable human and capital resources
Lack of metrics focused on customer Value-Added processes
Lack of productivity enhancing work methods
Lack of uniform prioritization of work

7. Categories Of Waste (Or MUDA)
Process Waste
Serial Actions
Correction Loops
Unnecessary Steps
Undefined Paths
Undefined Roles
Cycle Time Waste
Unnecessary Delays
Approval Cycles
Low Value Meetings
Lack of Information
Slow Transactions
Product Waste
Missed Target Costs
Design Errors
Missed Synergies
Poor Producibility
“Point Designs”
Resource Waste
Multitasking
Lack of Prioritization
Misaligned Incentives
Unnecessary Tasks
Firefighting/Expediting

8. How Lean Do You Think You Are?
The Opportunity?
20% – 60% Reduction in Process Lead Times
>50% Improvement in Resource Utilization
10% – 50% Increase in Gross Margins
>30% Gain in Process Capacity
Dramatic Improvement in Schedule Predictability

9. Lean Thinking
“Waste” describes the elements of “production” that add no value to the service or product required by the customer.
Historically, firms have been organized based on functional silos and poorly defined processes – They are loaded down with Non-Value-Added waste.
Lean Thinking demands an organizational culture that is intolerant of waste in all forms.

10. Value-Added (essential) tasks
Definition Of Value
“Any activity or task that transforms the “deliverables” of a process in such a way that the customer is both aware of it, and willing to pay for it, is Value-Added”
Based on this (strict) definition of value, we can divide the tasks and activities of any process into three categories
Value-Added (essential) tasks
Type 1 Waste – Non-Value-Added (NVA), but currently necessary
Type 2 Waste – Non-Value-Added (NVA), and not necessary
Our goal is to eliminate Type 2 activities wherever possible, and minimize the waste in Type 1’s through the use of Lean Methods.

11. Value-added Quiz
In which category should the following activities be placed?
Activity Value-Added Type 1 Type 2
Attending a weekly team coordination meeting
Filtering through your daily list
Reporting status to upper management
Gaining multiple approvals on documents
Gaining management approval for routine actions
Expediting a document through the approval list
Writing formal policies and procedures
Writing brief work-method instructions
Gaining regulatory or agency approvals
Creating ISO 9000 documentation
Hunting for needed information to do your job
Building a “best practices” database
Holding a lessons learned meeting
Spending time on process improvements

12. The Five Principles Of Lean Thinking
Lean Thinking can be summarized in five principles*:
Principle 1 – Specify the value of a process from the standpoint of the end customer
Principle 2 – Identify the value stream for each process
Principle 3 – Allow value to flow without interruptions
Principle 4 – Let the customer pull value from the process team
Principle 5 – Continuously pursue perfection

13. Principle #1 Specify And Focus On Value
Point of Optimized
Output Value
Value of Process Output
Too Much
Information,
Unnecessary
Features, Etc.
Missed Value
Opportunities
Cost of Process Output

14. Principle #2 Identify The “As Is” Value Stream
Customer Meetings
The Value Stream is the ideal sequence of value-creating steps that lead from a triggering event to a final deliverable without waste.
Example – Creation of a Request for Quotation (RFQ)
C/T = 14 days
W/T = 2 days
VA/T = 1 day
Assign Buyer
Gather Strawman
Requirements
Verify
Customer
Requirements
Consult With
Manufacturing
Engineer
Create Preliminary
RFQ
C/T = 3 days
W/T = 4 hours
VA/T = ~ 0
C/T = 14 days
W/T = 5 days
VA/T = 1 day
C/T = 5 days
W/T = 2 days
VA/T = 4 hours
C/T = 5 days
W/T = 3 days
VA/T = 1 day
C/T = 14 days
W/T = 5 days
VA/T = 3 days
Review and
Approval Cycle
C/T = 5 days
W/T = 1 day
VA/T = ~ 0
C/T = Calendar Time
W/T = Work Time
VA/T = Value-Added Time
Review and
Approval Cycle
Create Final
RFQ
Release RFQ
C/T = 2 days
W/T = 1 day
VA/T = 2 hours
C/T = 5 days
W/T = 1 day
VA/T = ~0
C/T = 5 days
W/T = 3 days
VA/T = 1 day

15. Work Time vs. Value-Added Time
“Calendar Time”
“Lead” Time
“Work” Time
“Value-Added” Time 1. 2. 3.
Calendar Time – The actual duration of a task from start to finish (the Lead time).
Work Time – The shortest time currently possible for a task.
Value-Added Time – The amount of the work time that is actually Value-Added…the rest is waste!

16. Principle #3 Eliminate Obstacles To The Flow Of Value
Functional Departments
Unnecessary Documents
Unnecessary Queues and
Wait Times
Multiple Approvals
Inadequate Resources
There can be many obstacles
to the flow of value!
Customer 6 5 5 5

17. Principle #4 Let The Customer Pull Value
Remember:
“Customers” can be both internal and external
If…
Every activity within a process has a “deliverable,” and...
Every “deliverable” must be received by some “customer”
Then…
The best way to ensure a satisfied “customer” is to have them DEFINE THETIMING, FORMAT AND CONTENT OF THEIR DELIVERABLES
Only “produce” what customer needs
“Customer” Defined Deliverables
Linked Tasks
Timely Information Flow

18. Principle #5 Continuously Pursue Perfection
It takes about a week for
THIS to look like THIS!
Waste constantly invades every work process.
Disorder tends to naturally increase.
Constant vigilance is essential to maintain lean
production and lean business processes!

19. Waste Eight types of waste: Overproduction Inventory Waiting
Transportation
Motion
Making defects
Over processing
Human Intellect
Three contributors to waste:
Unevenness
Overburden
Current methods and processes

20. Waste Of Overproduction (Type 1)
Producing more than needed (beyond customer demand)
Producing faster or sooner than needed
Visible as stored material
Result of producing to speculative demand (forecast)

21. Waste Of Inventory (Type 2)
Excessive in-process or finished goods inventory caused by large lot production or processes with long cycle times
Inventory should exist for two reasons:
Buffer required to maintain throughput in an environment where variation is present
Satisfy customer demand
Reducing variation enables inventory reduction

22. Inventory Hides Problems
Long setup times will be tolerable if high levels of inventory exist
Equipment does not have to be carefully maintained if lots of inventory is on hand
Quality does not need to be at Six Sigma if inventory is high
Inventory is like a river, when water level is lowered, boulders have to be dealt with
Scrap
Long set ups
Machine downtime
Lack of teamwork
Imbalanced lines
Quality problems
not capable
Processes
Maintenance issues
Productivity Problems
Suppliers’ issues
Inventory Level

23. Waste Of Waiting (Type 3)
Idle time that results when two dependent activities are not fully synchronized
Examples:
Waiting for a machine
Unutilized resources waiting for information
Slow or unavailable computer resources

24. Waste Of Transportation (Type 4)
Any movement or handling
Transportation does not add value and should be minimized or eliminated

25. Waste Of Motion (Type 5)
Any movement of people or machines which does not contribute added value to the product or service
Programming delay times
Excessive walking distance between operations
Ergonomic/safe motion

26. Waste Of Making Defects (Type 6)
Repair of a product or service to fulfill customer requirements
Scrap
Warranty
Customer returns

27. Waste Of Over-processing (Type 7)
Effort which adds no value to a product or service
Enhancements which are “invisible” to the customer
Work which could be combined with another process

28. Three Contributors To Waste
Unevenness
Overburden
Current methods

29. Unevenness can be observed in: The overall production quantity
Unevenness is unwanted fluctuations in production planning and production quantity.
Unevenness can be observed in:
The overall production quantity
The amount of work done by workers
The flow of parts
The use of machines and equipment

30. Overburden
Overburden occurs when a machine or person is pushed beyond safe and comfortable capacity limits.

31. Guiding principle: “Don’t be limited by the status quo”
Current Methods
Current Methods are the use of processes, methods or layout, without improvement, because they currently exist.
Inflexible processes
Same old problems
Guiding principle: “Don’t be limited by the status quo”

32. Why Make Waste Visible?
Identify bad strategies and practices lead to waste
Must understand process to improve
Define opportunities to improve
You can only fix or improve what you can see

33. What Tools Exist To Make Waste Visible?
Workplace organization 5S
Visual workplace
Spaghetti Chart
Process Flow Diagram
Pareto Chart
Cause and Effect Diagram
Five Whys
Process Reports and Assessments
We will discuss in detail with a module on this topic.

34. Techniques Used To Implement Lean
Workplace organization/5S
Visual management
Floor layouts
Small lot “production”
Quick setup
Total productive maintenance
Standardized work
Continuous improvement activities
Level scheduling
Machine and process capability
Variation reduction
Error proofing
Pull systems
Supplier rationalization
Supplier development
Transportation
We will learn some of these this week and in future training.

35. Appendix

36. Lean Concepts Key Concepts Value
The Five Principles of Lean
Precisely specify the value of a specific process
Identify the Value Stream for each process
Allow value to flow without interruptions; eliminate obstacles
Let the customer pull value from the process
Continuously pursue perfection
Value Stream Mapping
Mapping the process allows us to understand process to improve
Value Stream is all actions required to bring a specific product/service through three critical tasks:
Problem solving
Information management
Physical transformation
Identify value added activities
Define opportunities to remove Non-Value-Added steps
Value Stream Map of the ideal process (future state)
Key Concepts
Value
“An activity that transforms the “deliverables” of a process the first time in such a way that the customer is both aware of it, and willing to pay for it, is Value-Added.”
Value Stream Mapping Questions
Who was involved in the creation of the Value Stream Maps? Was it a cross-functional team?
What was your method for measuring process time observations (cycle time, lead time, work or touch time, calendar time, etc.)?
Did you walk the process to validate the Value Stream Map?
How did you create the future state Value Stream Map?
Can we remove those process steps that do not add value?
What are the baseline metrics (RTY, Takt Time, failure rates, defect types, etc)?

37. Concept Of Waste Tools to Make Waste Visible Workplace Organization 5S
The Eight Types of Waste
Overproduction
Inventory
Waiting
Transportation
Motion
Making Defects
Overprocessing
Human Intellect
Contributors to Waste
Unevenness
Overburden
Current Methods and Processes
Key Concepts
Waste
Identify types and contributors of waste in operations
Lean demands an organizational culture that is intolerant of waste in all forms
Tools to Make Waste Visible
Workplace Organization 5S
Visual Workplace
Spaghetti Chart
Process Flow Diagram
Pareto Chart
Cause and Effect Diagram
Five Whys
Process Reports and Assessments
Key Concepts
Takt Time
Demand Profile Establishment (“Takt" Time) a German term that refers to the tempo set by the conductor of an orchestra, it is a calculation that sets the rate of production equal to the average customer demand.