1. LeanSigma ® Fundamentals Module 4 – Specify Value

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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: E-mailing 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

10. 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 e-mail Two forms used with the same information Duplicate copies of the same file

11. 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!”

12. 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

13. 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

14. 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.

15. 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

16. 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

17. 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

18. 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

19. 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