As a process improvement expert, I am called into a business to help them in a variety of ways, usually all to help the company’s bottom line. Sometimes this looks like reducing inventory spending. Sometimes it is increasing productivity through more streamlined processes. And other times it is less quality defects. While there are a number of methods I use to help us determine how to improve, one of them is to look at value.
Who Determines Value?
Economists have a philosophy of supply versus demand, and anyone who has taken a college level economics course has heard of it. Basically, it says that when something is in high demand and low supply, the costs go up (example: diamonds). Conversely, if a product or service is in low demand and is in high supply, the costs go down (example: fill dirt).
This philosophy then tells us that the market, or customers, determine our product or service’s value, but when we think about process improvement, do we go back to the customer to determine what would add additional value to them? Shouldn’t we?
Value Versus Waste
In Lean philosophy, we look at things as a “value added vs. waste” model. We consider steps or tasks to be value added when it transforms the product or service, the customer is willing to pay for it, and it is done correctly, the first time. When all three conditions are met, the business makes money. Everything else is considered waste and cost the business money.
From here, we break this wastefulness into eight categories of waste, and then, as a process improvement expert, we tackle each to create a truly valuable end result product or service for clients and a healthier bottom line for the company.
The Eight Areas of Waste (Non-Value Added)
When I begin to look at processes through the eyes of value to the customer, here are some questions that I may ask to get to the root of the process wastefulness:
Defects: How much do defects and rework cost? Are there mistake proofing processes that can be implemented to reduce or eliminate defects?
Overproduction: Do processes meet demands? In which cases does it not match, resulting in piles of work waiting for the next process? Are there people or equipment that are overburdened?
Waiting: Who is waiting for work to be completed and why? What is causing the “idle”?
Non Value Added Processing: What is being done that isn’t adding value to the end user? Why is it important?
Transportation: Between the processes, are there unneeded steps? Is there a way to simplify movement or transportation through the facility?
Inventory: How is inventory being managed? Is there dead/cold inventory? How are raw materials cultivated?
Motion: What is being moved around and why? Is there a way to lessen any movements, including those done by equipment and people?
Employees: Is the business getting the most out of their employees? Are employees empowered and engaged? Are there skillsets or abilities that are not being used?
PBEX, LLC provides a complete review and analysis of the business processes that create efficiency and profitability, and the barriers to them. Contact us today to learn more about lean business management and to schedule your review with a process improvement expert.