#16 공정내 Value Adding 과 Waste 식별하기 - Identifying Value-Adding Steps and Waste
In This Chapter
▶ Adding value to your organization
▶ Working waste out of your organization
▶ Taking a greener approach
'We need to add value.' How often do you hear someone in your organization say something similar to this? Unfortunately, many organizations don't have an agreed definition of 'value-added' or indeed 'non-value-added' and this leads to confusion and missed opportunities.
Interpreting Value-added
Lean Six Sigma focuses on providing value for the customer, so knowing what value actually means in your organization is crucial. In examining how your processes try to meet the CTQs, you need to assess whether all the steps involved are really necessary, and if they occur in the best sequence. For determining if each step adds value to your process, a standard definition that everyone in your organization can use and understand is a prerequisite.
Providing a common definition
For a step to be value-adding, it must meet the following three criteria:
1. The customer has to care about the step.
Put yourself in the shoe of your customer: If he knew you were doing this particular step, would he be prepared to pay for it? In providing value to your customer you need to give him the right thing, at the right time and at the right price.
You need to look at your process from your customer's perspective. You may be processing orders in batches, for example, and waiting until you've completed the entire batch before dispatching the products. The step putting an individual customer's order to one side while you finish processing others hardly adds value from his perspective.
Consider another example. You have to refer your customer's mortgage application to a senior underwriter to approve the loan. The customer won't be happy to approve this step, especially if it involves sending his paper to another location - he expects you to be able to approve the loan. If the process involved the customer's paperwork for the mortgage going back and forth between underwriters the situation would be even worse.
2. The step must either physically change the product or service in some way or be an essential prerequisite for another step.
The activities such as checking, revising, expediting and chasing are clearly non-value-adding. Challenging your process steps with this criterion seeks to prevent unnecessary checking and the movement of items back and forth between steps in the process.
In the previous chapter (#6 업무의 흐름 파악하기 Part 1 - Determining the Chain of Events), a process-stapling exercise highlighted non-value-adding steps. Some steps in your process might be completely unnecessary, so remove them. Ensure the removal won't cause an unexpected knock-on effect elsewhere in the process, though. If you carry out the process stapling thoroughly, you can see all the vital elements in your process and how to interrelate and can make a simple improvement with no unforeseen adverse effects.
3. The step must be actioned 'right first time'.
Making sure a step is done right first time is the third criterion in checking value-added. Rework costs time, effort and money, and is definitely a non-value-adding activity.
Carrying out a value-added analysis
After you establish s common definition for value-added, you can review your process and see if any non-value-added steps can be removed. Bear in mind, you're likely to keep some of non-value-added steps you discover. For example, some regulatory requirements may be in place that the customer may not be interested in, but which you must adhere to. There are usually described as 'Essential NVAs' or 'Business NVAs.'
Use the matrix in the below table to capture your data. Completing and analyzing the detail might creat some surprises; typically, very few steps add value.
As part of your analysis, assessing the unit or activity time for each of the process steps is essential. Unit time is the time it takes to complete a process step. The unit or process time is the sum of the value-add-time and non-value-added time.
If you know how long a step takes to complete and the salary cost associated with people working in the process, you can work out the cost of that non-value-adding activity, which may well encourage you to improve the step or eliminate it.
Understanding the unit time is relevant for all non-value-adding steps, but perhaps especially so in terms of rework activity. Very often process maps are produced assuming the work is carried out right first time. Unfortunately, this ideal situation is not always the case, as you can see in the below figure (the dotted line represents rework). In the real world, many organizations describe a flowchart without rework and repair steps, which might be able to make another missing in an FMEA or control plan.
Mapping, perhaps in a different color, the rework loops in your process and recording how often they're used can be very revealing. In possession of your cost information, you can then start to prioritize your efforts to prevent these expensive errors.
Once identified, many non-value-added tasks can probably be eliminated. However, some will remain regulatory, health and safety or environmental reasons. Termed 'essential non-value-adds', these activities need to be carried out as quickly and efficiently as possible. Ensure your process allows this to happen.
Looking at the seven waste
Muda is Japanese for waste. In any process, some steps add value and some don't. Some of these non-value-added steps have to stay, perhaps because of limitations in available technology or resources. Others can be eliminated immediately, perhaps through DMAIC (#2 린 식스시그마의 원리 이해 - Principles).
These broad type of wastes can be broken down into eight categories which can be introduced as 'DOWNTIME':
- Defect (Correction)
- Overproduction
- Waiting
- Non-utilized talent
- Transportation
- Inventory
- Motion
- Excessive processing (Over-processing)
Owning up to overproduction
Overproduction is producing too many items, or producing items earlier than the next process or customer needs. This type of waste contributes to the other seven wastes.
Working in a service organization, we discovered a classic example of process suboptimization: improvement or inappropriate targets in one part of the process cause problems elsewhere in the process. The manager of department A was determined to show how good both he and his team were compared with the other departments involved in the downstream process. He set a target that requires overtime on the part of his team, but which showed extremely high levels of productivity that earned praise from senior management. Unfortunately, this increase in output created problems in the immediate downstream process step, leading eventually to the work being stored as a two-week backlog. Even more, unfortunately, the manager of department B received blame and was pressured by senior management and those working on the process steps even further downstream. Overproduction had struck again.
A class example of overproduction involves printed material. When you see how much the unit price of leaflets or brochures reduces as the volume increases, over-ordering is really tempting. Ordering the higher volume and paying so much less makes sense. Or does it? Do you have a large amount of printed material that's unlikely to be used, taking up valuable storage space or out-of-date? How much is literally thrown away?
Playing the waiting game
Waiting essentially means that people are unable to get on and process their work. For example, this delay may be caused by equipment failure, or because people are waiting for the items they need in their part of the process.
Waiting can result from late delivery from external or internal suppliers, or perhaps incomplete delivery of an order. One of our favorite examples of unnecessary waiting involves photocopiers. Large organizations need top-of-the-range photocopiers but ofter senior management decides, on the basis of cost, that basic models will suffice. Unfortunately, the cheaper models aren't designed to deal with the volume demands of large organizations, and keep breaking down, leaving staff to either wait for them to be repaired, or wander around trying to find a photocopier that does work.
Troubling over transportation
Transportation waste involves moving materials and output unnecessarily. Sending partly completed batches of work through the internal mail system because processing teams are located inappropriately is an example. Movement of goods to and from the same place is another. Transportation processes involving non-value-added steps are even worse.
Transportation waste can also include moving surplus materials. The need to move things around in order to find space for other things, for example, is often the result of over-production.
Picking on processing
Over-processing waste covers performing unnecessary processing steps, involving, for example, irrelevant information or the completion of too many fields on a form. Processing unnecessary information is the real crux of processing waste. Consider a situation in which customers filling in the order forms, and people processing them, have to provide or input more information than is really needed. Eventually, the processing team identifies the 'key fields' and, provided they complete those, the application can be progressed. So what was the other information for? Sometimes it can be justified as potentially important marketing information, but so often it isn't needed or even used.
Another example of over-processing is in the manufacturing industry, we experience often the operator conducts more inspections or testing than required. Sometimes supplier tries to make a better quality of the product than customer demands which is written in specifications. Controlling the product in tighter tolerance, better surface condition than required on the engineering document such as drawings. For example, 3.2 Ra is written in the drawing and the actual value of the operation is Ra 0.8, which, of course, feels better by touching it with hands. This can be justified as the world's best quality. However, is this the case if the customer really would like to pay for this over-processing in the end?
Investigating inventory
Inventory waste links to overproduction resulting in too much work in progress. Watch out for the overproduction of items simply to meet productivity targets. A demand for a costly space to store them is likely to result.
In reality, poorly utilized space in their storage room had created an overspill of inventory onto the work area floor space. The overspill was preventing the acquisition and location of the additional and much-needed equipment. We used 5S - Sort, Set, Scrub(Shine), Systemize, Standardize(Sustain) - as a framework to help keep things tidy neat, and tidy, with a place for everything and everything in its place. We will talk about 5S more in detail later.
Moving on motion
Motion waste covers the range of movements, including that of people, perhaps because of inappropriate siting of process teams or equipment, the need to find the misplaced documents by a poorly designed workspace. This type of waste also includes the need to access too many screens, double handling or seeking unnecessary approvals. Motion waste is particularly focused in assembly plants, where saving even a few seconds in the various stages of assembling a high-volume product can be vital in enabling reduced costs and increased production.
The spaghetti diagram supports your understanding of moving on a motion at the workshop floor. By drawing the line according to the actual movement of a part or person, it will visually show how many unnecessary movements are made during a working day. Even if a few minutes are wasted by unnecessary movement daily, you can imagine how much time could be wasted in a month or a year.
Rework, coping with correction
Correction is the seventh waste and it deals with rework caused by not meeting customer CTQs, providing incomplete products or simply making errors and defects.
The above figure. 'Mapping the rework loops' is a process map showing the level of reworks. You can use unit time information to put a cost on rework. When you calculate the cost of rework, you can refer to PONC (the Price of Non-conformance). This simple measure puts a price on how much it costs to do things wrong, to not meet customer requirements. Errors and defects are a costly waste.
Looking Beyond the Seven Wastes
The Japanese believe seven to be a lucky number, which is why they identify 'seven waste', even though they know at least eight exists. This eighth category is failing to use of the potential of people.
Wasting people's potential
The 'waste' of human potential can be viewed from two perspectives, 'misused' or 'untapped'.
Misused potential can result from not properly structuring the way work is distributed and described. So, for example, how often do you see the misalignment of individual and department goals, causing people to work at cross purposes? And how often do you either hear or say the words, "that's not quite what I meant." Spending a little more time on properly describing and agreeing on the requirements of the task is time well spent - assuming the task is a value-adding one.
Untapped potential is often the result of managers assuming their staff leaves their brains behind in reception when they come into work. Think about all the things people doing in their spare time, running clubs or societies, acting as treasurer or being a school governor, organizing social events and being a member of teams or choirs, and so on. These activities require skills and talents. Skills and talents that aren't always recognized in the workplace - it's such a waste!
Another form of people waste stems from competition between teams in the same organization. Cooperation can cut off so much wasted effort. Time will be also well spent on agreeing on the 'one best way' of various process activities of the organization - We will talk about Standardization in the next chapter.
In looking for an opportunity to reduce or to eliminate waste, you can find a clue in words that begin with 're'. Although plenty of 're' words are fine - recycling is one of them. Look out for rework, reschedule, repair, redesign, re-check and "reject!"
Considering customer perspectives
The various wastes described in this chapter are all seen from an internal perspective. But given that one of the key principles of Lean thinking is providing customer value, what do customers see from a waste perspective? How does internal waste affect them?
Certainly, customers will experience delays in waiting; consider queues, late deliveries or slow responses. Waiting and delay can result when they order products that are currently out of stock or when the wrong product is delivered and a re-order is needed. Also think about the effect of poor communication or inadequate instructions, errors, and defective products. They all create waste.
Focusing on the Vital Few
Witnessing the scale of waste in your organization makes you appreciate the need to tackle things in bite-sized chunks. Quantifying the scale of the waste problem, and breaking things down into manageable pieces, involves measurement.
The various types of waste can be put into a Pareto chart, and though Pareto's 80:20 rule (that, generally, 80 percent of problems/errors are caused by 20 percent of the problem/error types) won't always be exact, it's likely to reveal that a vital few areas are causing most of the problems.
The Pareto chart example shown in the below figure explains that three major failure types caused 80 percent of the total number of failures, which is around 500 cases out of around 600 total cases. Therefore, this diagram indicates where we need to focus on conducting corrective actions to see effective improvement of the process.
You need to find your vital few and start to work on them. One way of doing so is to organize regulate waste walks. These are rather like process stapling exercises (#6 업무의 흐름 파악하기 Part 1 - Determining the Chain of Events), but instead, the focus is on spotting examples of waste. Consider arranging a rota for such walks so that everyone in the organization can get involved. This approach means you benefit from lots of fresh eyes and also secure people's sense of engagement and willingness to undertake subsequent improvement.
※ 참조: 본문은 책, "Dummy들을 위한 린 식스시그마(Lean Six Sigma)"와 The Toyota way를 정리한 내용을 기반으로 제 경험들을 조미한 글입니다. 현재는 원서 기반으로 내용을 정리하고 있는 중이며, 정리가 완료되면 한글로 번역을 추가할 예정입니다.