Value Analysis and Waste Identification Welcome to the session! Learn more about Value Analysis and Waste Identification at: www.freeleansite.com

Let’s band together for Safety, Quality, Speed of Execution Let’s take a minute for SAFETY: Who has a safety concern/ contact or tip? SAFETY FIRST

Objectives Review the concepts of value-added and non value-added work Learn to recognize non value-added work and complete a Time Value Analysis (TVA) Chart Understand the 8 common types of process waste Learn the steps of a waste walk using memory jogger ‘DOWNTIME’

What is Value? Definitions: “Relative worth, merit, or importance” “Estimated or assigned worth” “The worth of something in terms of the amount of other things for which it can be exchanged…” Definitions from Dictionary.reference.com

What is Value Add? Two types: Customer Value Add Physical transformation of product or service Customer is willing to pay for the transformation Done right the first time Business Value Add Anything that the business benefits from: Required by law, regulation, agency policy Reduces risk, etc

Basic Definition of Work Activities Value Added Physical transformation of product or service Adds a form or feature, moves it closer to final form Customer willing to pay Source/ enabler of “competitive advantage” (better, faster, cheaper) Done right first time

Basic Definition of Work Activities Business Value Added Required by Federal, State, or Local Law or Regulation Reduces risk (product, operational, financial, safety, etc) Critical to avoiding process breakdown Required by agency policy or specific contract requirement

Basic Definition of Work Activities Non-Value Added Everything else that is not customer value added or business value added Not done right first time Re-work, corrections, etc. Activity customer is not willing to pay for: Storage between operations, batching inventories Unnecessary process steps Movement of inventory, paperwork, etc. Wait times, delay times, idle times

Evaluating Work Content “VALUE”: Customer knows it when they see it Value Added or Non-Value Added? Greeting a customer Taking an order Doing a credit check Filing a customer order Filling a customer order Vacuuming a reception area Watering plants Adding a component to a product Testing a product Inspecting a part Pulling parts from a warehouse Sweeping a production area Welding

Necessary or Unnecessary? Value Added Continue Doing Challenge Assumptions Non-Value Added Work to Reduce Challenge Need Eliminate Immediately

Our Goal and Focus Customer Value Added Improve the efficiency and effectiveness of the task Improve the flow of value to the customer Monitor to assure we are meeting customers’ evolving requirements Business Value Added Verification that it is truly required Reduction/ elimination of requirements Redesign tasks to meet requirements more efficiently Non-value Added Total and complete elimination, forever

In the Eyes of the Customer Is the work to make this design Value Added?? If you are sitting down in a resort locale for a casual cup of coffee? If you are four deep in a line waiting for a “cup of Joe” on your way to work?

Are there NVA steps here? VA Work May Have NVA Brew coffee Are there NVA steps here? Waste likes to disguise itself as value-added work Add cream / sugar Pour in cup Provide Wi-Fi Take order Grind coffee Pre-heat vat (Set-Up equip) Write name on cup Sell CD’s Time Value Analysis Chart (TVA)

Customers Do Not Care About Your Process The Bad News: You don’t get credit for a good process A customer pays based on the finished product or service The Good News: If you can save it in the behind the scenes processes, you get to keep it!

Value Analysis Steps Using your process map, identify Lead times for process steps Work Time Wait Time Transportation Time Classify each step as Customer VA, Business VA (non value added, but necessary), or pure NVA Calculate the VA to NVA Ratio Total Customer and Business Value Added Steps Divide by Total Time and Get % Value Add Communicate using a Time Value Analysis (TVA) Chart

Priority After analyzing root causes, the next step is to consider improvement We will work to identify and remove waste and wasteful practices: Eliminate Non Value Add work content Reduce Business Value Add work content Improve Customer Value Add (“TCE” = Total Customer Experience)

Waste - Defined Waste Elements of an activity that do not add value from the customer perspective Waste only adds cost and time Things to remember about waste Waste is really a symptom rather than a root cause of the problem Waste points to problems within the system We need to find and address root causes of waste

Types of Waste in Many Processes Non-Value Added Work Content (most common) Use this Memory jogger: ‘DOWNTIME’ 7 common types (+ 1): Defects - incorrect data entry, inspection Over production - preparing extra reports, reports not acted upon, multiple copies in data storage Waiting - processing monthly not as the work comes in (i. e. closings, billings, collections) Non-utilized resources (untapped creativity) Transportation - extra steps, distance traveled Inventory - transactions not processed, M&R parts, UTR’s queued Motion - extra steps, travel from office to office / desk to desk, extra data entry... Excess processing - multiple Billing sign-offs, inspection Defects Transportation Over-production Inventory Waiting Motion Non-utilized resources Excess processing

Defects Information, products, parts, or services that require rework, correction or are scrapped Correcting an error or repairing a defect in materials or parts adds unnecessary costs because of additional equipment and labor expenses

Overproduction Make more earlier or faster than the next operation needs it Doing this requires more raw product inventory than necessary, over uses machines and people and requires more storage area

Waiting Waiting for machines, materials, information, or people, sign-off’s etc. Idle time between operations or events

Non-utilized Resources Not utilizing people’s experience, skills, knowledge, creativity, or ideas Excess equipment or technology Unused contribution Underutilized ambition and drive

Transportation Moving material, information, or equipment around Transportation is a required action that does not directly contribute value to the product It’s vital to avoid unless it is supplying items when and where they are needed (i.e. just-in-time delivery)

Inventory Any supply in excess of one-piece flow Excess inventory masks unacceptable change-over times, excessive downtime, operator inefficiency and a lack of organizational sense of urgency to produce

Motion Any movement of people that does not contribute added value to the product Excessive walking, twisting, bending, reaching, or motion to complete a task

Excess Processing Effort that adds no value to the product or service from the customer standpoint Processing work that has no connection to advancing the line or improving the quality of the product or service

Causes of Waste Types Motion Waiting time Overproduction Problems / Causes / Examples Incorrect layouts causing excessive walking Time chasing information and data Lacking ergonomic workspace design Lack of proximity of machines, off-line resources Equipment downtime Waiting workers, machines, materials, approvals Long set-ups and lead times Large batches, raw material stocks High WIP, finished goods stocks Making for the sake of it/ Ignoring customer Excessive paperwork trails, checklists Long cycle times- process, itself Unnecessary steps/ handoffs Re-entering data, making extra copies Missing or incomplete information Lost paperwork or documents Work not meeting standards Approvals of approvals High number of verification steps Reliance- Mass inspection techniques Unnecessary material movement Extra handling / Moving data between computer systems Types Motion Waiting time Overproduction Excess Processing Defects Inspection Transportation People Process Product (NOTE: Non-utilized resources can touch each of these)

Examples of Waste in Many Processes Layout (distance) Insufficient maintenance Poor work methods Ineffective scheduling Incorrect final point of rest Counting inventory Multiple Signoffs No back-up/cross-training Excessive Mobile Equipment Lack of workplace organization Too many outside trucks in the yard The longer waste occurs, the more accepting you become!

Waste in the Form of Rework Each defect must be detected, repaired, and placed back into the process (costs time and money) HIDDEN FACTORY = “SHADOW TERMINAL” Waste Causes A ‘Hidden Factory’ Increased Cost & Lost Capacity

Example of Transportation Waste Mobile Equipment makes a trip to the hook before receiving its first move instruction

The Challenge: Find and Eliminate Waste Objective Ask each team to take one of the typical wastes and find at least one example in their site and eliminate it Conduct Waste Walk A planned visit to where the work is being performed to observe what’s happening and to note the waste Include waste elimination execution in status reports Require waste elimination every month / every day Reinforce / reward for found and eliminated waste

Waste Walk Steps 1) Huddle with your team members Describe the purpose Describe the various forms of wastes and examples Pass out copies of the Waste I.D. and Recording Form current-state map and identified problems Assign areas to walk within your team Usually better to have a pair of people for each assignment 2) As a group, walk the whole flow (value stream) depicted on your map to confirm the areas of the individual/pair assignments

Steps (continued) 3) Explain to the people in the area of observation what you are doing 4) Share the map and waste examples and describe the objectives of the observation activity 5) Move to areas for individual assignments, and study the areas for 30 - 45 minutes 6) As you see work that appears to be waste, jot down the example you see on the form 7) Return to the team and discuss what you have seen

Steps (continued) 8) As a team, match the wastes you see to problems previously identified in the current-state map 9) Put the results of the waste walk next to the current-state map being shared in the area and use the examples to continue to socialize the current state and the system-level problems that frustrate the people and process NOTE: If other significant problems are identified during the walk, place them on the map also

Review Explore definition of value added and non-value added work and Time Value Analysis (TVA) chart Recall the 8 common wastes within processes Understand the concept, step(s), and form for a Waste Walk Utilize the memory jogger: ‘DOWNTIME’ Watch the DVD - “An Introduction to Continuous Improvement & Lean Principles” by GBMP

Value Analysis and Waste Identification Thank you for attending the session! Learn more about Value Analysis and Waste Identification at: www.freeleansite.com