Lean is a way of thinking and being that applies to any organization interested in being efficient and effective in their operations. The lean tools and methods are designed to maximize customer value and eliminate waste—in any process. In the context of lean, processes are viewed as value streams and eliminating waste creates efficient and effective processes that flow with less human effort, less capital investment, fewer defects, and at a significantly reduced cost relative to traditional processing methods. What small business isn’t interested in those outcomes?
A key aspect of lean is identifying and maximizing the value added activities in your business processes. Something is considered to be “value added” if it has features that a customer is willing to pay more for, or, if you’re providing something that is usually free, a value added feature is one for which a customer will pay at all. For small businesses, the key is to identify the value added steps of your process from your customer’s point of view. What activities are they are willing to pay for in the production process of your product or service?
The real opportunity of lean doesn’t lie in optimizing your value added activities—it arises from identifying the non-value added activities in your processes and taking action to eliminate and reduce their impact on your overall process. Non-value added activities are quite simply anything in your process that is not considered value added. Most processes contain up to 90% non-value added activities, providing considerable opportunities for process improvement!
Identifying the non-value added activities in your business processes requires taking on a new lens for viewing your processes: waste. There are eight major wastes common to business processes. The identification, reduction, and elimination of the 8 Wastes will leave your processes operating more efficiently and effectively than ever before.
Human productivity waste is one of the most common and most damaging types of waste in business processes that arises when employees are not valued or trusted with the ability to improve the processes they work with. Examples are:
- Discouraging employee innovation
- Undervaluing employee potential
- Highly qualified employees performing clerical tasks
Defects are one of the easiest process wastes to identify. They include the production of scrap products, products requiring rework, and defective product inputs. Defects are considered to be one of the most significant process wastes because they negatively impact downstream operations, resulting in additional overproduction, transportation, and processing waste. Examples are:
- Manufactured products that don’t meet customer specifications
- Process errors causing rework
- Shipping errors and delays
Overproduction waste occurs when more products are produced than the customer is willing to pay for. This mismatch between production rates and customer demand for goods and services wastes processing time and resources and results in additional waiting, inventory, and motion wastes. Examples are:
- Ineffective production scheduling
- Unused client appointment slots
- Oversized batch production practices
Transportation waste includes any unnecessary movement of people, product, or parts that adds expense and risk to business processes without adding value. Examples are:
- Moving equipment from one location to another
- Shipping unsold product back to the warehouse
- Inefficient process layouts
Waiting is one of the most common process wastes. People (including customers and staff) and processes often waste time waiting when downstream processes are not ready for them and when the necessary inputs to act are not ready. Examples are:
- Customers waiting in line for service
- Waiting for materials to be delivered
- Waiting for process approvals
Inventory is any accumulation of products, materials, or works in progress waiting for the next production step or waiting to be sold to a customer. Excess inventory is costly and consumes storage space while insufficient inventory levels lead to long product lead times and excessive motion and transportation wastes. Examples are:
- Large inventories of perishable items
- Work-In-Progress inventory
- Excess materials in storage
Motion waste is similar to transportation waste but is specific to the unnecessary motion of people working in the process. Examples are:
- Staff looking for supplies and materials
- Inconveniently located equipment and resources
- Searching for customer records
Processing waste includes excess reviews and product inspections, rework and extra-processing due to product defects and mediocre processes, and the execution of redundant processes and activities. Examples are:
- Overly complex processes with multiple approval levels
- Excessive product inspections
- Redundant and repetitive activities
Once you’ve identified the non-value added waste in your business processes, you have access to creating new solutions, systems, and processes that work to eliminate and reduce the impact of that waste on your business operations. The result is more effective, efficient, and streamlined processes that align with the value you provide to your customers.
Interested in elevating your productivity, efficiency, and effectiveness? Need help identifying and eliminating the non-value added aspects of your business processes? Contact us today to see what’s possible for your small business!