Defining Value Added

In the lean lexicon there is a lot of talk of removing waste from processes.  Waste is anything that is not value added.  There is the problem.  What is value added?

In my work, I ask people to define value added for me.  It seems like a simple question, but I get numerous blank stares and answers rarely match across the team or organization.

So if can’t give a standard definition of value added, then what is waste?  How do you look for it?  How do you know what to keep and what to eliminate?

Here is the definition I learned long ago and it never fails me:

1. The customer must be willing to pay for it
2. It changes the form, fit, or function of the product or service
3. It must be done right the first time

ALL THREE MUST BE MET TO BE VALUE ADDED!!!

A customer may find something interesting but isn’t willing to pay the extra price for it.  An example may be an optional built-in DVD player in the mini-van.  Some may find it of value and pay extra for it, while others may not.

A change must be made to the product or service.  Inspection stations on an assembly line are a good example of something that violates the definition.  It may be needed because that is better than a bad product getting out.

Which leads to the last point.  If it isn’t right the first time then it is a defect which is one of the seven types of waste.

Next time you are looking for waste, bounce it against this definition of value added.  You may be surprised to find waste that you haven’t considered before.

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It’s Not Always About the Big Improvement

With any improvement philosophy, people always want the BIG improvement.  When there are none to be had a re-organization or a shift in direction is implemented.  This may work for a short period of time, but eventually the results normalize back to their old levels.

A uniqueness with lean is creating a focus on getting better each day.  Even it if is just a second or two better.  Saving 1 second each day while maintaining the savings from the previous day will yield 8.7 hrs of savings after a work year.  What would you do with a full extra day of capacity?

Paul Akers has called this 2 second lean.  It is extremely powerful.

Focusing on small improvements means focusing on what bothers you and your customer and fixing it.  It could be as simple as always having to search for a stapler when doing paperwork.  Or moving the placement location of a label.  This saved a group I worked with 1 second per label…we timed it.  Over the course of the year, that was a savings of over 30 hours for the team!

People don’t like to focus on small changes because it isn’t “sexy”.  Guess what?  Sexy falls apart quickly and usually has no substance.

Build lasting change a little at a time.  It takes patience and understanding but two years from now you will have better actual results than people chasing only the “big” improvements that never get completed.

Customer Focus Eliminates Waste

Recently, my wife had an experience with supplier that wasn’t focused on us as a customer and it created great waste for the supplier.

The shop was low on a particular candle that we buy from a local handmade supplier.  The product is great and it sells really well.  My wife emailed the owner to order more candles.  In the email, she asked if the owner could send a list of spring related scents as we phase out the holiday related scents, so we could pick out what we think our customers would like.

We didn’t hear from the owner for about a week or more.  Then the owner shows up with the candles we ordered plus three new spring scents.  We didn’t like one of the scents.  We said we wouldn’t take that one and discussed other possibilities to choose from.  A different scent was picked and a few days later the owner returned with the new scent.

When the issue of not responding was brought up to the owner, the reply was they were so concerned that we needed the candles right away that they just made them as quick as possible and brought them over.  My wife explained that we don’t need things immediately, especially after the holidays and if there is ever any question to just ask.

The owner wanted to please us, but didn’t focus on what was truly important to us which is the scent selection.  The owner ended up causing waste of defects/rework (making new candles she hadn’t made), waiting (us waiting longer to get the order filled) and transportation (driving to our store twice).

Have you or your company ever rushed a product or service to market because YOU thought that was what the customer needed and then if failed?  What were you focused on?

If you aren’t sure what your customer needs are…ask.  Be clear and focus on what they need, not what you think they need.

Get Rid of the Email Distractions

Note: I want to give a big shout out to Dan Markovitz, author of A Factory of One.  It is an excellent book on how to gain efficiency in your personal work.  Dan outlines things you can do in regards to email that will help with efficiency.  While I have been doing almost all of the suggestions for a few years now, Dan did have one suggestion that was new to me and helped me with a problem I was having.  I have implemented the suggestion and it works very well.  I will point it out below.

On with the blog post.

We all want to improve our efficiency and free up time.  In my personal work and in observation, one of the biggest culprits of causing inefficiencies is email.  Here are three things I have done to help eliminate some of the distractions and inefficiencies email causes me.

1. Turn off Email Notifications: In Outlook, I have turned off all notifications of incoming email.  Nothing popping up in the bottom corner showing a new email has arrived.

Result: When I am working on something I don’t catch the notification out the corner of my eye distracting me causing the back of my mind to have to know what the email was about.  I stay focused on my work and can finish what I was doing.

On my phone, I have turned off the lights, sound and vibration of new email notification.  There are two reasons: 1) if I am in a meeting and it is making noise or vibrating it is distracting me and others from the meeting and 2) if I am working at my desk is acts the same as the Outlook notification as it beeps or vibrates or flashes on my desk next to me.

Results: I am not distracted by incoming emails at all during meetings or while working at my desk.

2. Open Mail Software to Calendar: This was the new suggestion I found in Dan’s book.  Thanks, Dan!  When I open Outlook, it opens to my calendar.  Not my Inbox!  Most mornings, I have a quick email I thought of on the way into work that I have to send when I get in, but I was getting distracted by waiting email in my inbox.  I might even forget to send the original email I went to write.

Results: I am able to send an email from the calendar view by selecting New Items –> Email Message from the menu at top.  I always finish the email I intended to send out and I am not distracted by the other messages in my inbox.  I don’t check email first thing in the morning and get off on the email tangent.  I am able to complete something off my personal kanban board before checking email.  I feel more productive and less distracted.

3. Use the 4D’s: I have been doing this for a few years, but never had a name for it until I read Dan’s book.  When I decide I have time to process my emails I do one of four things: 1) Do it: reply back if it is a short reply or completed the action if it is less than 5 minutes, 2) Delegate it: delegate the work to someone that can help, 3) Designate it: for me this means if it is a larger task I add it to my personal kanban board or 4) Delete it: I have read it and don’t need it.

Results: My inbox is not cluttered with messages that I lose.  I know what I have to process when I go into my inbox.  I don’t loose track of requests made of me via email.

One last thing.  Just because someone emails you doesn’t mean you have to read and respond immediately so don’t feel like you have to be hovering over your email waiting for it.  If the person needs an immediate response, they can call.  That is what a phone is for.  We all have one in our pockets nowadays.  Note: I do know some jobs require constant monitoring of email, like an order processor. 

How have your improved your efficiency with your email practices?

Visual Board for Production Standards

I have been working with one group on how to make there work more visual.  Show production goals versus actual production.  Make safety standards clear.  Highlight any problems to help them improve.

The supervisor of the area was on person leave when I was helping the area.  Upon her return, she liked what we had done.  In fact, she liked the idea so much that she made a visual board for another area where she is the supervisor.

Click on image to enlarge

What was the problem she was trying to solve?  Employees were always asking what their goal for the day was.  Employees would leave their work station and abandon their work to find the supervisor just to ask what the goal was.  The supervisor posted this board in the work area.

This reminds of Gwendolyn Galsworth’s book Visual Workplace Visual Thinking.  One of the questions of the visual workplace is “What do I need to share?”.  Goals and standards were something this supervisor needed to share with her team.

The board is simple and effective.

What have you made visual? What do you need to share?

Lean at Home…by My Nine-Year-Old Son

The other day my son came up with a great improvement at home.  It saves only a few seconds but it is in the true spirit of continuous improvement and kaizen.

A few weeks ago, I bought a DVD player with WiFi and the internet apps to watch through Amazon, Netflix, MLB.TV, etc…  I set it up so it is plugged into Input 2.  Our cable is plugged into Input 1.

Over the first few weeks of using the new DVD player we have found that if when you turn on the DVD player it automatically switches the TV to Input 2 without hitting any other buttons.

My TV has a total of 8 inputs.

That led my son to ask if we could switch the cable and the DVD inputs.  When I asked why?  This was the response he gave me, “Because it makes the easier.  When I turn on the DVD player it switches to Input 2 automatically but when I turn it off I have to hit the input button seven times to get the TV back to Input 1.  If we switch them then I only have to hit the button once to get to the TV when I am done with the DVD player.”

HOLY SMOKES!  That is simple and easy to change.  It is the true spirit of kaizen.  Keep make small improvements and they will add up.  Yes.  This was for watching TV, but it is such a great example.

How are you making small changes to improve?

Seconds Matter…So Save Them

Paul Akers at FastCap talks about the 2 second lean.  Everyday we should be working to save two seconds.  Just two seconds.

All too often, this aspect of lean is missed.  Most people are looking for the BIG savings.  They don’t deem 2 seconds worth the savings.  People miss the value of a bunch of 2 second savings adding up quickly and creating a lot of capacity and savings.

Recently, I was working with a group that found several 2 second savings in their area and it added up to over 200 hrs of gained productivity over the year.

The picture below is an example of a 2 second savings they found.

The box on the right shows where the label was outlined to be placed.  The label is low and is blocked by the lip of the shelf.  Every time a person has to put something in the box they have go scan the label, so they have to push it back to scan the label and then pull it forward to put the item in the box.  Several people doing this over 300 boxes with upwards to 20 items per box.

The box on the left shows where they moved the label.  Now a person does not have to push the box back and pull it forward saving about 2 seconds per box per item.  This alone saved over 28 hours of time during a year.  That is over a full day’s worth of worked that can gained from this simple change.

All savings are important.  Seconds matter.  Save them every chance you get.

Lean for Small Businesses

If you have followed my blog for awhile you know that my wife started a hand-poured soap and bath and body business a few years ago.  One of her suppliers sends out a monthly newsletter with different kinds of articles: how to make new products, different recipes and in the most recent newsletter an article on lean for the small business.

Though turning to “lean” operation processes may sound like a complicated undertaking best left to large corporations, small businesses are actually ideally equipped to leverage the advantages of a lean business model.

The author is correct.  Being a small business makes it easier to create change more quickly as long as you are dedicated to it.

There are some good points in the article and some that are not even close.  I know lean is a the en vogue thing to discuss but that doesn’t mean everything is always a good point of view.  Better to have it mentioned and start a discussion though.

Some of the good.

You probably spend a lot of time in a day communicating with your clients, vendors, and staff. But have you ever taken a close look at why you have so many of those conversations? If the topics of your business conversations tend to involve a lot of the same questions, standardizing your operations could present a huge opportunity to save time, and eliminate such redundancies. Take detailed notes of the email and phone conversations

…get creative about how you might develop a standardized system for addressing such recurring issues. If customers tend to email or instant chat with similar questions, develop various email templates that you can send to them in a matter of seconds could prove a real time saver. Better yet, incorporate clear language onto your website that answers the questions so they donʼt even have to contact you.

I am more of the thought about trying to get to the root cause and better incorporate the clear language onto your website.  This is a clear way to help eliminate waste and create more time to serving your customers specific needs.

Dave Kerpin suggests that you can improve the efficiency of every [meeting] (and save 900 hours a year) with a simple shift: Donʼt end the discussion until everyone clearly understands their next steps, and you actually begin your own. Kerpin insists this eliminates the odds that miscommunication and confusion linger (which will only lead to further conversation), and reduces the amount of time youʼll spend trying to fi gure out how you need to move forward.

Dave is talking about getting high agreement on what will be done and how it will be done.  This is one of the core lean principles.  He is right.  It helps reduce confusion and communication that comes later from it so the work can be done more quickly.

Some of the not so good.

To adopt the common principles of lean management known as the 5 sʼs (Sort, Straighten, Sweep, Standardize, and Sustain), start by taking a look at your business routine…

This is a smaller issue in that 5S isn’t really a principle but more of a concept or tool to help highlight quickly when something is abnormal.  The author never mentions this.  Just that it can help “clean up” and organize your routine.

This is the one comment that truly gives me heartburn.  It shows the engrained misunderstanding of economies of scale.

If you find yourself ordering inventory frequently, could you forecast more appropriately, to reduce the frequency and possibly, realize cost savings from placing one larger order?

Oh where to start with this one.  First off, you can’t forecast “more appropriately”.  Overcomplicated MRP systems have shown that repeatedly. If you are a small business and growing this is no way to forecast more appropriately.  Understand your lead times and put in a visual reordering system that will trigger with enough time to get your orders in.  You may need to adjust over time as you grow, but it is more efficient and cost effective.

More importantly, don’t just order in bulk to get savings.  This is not a smart move.  You need to understand what your demand is, how much space you have, how much materials cost and how long the inventory would sit around.  If you order a larger quantity to get the savings but it takes 8 months to go through the inventory, you have tied up your cash so you can use it to grow in another area.  As a small business, cash flow is extremely important.  Another factor is the space you have.  If the material is going to take up a lot of space that you don’t have, it is better to not have it spilling over in your work area.  This is something to consider the long term savings in space and cash availability versus the immediate savings of a one time buy.

It was good to see lean talked about in a different arena besides manufacturing.  The message may not always be perfect but it is better to start the conversation than not have it at all.

Jumpping to Improvement

I have talked in the past about the importance of direct observation.  The power in seeing the waste for yourself.  It really shines a light on what is really happening and it also is the best way for a person to continue to learn.

The question is,  “What do you do with those observations?”

Most often, I see people run out and try to eliminate or reduce the waste or even assign it to someone else to do.  While not entirely a bad thing, if you are trying to instill a lean culture don’t just jump to trying to improve.

Stop and reflect about what you are trying to do as an organization and use the waste you saw as a way to further the lean culture.

Most organizations I have seen do not have a systematic way to eliminate waste.  Usually, this is because waste is one of the first things people learn about lean.  What happens is people just go out and attack waste (again not a bad thing) without any direction.

If your organization is early on in trying to implement a lean culture, think about how you can make the waste elimination systematic.

Is this a good way to engage employees in a kaizen event to start to build trust?  Could be an easy win for everyone.

Should an improvement board to post the waste seen and how it is detracting a better option?  Use the waste you saw as an example of how to use the board and go and eliminate it yourself or with the help of others, but be involved.

If you observed multiple areas, do you want to concentrate in one department?  Make it a model for others in the organization.

Think about how you can make the waste elimination sustainable and systematic.  This will benefit you and the organization in the long run.

Guest Post: Lean Material Handling: Making Production More Efficient and Profitable

Today’s guest post comes from Danielle M.  She has been a dedicated student of Lean Manufacturing methodologies since 2006. It was love at first sight when she read the motto, “Everything has a place; everything in its place” in her first copy of The Toyota Way.

Lean manufacturing seeks out and eliminates waste wherever it can be found. One process that can be overlooked in a manufacturing business is the very end, where products are stacked on pallets, wrapped and shipped out. What follows are a number of ways you can reduce wasted time, effort and money by finding efficiencies in your pallet packing processes.

Material handling and lean manufacturing go hand-in-hand. Without efficient material handling processes, factories and warehouses can’t fully integrate lean manufacturing into their operations.

If you want to increase production time and reduce waste in your manufacturing business, take lean material handling practices seriously. These suggestions should inspire you to make changes in your warehouse operations.

Reduce mistakes, eliminate waste

The most basic principle of lean manufacturing is eliminating waste — wasted time, inventory, movements or processes. Your production systems should be so efficient that employees know exactly what to do with each part, how to do it and when to do it.

It’s important to remember that working faster doesn’t always mean working more efficiently. Take the time to figure out the simplest method of doing something and make that the standard of operation. Ensure that all processes are scheduled to eliminate lag time between work stations; workers shouldn’t have to wait on needed parts, and materials should be worked on immediately.

Improve efficiency with standardized routes

Material handling routes can either make or break a production line. Standardized material handling routes ensure that the appropriate parts reach their destinations on time, that there are no waiting times and that production runs smoothly. Employ standardized schedules in these areas for an efficient material handling route:

• Deliver all components on time. This is achieved by setting up kanbans (signposts or billboards) at predetermined locations so that material handlers know exactly which components to deliver to specific work areas. Each component retrieval cycle should take the same amount of time.
• Use the right equipment to transport components. The weight and amount of components being transported should determine the kind of equipment needed to safely and quickly move them to the designated area.
• Set up even pulls. The amount of finished goods pulled throughout the day should be enough for each employee to manage throughout the duration of his shift, without lag time or being overwhelmed.

Invest in necessary equipment

Using the right material handling equipment to transport and store inventory increases available space and improves production time. For instance, using forklifts to carry multiple heavy items — instead of using dollies to carry a few items at a time — is safer for employees and moves inventory from point A to point B quickly.

Automated storage systems aren’t exactly necessary, but they do accurately track inventory and allow employees to quickly find necessary parts. With these systems, employees input the materials they need into the storage system, and it automatically retrieves the item, without wasted time searching each shelf.

Accurately track material handling costs

Most — if not all — pricing methods in manufacturing are estimated based on actual production time and overhead. In order to get an accurate amount of time spent on an area of production, estimators must frequently communicate with employees and managers to find out where inefficiencies exist and figure out how to eliminate them.

Systems like cost-estimating software track the efficiency and processes using existing manufacturing standards and data. This makes it possible for estimators and accountants to change their company’s processes by adding and modifying the software’s data to accommodate specific needs. Doing so provides accurate information regarding production schedules and pricing, so your company can provide clients with more accurate quotes.

Material handling processes have come a long way from the inefficient systems of decades past, but there’s always room for improvement in the production industry. Constantly examining and identifying flaws in the system is key to making your business a lean, mean manufacturing machine.