Value Streams Are Misunderstood
I really like seeing more and more organizations trying to implement lean. Seeing organizations start to understand lean and want to improve using the lean mindset and principles is very refreshing. A great step in the right direction.
But not all lean starts are created equally. Or for that matter even get off on the right foot.
I recently saw a company giving a presentation on some HR practices and apprenticeship. They were doing some really great stuff around apprenticeship for a machining shop.
What caught my eye was their comments about lean and aligning to value streams. The company listed their value streams on a slide. The first few sounded more like machining functions rather than a value stream but I don’t understand the business so I could be wrong. Then I saw the bottom half of the list: Accounting, Project Management, Human Resources, etc…
Yikes! These are not value streams. These are functions that support value streams.
Misunderstanding of value streams is quite normal. In order to be a value stream, it has to create value for the customer. To understand what creates value a company has to have a definition of value.
I use one I learned from the Lean Learning Center:
- The customer must be willing to pay for it
- It must change the form, fit or function of the product/service
- It must be done right the first time
In a machining shop, accounting does not create any value for the customer. Nor does Project Management.
Value streams are linked process that create value to a product or service for customer. The are not departments (accounting , project management) or functions (milling, cutting).
Grasping the true meaning of value streams and what your companies value streams are can really open your eyes to the improvement possibilities.
Definiton of Value – Part 2
A few weeks ago I posted a blog about the definition of value that I use. James Lawther posted a great comment about that post with some good questions. I felt the questions were good enough that it warranted a blog post to highlight the questions and give my thoughts in response.
With James’ permission here is the comment he left:
Not sure I agree
1. It must be something the customer finds valuable and is willing to pay for
2. It must change the form, fit, or function of the product/service
(If it doesn’t why would I pay for it?)
3. It must be done right the first time
(If it wasn’t, why would I be willing to pay for it?)
Am I being a pedant? Don’t I only need one definition? What am I missing?
My thoughts on James’ comment are below.
I see all three points as one single definition with three parts that must be met. I agree with your assessment on points 2 and 3 of “If it doesn’t, why would I pay be willing to pay for it?”
The issue comes up when discussing value added activities during an improvement event or discussion. Having a stringent definition helps make the discussion less personal and more objective. Two examples that I run into are inspection and finance (or any support function).
With inspection, I have heard the argument that people will pay to have the product right. I would disagree but can understand that argument. With the stringent definition though inspection immediately fails point number 2. Inspection does not change the form, fit or function of a product or service. People tend to agree with this and the discussion ends.
When the discussion becomes about someone’s specific job like finance, people can get very defensive. Again, a support job like finance fails point number 2 and does not change the form, fit or function of the product or service. People will argue that it is necessary to run a business. I completely agree with so at this point we start to discuss necessary versus pure waste.
There are things that are necessary like reporting the company’s finances or even transportation but it is still not value added and it should be made very clear. Waste is stuff that can be completely eliminate like extra motion or rework.
Point three about doing it right the first time is part of the definition because sometimes the rework has been so engrained into a process that people think it is normal. This helps to reinforce the notion that anything that is being redone is not value added and should be scrutinized.
What are your thoughts?
The Definition of Value
In the lean vernacular waste is mentioned quite often. From my experiences, waste is the number one concept and idea talked about with lean.
Waste needs to be identified and eliminated or reduced, but that is hard to do if values is not defined. Without a definition of value, the separation of wasteful items and non-wasteful items becomes harder.
Here is the definition of value that I use:
- It must be something the customer finds valuable and is willing to pay for
- It must change the form, fit, or function of the product/service
- It must be done right the first time
All three of the criteria must be met. No Exceptions!
I am very strict in my definition of value When I look to improve a process I want to first work on eliminating or reducing the non-value added steps/actions. Not squeeze the juice out of the value added items. The non-value added actions/steps is the place where the headaches and pain points for the employee occur. It isn’t changing the product/service that cause headaches as much as it is looking for the things needed to be able to do the change to the product/service.
Defining what is value is the first step in being able to eliminate waste. Feel free to use the one above. If not, be sure to have one of your own. You don’t want to eliminate something that a customer may find valuable.
When All Else Fails Eliminate the Value
It is no secret that the U.S. Postal service is in dire straits and getting pressure to improve it’s financial position. I thought I had seen it all until I saw this article last week in the USA Today.
The U.S. Postal Service’s plan to save $2.1 billion a year and fend off possible bankruptcy threatens to end almost all overnight delivery of first-class letters and postcards next year.
Isn’t the way the U.S. Postal Service adding value by delivering letters and packages as quick as possible from Point A to Point B? So instead of addressing waste in the process, they are going to eliminate a value added feature.
This will surely affect businesses.
“Everyone from Netflix to timely magazines to the greeting card industry to political campaigns who still rely massively on traditional mail deliveries will be negatively impacted,” says Adam Hanft, a consumer-marketing specialist who heads Hanft Projects.
Online retailers — not to mention small and midsize businesses — that are dependent on timely shipping could feel the pinch. Nearly one-fourth of local merchants use direct mail as a crucial marketing strategy, according to MerchantCircle, the largest social network of local business owners in the U.S.
This just is just backwards. If you are going to cut something, cut something that is adding little to no value. That would be something that is not being used by your customers. Would an automaker stop putting radios in cars to save money? No. They add value for the customer so it would stay.
Plus, stamps are going up next year again. I’m sure another raise in package rates is right behind it. If a normal, business cuts an item that adds a lot of value for its customers and raised it’s prices at the same time it would not survive.
These moves aren’t going to save the Postal Service. They are going to squash it. What a chance for UPS and FedEx to jump in and increase it’s business.
If the U.S. Postal Service wants to survive, it should focus on the customer needs and eliminate what does not add value. Not what does.
PowerPoint Can Be Wasteful
Have I taken my lean thinking too far? I don’t think so, but there are others that do.
PowerPoint is a useful tool for presentations, but is WAY overdone. Everything needs to be done in PowerPoint in order to have any validity anymore. People put things in PowerPoint that are seen once and never referred to again. Most of the time the PowerPoint slides do not add any value to the conversation.
Anything that does not add value is waste. So why do people spend so much time creating PowerPoint slides?
I have gotten away from the waste of creating needless PowerPoint slides. During kaizen events, the team has the maps on the way and we take the management group out to the floor to see the changes. You can’t get that from a slide. If it is information to digest, I make the original file (Excel, Word, .jpg) as readable and easy to understand as possible and use that to illustrate my point. I love to use pictures to show people.
Unfortunately, not everyone I work with agrees. More importantly the upper management doesn’t agree. I have received feedback from a few that I nail the project deliverables, bring great data analysis to the table, do great work, BUT it doesn’t feel quite finished. When I ask what is missing I get the prettiness factor, the PowerPoint slides.
Really?! I get dinged for that?!
When I ask what value it adds I get the run around.
There are times when PowerPoint is very useful. Training is a great example. I am not encouraging to but a novel on a slide. In should be some bullet points to highlight your point. Adding a visual to re-iterate your point is powerful too. People learn in 3 ways: reading (bullet points), visual (picture), or auditory (hearing the explanation). There is the learning by doing, but there usually is an explanation before the doing and that is what I am referring to.
PowerPoint can add value if you are having to give a presentation in a large room where not everyone can see a flip chart or when you have to give the same presentation multiple times.
Whether you use PowerPoint or not always prepare for the presentation. When you have the chance challenge the value of using PowerPoint slides to convey the message. And if you do need to use PowerPoint, ask yourself if the slide is adding value to the presentation or not.
Forecasting is the Not the Answer
I have become cynical anymore when I hear people talk about forecasting. It has gotten to the point of being laughable. Have you ever sat in a meeting and listen to someone say that if the forecast was accurate we would have done well?
Really? I am stunned that people will still utter those words.
I have seen people act like getting a forecast right shouldn’t be that hard and forecasting is the simple solution to all of our problems.
There are three things in life that are certain: Death, Taxes, and 100% of Forecasts are inaccurate.
Don’t get me wrong. Forecasts can still be useful. Forecasts can show changing trends. Is there going to be a peak output time frame? A low output time frame? What is the magnitude of it the peak or valley?
Most companies seem to have people dedicated to determining the accuracy of the forecast. This can help because it can give a clue as to how much the forecast might be off. Now the company has a range but it is still a forecast.
The flip side to forecasting is pulling or replacing what the customer has bought. In this case, your output matches your demand. Now the focus can shift from a non-value added activity such as making an accurate forecast and focus on value added activities like adding value to the product or service in order to increase sales.
Lets stop talking about forecasting and start focusing on only producing what is sold.
The 8th Waste…is a Waste
Waste is a common term used in lean. Taiichi Ohno categorized waste he saw in manufacturing into seven categories.
- Transportation – The movement of goods
- Inventory – The storage of goods
- Motion – Any motion that is not adding value to the product, such as walking, reaching, etc…
- Waiting – Machine or person or product not having value added to it while other products are having value added to it
- Overproduction – Making the product in quantities more than the customer wanted or before the customer wanted it
- Overprocessing – Adding more to a product than a customer values or extra steps that are not necessary to create the value
- Defects – Anything not done right the first time
These types of waste have been proven to be in the office, healthcare, distribution, or any environment.
I’m not a history major so I don’t who or when, but an 8th waste was added.
The waste of human Intellect.
I have worked at companies that use 7 and companies that use 8 types of waste. My opinion, the 8th waste is a waste!
Here’s why I think that way. If you study lean you will see that respect for people is a very big tenant. If you are showing respect for people then you are engaging the work force. The purpose of this engagement is tapping into the employees intellect in order to use it to benefit the company through improvement.
In order to engage the employees most companies train them on the types of waste. That way they can use their intellect to see the waste in their work environment. So how do you teach seeing wasted intellect? You can go out and see the other seven types of waste during a waste walk. Do you walk up to someone and say, “You aren’t giving ideas. Wasted Intellect! I found it!”? You don’t see intellect like you see the other seven types of waste.
Wasted intellect is implied in the other wastes. If you are using employees to find and eliminate waste then you are not wasting their intellect. If you are not using them to find and eliminate waste then you are wasting their intellect.
I have heard the opinion that by explicitly stating waste of intellect it brings into the forefront employee engagement. Good opinion. I just don’t buy it though. Those same people are stressing employee engagement at the same time, so why not just do it there.
I am in agreement that employees need to be engaged and the company should be using their knowledge and intellect to help improve the business. I just don’t think it needs to be called an 8th waste.
Quick Assembly of Pre-Fab Shelving Unit
A few weeks ago, I bought a shelving unit from Target. The kind that comes needing a bunch of assembly and most people dread putting together because the instructions aren’t written very well. I have done plenty of them and look at it as LEGO for big boys!
One reason people hate the assembly kits so much is the big bag of screws, washers, Dow rods, etc… that is always a nightmare to sift through to find parts for each step. Well, not this time. Apparently, the manufacturer must have had some customer feedback about how much of a hassle it is because this time all the hardware was pre-sorted for each step. The front shows the hardware separated for each step and the back of the packaging tells what step the hardware is for.
All I had to do each for each step was open the appropriate compartment and use the hardware. It was sorted and counted out properly. This provided visual queues as whether or not if I forgot something. If all the pieces were used, I should be alright and if there was a component still on the floor then I missed something.
I compare this to how some companies use material handlers to do the non-value added work to present parts to the value added operator so less time is taken by the value added operator to assemble the finished product.
The manufacturer took the non-value added task of sorting the hardware needed for each step and packaged it together. This meant me, the value added operator, didn’t have to spend the time looking for the right hardware during each step. I took less time to assemble this shelving unit than I have for any other unit in the last 10 years. It was great.
One last thought on the manufacturer. I would imagine they fought conventional thinking to do this, because it would be easier to package all Hardware A together and all Hardware B together in their silos and then throw that in the box. Instead they probably had to get all the components into a common area before separating them. Plus, the packaging I would assume cost more than a plastic bag that is heat sealed.
Over all, I liked this convenience. It definitely added value for me.
Overlooked Waste Reduction of Kanban
Kanban is a very powerful tool when used properly. It can lead to significant waste reduction. Most people tend to think of the inventory waste reduction. While kanban can lead to inventoryreduction, it could also lead to an inventory increase. If a company is running so light on inventory and always creating shortages at the customer, kanban can help but it will most likely add inventory to the system. Or if a company tries to use kanban on items that are not used but a couple of times a year, most likely the inventory will be increased in order to keep them in-stock year round.
No matter the circumstance though, if used properly, kanban will reduce the waste of information and material flow/transportation through the facility.
In a traditional environment, information flow is separated from the material flow. The information comes from the office to someone out doing the work. The person doing the work creates a schedule to be published. When the schedule is published the material handler moves the material to the area to be worked on. Then the material is processed.
The genius of kanban is taking the information flow and the material flow and combining it into one. When the kanban is returned to the supplier, it triggers the work to be completed and when to be completed by. It becomes the scheduling and the inventory control, as well as directing the where and when for the material to flow. The kanban travels with the matieral and describes what the material is, the quantity to produce, who ordered it, and when it is due. All in one package.
This reduces a lot of transactional waste of transportation and can eliminate non-value added work done by some people, freeing up time to do more value added work.
This is often missed because many people focus solely on reducing inventory through kanban and not reducing inventory through flow. So, in cases when the inventory is increased, and rightfully so, due to a kanban system then kanban gets a bad name because “it isn’t lean.” As Mark Graban would say, that is more L.A.M.E. then Lean.
Basics of Problem Solving
Over the years, I have been fortunate enough to have been certified/trained in many different methods of problem solving. Some of them include Shainin Red X, Kepner-Tregoe Is/Is Not, the basics of Six Sigma and DMAIC, PDCA, SPC, and the list goes on and on. Quite frankly, I have lost track of all the problem solving methods and tools I have used.
After many years of using all of these techniques, I have boiled problem solving down to just 4 basic steps that can be used/seen with any of the methods I mentioned above.
1. Identify Current State
2. Identify Ideal State
3. Analyze the Gap between Current and Ideal States
Identify Current State: I firmly believe that you have to know where you are and what is happening before you can think about improving. I have seen people throw everything out and just do step 2 and 4. I don’t understand this, because they have almost always re-created some of the same headaches that they currently have or had in the past and then have to re-fix these issues. You have not gotten where you are because everything was bad or wrong. So what is good? What is value added? What is non-value added? How does the process work? Understand these things about your current situation and you will learn a lot about the process.
Identify Ideal State: I see some people want to identify the future state instead of the ideal state. That can work, but I prefer the further sighted ideal state. You won’t necessarily get to the ideal state by solving just this one problem, but you want to make sure you are heading in the direction of the ideal state. You don’t want to create a countermeasure to a problem that is heading in a different direction than your ideal state. Have you ever had a future state that isn’t aligned with your ideal state? Do you want to start working in one direction only to be redirected later? Define the ideal state, even if it is just bullet points, so you know that any countermeasure you put in place is directionally correct.
Analyze the Gap between Current and Ideal States: Now you must understand what it will take to get from where you are at to where you want to get. How do we close the gap? It may not fully close the gap but we are making progress towards the ideal state. Sometimes you may find that you have to do a major process redesign or a big project. Sometimes you may need to do smaller more manageable tasks to get there. It is OK to not close the entire gap in one jump. Just make progress. If you make progress and have a plan, my experience has shown that you will get a lot of understanding.
Attack!: Now it is time to implement. By implementation, I mean try out the countermeasures, verify the results, and make adjustments base on what was learned or make the new countermeasure part of the standards. Basically, the Check and Act of PDCA.
This approach can work for simple problems like needing to reduce walking in a process.
1. Identify Current State – I walk 10 steps between my desk and the fax machine, 20 times per day = 200 steps.
2. Identify Ideal State – I don’t want to walk at all to the fax machine
3. Analyze the Gap – 200 steps per day is the gap, I can’t get a fax machine for my desk (not in the budget), but I can move the fax machine closer but I need to talk with others to make sure I’m not making more work on them.
4. Attack – Others are OK with me moving the fax machine. I move it. I am now walking 5 steps per trip, 20 times per day = 100 steps. 50% reduction. That is the new standard now.
It also works for complex problems like creating single piece flow
1. Identify Current State – A common tool used here is a Value Stream Map
2. Identify Future State – Create a future state Value Stream Map
3. Analyze the Gap – What projects and kaizen events do I need to do to reach my future state. Develop an action plan.
4. Attack – Implement action plan. Reflect on results and process of implementing and make adjustments as necessary.
I know this boils it down very simply, but there is a lot of work that has to happen in each step. There are many tools/concepts that can be used to complete these steps, but remembering these four steps is a great start.