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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.

Listen to the Customer Input

The main tenet of lean is to deliver value for your customer.  The customer is someone that uses the product or service whether it is internal or external.  The customer helps to define if something is value added or not.  It is critically important to listen to the customer and understand their needs and how to deliver that value.

Sometimes the designer of the product/service can get too caught up in what they want to deliver to the customer or what they believe they need and miss what the customer needs.  When this happens the customer can become frustrated and will not adopt or use the product/service.  This leads to less credibility of the designer.  Over time people will go around or cut out the designer.

An example.  A group of designers build a process without input from the users of the process.  When rolled out the users don’t use the new process because it is not a process that can not be executed in reality.  The designers should have had the users of the process in the sessions helping to build the new process.  During this time, the designers should be listening to the users and asking questions to gain clarity of what would work not trying to convince the users of how they should work based on their thoughts.

There is a fine line (or grey area) though.  The designers should ask questions and push for improvement where they think it can happen, but with input from the users.  If you are taking the time to improve something then push for all the improvement you can get.  The designers should help to do this.  It is a fine line to walk but when the designer crosses over it is usually easy to tell.

The customer input is the most important part of designing anything.  A product.  A service.  A technology.  A process.  Anything.  Listen.  Ask clarifying questions.  Understand the customer needs.  Deliver value for the customer.

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:

Matt

Not sure I agree

1. It must be something the customer finds valuable and is willing to pay for

(Yes)

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?

James

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:

  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
  3. 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.

Discussions are What Is Value Added

Before anyone understood the thinking behind the tools used by Toyota, people copied the tools.  There are many examples of companies trying to copy the tools and not succeeding.

Today, many more people are starting to understand it is about the thinking and not the tools that makes lean successful.  Yet, because it is human nature we still rely on tools and templates.

Last week, Jamie Flinchbaugh had a great video post about focusing on the discussion and not the template when developing a lean strategy.  I would extend that thought to be the same same when creating value stream or process maps or A3′s.

Too many times I have caught myself as well as colleagues worrying about the format or template use of a map.  I would get questions like, “Why didn’t you follow the normal standards for the map?”  or “That doesn’t look like the A3 I was taught to use.”  These questions are missing the point.  The discussions we have around, “what is the problem and how did we fix it,” or “what is the lean strategy and how do we execute it” are what is important.

Discussions are where we can gain clarity and come to agreement on what is the issue and how to go about resolving it.    When you have an issue at home to you ever talk with your spouse about what template to put the information on?  I bet it is safe to assume no.  It is the discussion you are concentrating on.

Templates are tools to help facilitate and draw out the discussion.  Not hinder it.  Next time you use a template, make sure you use it to enhance the discussion, because the discussion is what adds value.

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.

Companies Trying to Target Customer Focus and Alignment

This is part of my reflections from the OpsInsight Forum in Boston.

There were some great keynote speakers at the OpsInsight Forum.  The topics ranged from execution excellence to optimized S&OP process to transforming innovation.

What causes me to be optimistic about the potential success of lean progressing through companies is that almost all of them were talking about lean concepts, ideas, and thinking without knowing it.

In my opinion, the work does not have to be called out as being lean.  The most important part is the thinking and concepts becoming part of the company’s DNA.

The two concepts that were repeated over and over were focusing on the customer and the company being aligned to the work to deliver value.

Focusing on the customer.  This is the root of lean.  The very first seed that is planted.  The main focus is the customer or consumer that buys the product.  If what you are doing is not adding value for them we should ask, “Can we eliminate it?”  If not, then “Can we reduce it?”

In order to be the most effective in delivering value to the customer, everyone must be aligned.  Over half of the speakers brought up the issue of having everyone aligned to the business goals and clarity around the work that was needed to achieve those goals.  A few speakers specifically called out strategy deployment tool that could be used.  Others didn’t call out strategy deployment but talked about the catch ball process.  This is the process where Level 1 managers talk with Level 2 managers about how they can help achieve the goals and then Level 2 meets with Level 3 and so on and so forth.  The discussions go down and the back up the levels a few times to develop a comprehensive and achievable plan.

All of the speakers mentioned that lean was a way to support the work and help make it better.  These comments add data to my data set that lean still isn’t truly understood for what it is very widely still.  The good news is that people are trying to implement lean thinking and concepts.  They just don’t realize it.  That gives me optimism as I continue to implement lean thinking at the company I work for.

Look for areas where lean thinking is being implemented.  Don’t try to change the language.  Instead try to foster the thinking and help it grow.

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.

  1. Transportation – The movement of goods
  2. Inventory – The storage of goods
  3. Motion – Any motion that is not adding value to the product, such as walking, reaching, etc…
  4. Waiting – Machine or person or product not having value added to it while other products are having value added to it
  5. Overproduction – Making the product in quantities more than the customer wanted or before the customer wanted it
  6. Overprocessing – Adding more to a product than a customer values or extra steps that are not necessary to create the value
  7. 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.

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