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

Value Analysis and Waste Identification

• Welcome to the session!

Learn more about Value Analysis and Waste Identification at: www.freeleansite.com

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Let’s take a minute for

SAFETY:

Who has a safety

concern/ contact or tip?

Let’s band together forSafety, Quality, Speed of Execution

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’

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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

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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

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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

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Evaluating Work Content

“VALUE”: Customer knows it when they see it• Adding a component to a

product• Testing a product• Inspecting a part

• Pulling parts from a warehouse

• Sweeping a production area

• Welding

• Greeting a customer • Taking an order• Doing a credit check• Filing a customer order• Filling a customer order• Vacuuming a reception

area• Watering plants

Value Added or Non-Value Added?

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Non-Value Added

Unnecessary

ContinueDoing

Challenge Assumptions

EliminateImmediately

Work to ReduceChallenge Need

Value Added

Necessary

Necessary or Unnecessary?

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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

• Is the work to make this design Value Added??

In the Eyes of the Customer

• 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?

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Provide Wi-Fi

Pour in cup

Sell CD’s

Take order

Pre-heat vat

(Set-Up equip)

Grind coffee

Write name on

cup

Brewcoffee

Add cream /

sugar

Are there NVA steps here?

VA Work May Have NVA

Waste likes to disguise itself as value-added work

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Time Value Analysis Chart (TVA)

The Good News:• If you can save it in the

behind the scenes processes, you get to keep it!

The Bad News:• You don’t get credit for a

good process• A customer pays based on

the finished product or service

Customers Do Not Care About Your Process

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Value Analysis Steps

1. Using your process map, identify Lead times for process steps– Work Time– Wait Time– Transportation Time

2. Classify each step as Customer VA, Business VA (non value added, but necessary), or pure NVA

3. 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

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Priority• After analyzing root

causes, the next step is to consider improvement

• We will work to identify and remove waste and wasteful practices:1. Eliminate Non Value

Add work content2. Reduce Business Value

Add work content3. Improve Customer

Value Add

(“TCE” = Total Customer Experience)

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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’

• Defects• Over-production• Waiting• Non-utilized resources

• Transportation• Inventory• Motion• Excess processing

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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

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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

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Waiting

• Waiting for machines, materials, information, or people, sign-off’s etc.

• Idle time between operations or events

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Non-utilized Resources

• Not utilizing people’s experience, skills, knowledge, creativity, or ideas

• Excess equipment or technology

• Unused contribution• Underutilized ambition and drive

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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)

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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

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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

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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

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Causes of Waste

Motion

Waiting time

Overproduction

Excess Processing

Defects

Inspection

Transportation

Problems / Causes / ExamplesIncorrect layouts causing excessive walkingTime chasing information and dataLacking ergonomic workspace designLack of proximity of machines, off-line resources

Equipment downtimeWaiting workers, machines, materials, approvalsLong set-ups and lead times

Large batches, raw material stocksHigh WIP, finished goods stocksMaking for the sake of it/ Ignoring customerExcessive paperwork trails, checklistsLong cycle times- process, itselfUnnecessary steps/ handoffsRe-entering data, making extra copiesMissing or incomplete informationLost paperwork or documentsWork not meeting standards

Approvals of approvalsHigh number of verification stepsReliance- Mass inspection techniques

Unnecessary material movementExtra handling / Moving data between computer systems

Types

Peop

lePr

oces

sPr

oduc

t

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(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!

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Waste in the Form of Rework

• Each defect must be detected, repaired, and placed back into the process (costs time and money)

Waste Causes A ‘Hidden Factory’Increased Cost & Lost Capacity

20 Mins

Record data necessary for billing

30 Mins

Enter data into systems

10 Mins

30 Mins4223 Mins

Validate Documentation

Send Documentation to Biller

Create Invoice

5 Mins

Validate Invoice

2 Mins

Submit to customer

Yield After Inspection or Test

Waste

ReworkHidden Factory

NOTOK

OperationInputs Inspect First Time Yield

OK

Time, cost, people

90% Customer

Satisfaction

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Example of Transportation Waste

• Mobile Equipment makes a trip to the hook before receiving its first move instruction

2. UTR to Ship for first move assignment from marine clerk

3. UTR Gets Equipment

4. UTR gets firstContainer move

5. UTR takes first move to the vessel

1. UTR checks in with Foreman

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The Challenge: Find and Eliminate Waste

• Objective Ask each team to take one of the typical wastes and findat 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

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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

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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

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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

Steps (continued)

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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