QUESTION:How is value determined in a Lean system?
Here’s a simple and brief answer to a meaty subject. Value in a Lean system is created through the elimination of waste and the transference of time and resources from non-value adding process activities to value-adding activities. Waste is definitional and comprises anything NOT needed in the creation and delivery of product or service to the customer. There are two types of waste: pure waste and unavoidable waste. Lean seeks to eliminate pure waste and minimize unavoidable waste. Generically, there are 8 Wastes, which are defined as:
- transportation: transport of the unit or resources in the process
- inventory: WIP and finished inventory
- motion: within the process including that of the workers
- wait time: delays and queue time of raw materials and the unit in the process
- over processing: doing more than is required
- over production: making more than real customer demand
- defects: errors, rework and scrap
- searching: related to motion, interruptions to find needed processing resources
A Lean system also creates value by focusing on the value stream in the process. Simply stated, the activities comprised in the creation and delivery of the service or product the customer is paying for. A streamlined, efficient value stream delivers a quality product and service to the customer. The Lean focus on facilitating flow, moving to pull systems and minimizing ‘batching’ reduces waste in process. Moving to a pull system eliminates forecasting errors. Batching helps eliminate unneeded WIP and inventory.
Finally, Lean systems promote worker empowerment and involvement, visual control and management of a process and feedback mechanisms to reinforce quality product and services and waste reduction. A truly successful Lean system requires embedding its concepts and methods in the “DNA” of the organization from leadership to its line workers to suppliers.