Tackling Process Waste and Value add Analysis

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Tackling Process Waste and Value…

Introduction

Overview of Process waste and value add

The Lean Six Sigma technique is a powerful process improvement approach that integrates the best principles of both Lean manufacturing and Six Sigma. Lean Six Sigma aims to enhance process efficiency, quality, and customer satisfaction by identifying and reducing waste and variability.

Lean Six Sigma provides a framework for identifying and reducing the eight types of waste outlined by Lean manufacturing. The Lean Six Sigma methodology also includes tools and strategies for evaluating processes to identify waste, such as value stream mapping, as well as tools and techniques for measuring and tracking the level of waste in a process.

Lean Six Sigma, on the other hand, provides a framework for maximising value add activities in a process. Organizations can reduce non-value add tasks and boost efficiency by defining and recognising value add activities. Furthermore, employing Six Sigma tools and techniques such as DMAIC (Define, Measure, Analyze, Improve, and Control) can help reduce variability and improve process stability, which in turn helps improve process value.

Overall, the Lean Six Sigma technique and its relationship to process waste and value add analyses can help organisations in improving process efficiency, increasing customer satisfaction, and lowering costs.

Defining and Identifying Process waste

The eight forms of waste in Lean Manufacturing

There are eight typical types of waste in Lean manufacturing that are often referred to by the name TIMWOODS or DOWNTIME:

Transport

Transport is the first type of waste in lean manufacturing. This refers to the movement and handling of non-value-added items and commodities throughout the process. The transportation of materials and products from one location to another in a manufacturing process can be costly and time-consuming. When this movement is unneeded or poorly planned, it can waste time and money while also increasing the danger of damage or faults.

Transportation waste examples include:

Transporting raw ingredients or finished commodities over greater distances than necessary
Transporting materials or products between steps of a process that are not close to one another.
Multiple handling of materials and products, such as loading and unloading them several times during the manufacturing process
Using insufficient or inefficient transportation equipment or procedures, such as manual handling instead of conveyors or forklifts

One method for reducing transport waste is to optimise the layout of the manufacturing process to limit the distance and number of times materials and products are carried. Furthermore, transport waste can be reduced by using automated handling systems and equipment, as well as using just-in-time delivery and inventory management systems to eliminate the need for storage and handling. Organizations can improve the efficiency of their production process, cut expenses, and increase customer satisfaction by decreasing transport waste.

Inventory

Inventory is the second type of waste in Lean production. Excess stock and raw resources that do not contribute value to the process are referred to as this. Excess inventory may be a significant source of waste for firms since it consumes precious resources such as money and space while adding no value to the customer.

Inventory waste examples include:

Holding excess raw materials or finished goods in storage
Having a large buffer inventory to mitigate risks of supply chain disruptions
Stocking slow-moving or outdated items
Having too much variability in the production process, which leads to a rise in the amount of inventory required.

Organizations that have surplus inventory have an opportunity cost, which is the cost of not investing those resources in more profitable alternatives. Reduce inventory waste by deploying just-in-time (JIT) inventory management systems, which allow firms to order resources and products as needed, eliminating surplus inventory. Furthermore, employing a pull system in which production follows the rate of consumer demand rather than the other way around can aid in the reduction of inventory waste.

Motion

Motion is the third type of waste in Lean manufacturing. This refers to the movement of people or equipment that is unneeded and adds no value to the process. Excessive movement can waste time, energy, and resources. This type of waste arises when equipment or tools are disorganised, personnel must travel too far to do their responsibilities, or employees perform things that machines might do more efficiently.

Motion waste examples include:

Long distances walked or travelled to collect tools or materials
awaiting the availability of machines or equipment
Manually performing activities that machines or automated systems could perform
Excessive bending, twisting or reaching during jobs
Not having the right tools or equipment in the right place

Reducing motion waste can be accomplished by:

Proper production process and equipment layout
Putting in place efficient and ergonomic workstations
Putting in place a 5S workplace organisation programme
Automation of material handling equipment
Providing workers with the tools and equipment they need at the point of use.

Organizations can improve the efficiency of their production process, cut costs, increase productivity, and improve employee happiness by lowering the strain on their bodies by eliminating motion waste.

Waiting

Waiting is the fourth type of waste in Lean manufacturing. Time spent waiting for resources, equipment, or information that adds no value to the process. Waiting can occur at various stages of the manufacturing process, resulting in delays, increased lead time, and, eventually, a drop in output.

Waiting waste examples include:

Waiting for raw materials or components before beginning production
Waiting for the availability of machines or equipment
While awaiting work orders or instructions
Waiting for approvals or signatures
While awaiting inspection or test results

Organizations can reduce waiting time by doing the following:

Implement inventory management systems that are just-in-time (JIT).
Implement pull-based manufacturing systems.
Set up a Kanban system.
Implement cross-training programmes to increase flexibility and reduce dependency on specific individuals.
Use visualisation techniques such as Andon boards to quickly identify and address bottlenecks.

Organizations can improve the efficiency of their production process, reduce lead times, increase productivity, and improve customer satisfaction by providing products and services on time by eliminating waiting waste. Furthermore, by minimising waiting times, firms can reduce inventory levels, saving on storage and handling expenses while increasing the flow of goods and products.

Overproduction

Overproduction is the sixth type of waste in Lean manufacturing. This term refers to generating more than is required or producing before it is required. Overproduction can result in extra inventory, higher expenses, and decreased efficiency.

Overproduction waste examples include:

Producing goods or components ahead of demand
Producing items or components that are not yet required
Producing more goods than the consumer requested
Making numerous copies of the same product for various customers
Producing products in large quantities to capitalise on economies of scale

Organizations can reduce overproduction waste by:

Implement pull-based manufacturing methods such as Kanban.
Implement inventory management systems that are just-in-time (JIT).
Use visual management tools such as Andon boards to identify and address overproduction rapidly.
Adopt a one-piece flow process that produces only what the client need, when the customer requires it.

Organizations can improve the efficiency of their manufacturing process, save costs, and increase customer satisfaction by delivering products and services that are suited to the client’s individual needs by decreasing overproduction waste. Furthermore, by producing only what is required, businesses can cut inventory costs while increasing their capacity to respond rapidly to changes in demand.

Overprocessing

Overprocessing is the sixth type of waste in Lean manufacturing. This term refers to extra stages or activities that add no value to the process. Overprocessing can increase costs, lengthen lead times, and decrease productivity.

Overprocessing waste examples include:

Inspections or tests that are not required
Including extraneous features or components in a product
Using costly or high-precision equipment when less expensive equipment will suffice
Taking extra steps that are not required by the customer
Waiting for specific equipment to become available rather than using another that is already available

Organizations can reduce overprocessing waste by doing the following:

Analyze client needs and only produce what is required to meet those needs.
Processes can be streamlined by eliminating unnecessary steps or activities.
To immediately identify and address overprocessing, use visual management solutions such as Andon boards.
Implement process standardisation and simplification.
Adopt a one-piece flow process that produces only what the client need, when the customer requires it.

Organizations can improve the efficiency of their manufacturing process, save costs, and increase customer satisfaction by offering products and services that fit the client’s unique demands while minimising extraneous procedures or operations. Furthermore, by decreasing overprocessing, businesses can reduce lead time and boost the responsiveness of the manufacturing process.

Defects

The seventh form of waste in Lean manufacturing is Defects. This refers to errors or rework that must be corrected, leading to wasted time and materials. Defects can occur at any level of the manufacturing process, resulting in higher prices, longer lead times, and decreased efficiency.

Examples of waste defects include:

Errors or faults in the manufacturing process
Products or components that have been incorrectly built or configured
Failure to meet requirements or standards
Incomplete or incorrect information on paperwork or labelling
Products that fail quality assessments or tests

To reduce defects waste, organisations can:

Set up a quality management system.
To swiftly identify and address faults, use visual management solutions such as Andon boards.
To prevent errors from occuring, use error-proofing techniques such as poka-yoke.
Employees should be educated on quality standards and practises.
Implement equipment preventative maintenance.
Conduct regular quality audits and corrective actions as warranted.

Organizations can improve the efficiency of their production process, save costs, and boost customer satisfaction by delivering products and services that fit the client’s unique demands with little faults or rework by decreasing defects waste. Furthermore, by eliminating faults, firms can strengthen the dependability and trustworthiness of their products and services, resulting in increased consumer loyalty and repeat business.

Skills (Unused Talent)

Unused Talent (Skills) is the eighth type of waste in Lean production. This refers to employees’ abilities and knowledge being underutilised or not being provided with opportunities for professional growth and development. When individuals’ potential contributions to the business are not completely realised, the organisation may miss out on valuable insights and ideas.

Unused talent waste examples include:

Employees executing things that are outside the scope of their abilities or knowledge
Employees that are not allowed to express their views or proposals
Employees who are not given the opportunity for training or development
Employee participation in decision-making and process improvement is limited.
Inadequate cross-training or work rotation

To reduce unused talent waste, organisations can:

Employee skills and talents should be evaluated and matched to appropriate positions and responsibilities.
Encourage staff involvement in decision-making and process improvement.
Employees should be given opportunity for training and growth.
Encourage free conversation and idea sharing.
Encourage a learning and improvement culture.
Put in place cross-training programmes.

By fully utilising employees’ talents and knowledge and offering opportunities for professional growth and development, firms can improve the efficiency of their production process, save costs, and raise customer satisfaction by eliminating underutilised talent waste. Furthermore, by minimising underutilised talent, firms can boost employee satisfaction and engagement, leading to higher employee retention.

How to identify process waste from observations

Observations are one method for identifying process waste. Observing a process can provide useful information on where waste is occurring and how it might be removed or minimised. Here are some observations that can be used to identify process waste:

Define the process’s scope: Define the process’s start and end points, as well as the bounds of the process you will be observing.

Pick a location: Choose a place to observe the procedure. It could be a single workstation, an entire department, or the entire process.

Define your objectives: Define the observation’s goals clearly, such as detecting certain types of waste, identifying bottlenecks, or evaluating performance measures.

Make observations: Observe the process and take detailed notes on what you see. Be sure to pay attention to the details of the process, such as waiting times, unnecessary steps, overproduction, defects, and rework. Identifying these areas can reveal where resources are being wasted and where improvements can be made.

To support with this we have provided a TIMWOODS waste walk observation sheet to note down wastes for later anaysis.

Download: TIMWOODS Waste Analysis Template

Identify bottlenecks: Look for bottlenecks, which are regions in the process where delays occur or work is piling up. These are the regions that typically slow down and waste the remainder of the process, therefore identifying and fixing these bottlenecks can have a big impact on the overall efficiency of the operation.

How to identify process waste using process maps

Process maps can be an effective tool for identifying waste in the manufacturing process. Process maps can help identify areas where resources are being wasted and where changes can be made by providing a visual picture of the processes and activities in a process.

When creating a process map, it is critical to consider the process’s details, such as waiting periods, needless processes, overproduction, errors, and rework. The identification of these regions can highlight where resources are being squandered and where improvements might be made. Identifying non-value added operations that do not add value to the product or service given to the client can also aid in simplifying and eliminating waste.

It’s also important to look for bottlenecks, areas in the process where delays are occurring or where work is piling up. These are the regions that typically cause the remainder of the process to slow down and waste, therefore identifying and fixing these bottlenecks can have a big impact on the overall efficiency of the operation.

Furthermore, process mapping can be used in combination with other tools such as value stream mapping to provide a more holistic perspective of the process and more efficiently identify waste.

Measuring and Tracking Process Waste

Using Metrics and data to measure the amount of waste in a process

Metrics and data can be used to measure the amount of waste in a process. It is possible to identify places where waste is occurring and quantify the extent of the waste by examining data on process performance.

The following metrics can be used to measure waste in a process:

Lead time: The time from when a customer places an order to when the product or service is delivered. Long lead times can indicate delays and bottlenecks in the process.
Inventory levels: The amount of raw materials, work-in-progress, and finished goods on hand. High inventory levels can indicate overproduction and excess inventory.
Defect rate: The percentage of products or services that do not meet quality standards or customer requirements. High defect rates can indicate errors or rework in the process.
Cycle time: The time it takes to complete one cycle of the process, from start to finish. Long cycle times can indicate delays and bottlenecks in the process.
Capacity utilization: The percentage of the production capacity that is actually being used. Low capacity utilization can indicate underutilization of resources.

You can identify regions where waste is occurring and estimate the extent of the waste by studying these variables. You may detect the progress of the changes achieved and measure the success of the waste elimination initiatives by regularly monitoring these KPIs.

Other technologies, such as Statistical Process Control (SPC), can also be used to identify and quantify process waste by recognising trends and patterns in data, which can then be used to identify the root cause of the problem and take remedial steps.

Establishing Baseline data

Establishing baseline data for a process entails measuring the present performance of the process and using that data as a starting point for improvement initiatives. Here are some measures that can be followed to establish process baseline data:

Define the scope of the process: Define the process’s start and finish points, as well as the process’s limits.

Determine the main process performance indicators: Determine which metrics are most critical to track in order to understand the process’s performance. These can include lead time, inventory levels, defect rate, cycle time, capacity utilisation, and others.

Collect data: Collect data on the process performance indicators you’ve identified. This information can be obtained by observation, process documentation, and questionnaires.

Collect information: Gather information on the process performance metrics you’ve selected. This information can be gathered by observation, process documentation, and existing data sources such process control systems and databases.

Organize and evaluate data: Put the data you’ve gathered into a format that’s straightforward to interpret and analyse. To discover patterns and trends in data, use data analysis techniques such as statistical process control (SPC).

Define a baseline performance level for the process: Once the data has been reviewed, you may establish a baseline performance level for the process. This is the process’s current performance level, which you will use as a starting point for improvement initiatives.

Setting Targets for waste reduction

Setting waste reduction targets can help firms focus their efforts and track their progress toward their objectives. Here are some methods that can be performed to set waste reduction targets:

Identify the waste types: Clearly identify the various types of waste present in the process. This includes any form of TIMWOODS, as previously discussed.
Analyze current performance: Use measurements and data to understand the process’s present performance and the level of waste. This will assist in identifying the areas that require the most improvement as well as the possibilities for waste reduction.
Determine desired performance level: Determine the intended performance level for the process based on an examination of current performance. This is the degree of performance you hope to reach through waste reduction activities.
Calculate the waste reduction potential: Calculate the waste reduction potential by comparing the current performance level to the desired performance level. This will assist you in comprehending the scale of the improvement project as well as the possibility for waste reduction.
Set precise and measurable waste reduction goals: Set specific and measurable waste reduction goals. “Reduce lead time by 50% in 6 months” or “Reduce defect rate by 25% in 1 year,” for example.
Communicate the objectives: Share the targets with the appropriate stakeholders and teams, and create a data collecting and monitoring mechanism to track progress toward the targets.
Review the targets on a regular basis: Monitor and review progress toward the targets on a regular basis, and alter them as needed depending on progress and new insights received.

To have a clear direction and clear expectations for waste reduction activities, make sure the targets are SMART (Specific, Measurable, Achievable, Relevant, Time-bound). It’s also critical to create a plan that describes the processes and actions required to meet the goals.

Value Add Analysis

Value add vs non-value add

When reducing waste within processes we are looking to remove or reduce as much as possible the process steps that do not add value to the customer. Value-added activities are activities conducted in a process that customers are willing to pay for. They should settle all three of the below criteria to be classified as Value adding.

Transformation of information materials or people.
Done right the first time
The customer wants it.

Value-added activities are actions or steps that are directly related to the production of a product or service and provide value for the customer. These tasks are crucial for addressing client needs and contributing to the process’s overall performance. Assembling components, packaging the completed product, and providing customer service are all examples of value-added operations.

Non-value-adding activities are steps or activities that do not provide value to the customer and do not contribute to the process’s overall performance. These activities may involve waiting, inspecting, moving things, or dealing with paperwork that adds no value to the customer’s experience. The purpose of value-add analysis is to eliminate or decrease as many non-value-adding operations as feasible in order to optimise processes and increase performance.

Necessary non-value-adding activities are steps or activities that are required for legal, regulatory or compliance reasons, or for maintaining the quality or safety of a product or service, but they do not add value for the customer. Inspections, testing, certifications, record keeping, and reporting are examples of non-value-added tasks that are required by regulations or organisational procedures. These operations are considered compliance costs and are critical for maintaining the integrity of the product or service as well as compliance with laws and regulations.

Understanding where resources are being spent successfully and where improvements may be made requires distinguishing between value-adding, non-value-adding, and necessary non-value-adding activities. Organizations can enhance efficiency and minimise waste by focusing on value-adding activities, eliminating or reducing non-value-adding activities, and streamlining critical non-value-adding operations.

Conducting Value Add Analysis

Conducting a value add analysis is a way to identify and analyse the waste present in a process, by understanding what steps or activities add value for the customer, which don’t and which are necessary but still non-value adding. The process begins by explicitly defining the process’s scope and generating a process map that visualises all of the processes, inputs, outputs, and key performance indicators. The process is then separated into specific processes and activities, which are evaluated based on whether they create value for the client, do not add value, or are necessary but do not contribute value.

For each stage, the amount of time, resources, and cost are also recorded.

This information is then examined to determine the total process time, value-adding time, non-value-adding time, and required non-value-adding time.

With this data, you can calculate the value-add % and use it as a starting point for making improvements and identifying the types of waste present.

This analysis is critical for optimising the process and eliminating or reducing non-value-added operations, ensuring that the process meets the needs of the client while remaining efficient and cost-effective.

This process can be carried out with a waste analysis template, which we have made available for you to use in your processes.

Download: Value Add Analysis Template

What's Next?

Now that you have a grasp of the various forms of waste present in a process, and how to recognize them, the next step is to understand the importance of data collection to quantify the waste and establish a process baseline, so that improvements can be made.