Expert Core: Process Improvement

Many manufacturing companies have adopted Lean, and service organizations are starting to seriously consider it. Lean, like Six Sigma, is a methodology for solving business process problems. Unlike Six Sigma, it does not focus entirely on process efficiency. Lean has a slightly different focus: removing as much waste as possible in an organization. In Lean, we define waste as “anything that does not add value to the final product or service.” Instinctively you realize that removing all waste should make a process more efficient.

Rarely can you remove all the waste from a process; but the more you can remove, the more value you provide. I think most of us can identify some types of waste; for example, defective parts or employees standing around awaiting parts in a just-in-time environment.The accountants in your organization might not appreciate that inventory is indeed waste! If they don’t believe you, then tell them to send your customers a bill stating “10.00 for storage of software before shipping.”

Most of what a typical organization does is waste: as much as 99% of everything done falls into the category of waste. To identify waste in your process, map the business process and identify the process steps that add value and those that add no value. You may find that less than 1% of all the work your organization does adds value. This sounds extreme, but is accurate in some organizations.

Of course, such a process can be very demoralizing to everyone. Managers are embarrassed and worried about their bonuses. Employees may reason that when you remove all the waste you will start removing them. Realistically, many of these outcomes are not practical and also not very likely, but the possibility feeds organizational Fear, Uncertainty and Doubt (FUD).

Nevertheless, experiential evidence shows that typical Lean improvements are modest. You will not eliminate all waste. But what if you could move from 99% non-value added work (NVA) to 97% NVA? You might assume you still are not very productive. But, rhetorically, is the glass half empty or half full? Don’t look at the NVA work but focus on the value-added work. When you go from 1% of your efforts producing output to 3% of your efforts producing output, you have tripled your output. Now that’s worth talking about!

To form a Lean team in your area, look for the following types of waste and systematically remove them:

• Defects
• Overproduction
• Waiting
• Transportation
• Inventory
• Motion
• Extra processing
• Under utilized people

The hard part is getting started, so I'll tackle Kaizen events in my next post.