Defining Value
I recently embarked on a reread of Lean Thinking the classic from Womack and Jones.There is a lot to think about in the book regarding systems thinking – but a big takeaway I got from the book this time was different to my earlier reading and it is this:
Understanding what is valuable to the customer is more important than the efficiency of your processes. Doing the wrong thing faster, better, with less queuing time is not as important as the main thing – the value to the customer. Before applying thought to how to do the current things better (as summarized below) have you identified the value in what you are providing?
Once you know where the value is THEN:
1. Eliminate unnecessary stages
The Value Chain relates to things that add value for customers. Anything that does not add value to customers is ‘Muda’ (waste). The authors divide waste into two groupings – that which adds no value to the customer and can be eliminated straight away (referred to as Type II), and that which adds no value but is unavoidable (Type I).
2. Eliminate Queuing (it is worthless)
The main Value Chain for a can of cola takes 319 days from initial mining of bauxite to the finished article, although only 3 hours of this time is spent in value adding stages, the remainder is queuing caused for the efficiency of batch processes.
3. Flow processes vs batch processes
An example given of folding letters into envelopes sealing and stamping them makes it obvious that departmental batches may fit with a Taylor/Ford thinking of efficiency, but mean that the item being worked (the letter itself) is put down and picked up many times, and for the enveloped being queued adds no value.
4. Pulling vs push
When work being pushed through a system departmental batching is often the most effective way for work to happen. If demand is pulling work through the system batching reduces value – there is an implication that demand pull is optimal from the customers perspective (and therefore for the value of your offering)
5 Quality and Perfection (virtuous circle)
It turns out that measuring value, and making sure that quality checks occur inside the process reduces waste, and therefore increase value. Quality checks outside the process are Type I muda, logically. improvement leads to process familiarity, which allows identification of further improvement.
Further reading: http://custom.hbsp.com/b01/en/implicit/custom.jhtml?pr=LEANER0503C2005
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