Defining Value and the 7 Wastes

You may be surprised that up to 80% of the work that goes on in any organisation is adding no value to your customers! A key concept in implementing Kaizen is to understand what value is and then to eliminate completely (or at least minimise) all non-value added activity.

 

The following definitions will help you understand what is and is not value added:

Value Added

Conventionally, value added has three dimensions

  • The activity changes the product or service towards something that the customer wants
  • It is done right first time
  • The customer would be willing to pay for it

Clearly, the concept of a paying customer may not be relevant to all industries/business sectors. What may be more appropriate in those is to keep focused on the concept of doing things right first time whilst eliminating or at least minimising the non-value added tasks. What is left will be the value added work.

Non-Value Added

Non- value added work falls into two main categories:

  • Business Requirements (sometimes called “Operational Value Added”)
  • Pure Waste

Business Requirements:

  • Activities required by law, statute or contract. Such requirements may be outside the control of the organisation or department and must be complied with. Examples include Health and Safety, Data Protection, Consumer Credit Act.
  • Activities required to keep the organisation running. For example recruitment, vehicle maintenance, training.

When an activity is labelled as “Business Requirement” it does not exclude this activity from your improvement efforts. You may have to comply with certain requirements but the process of compliance may be full of non-value adding activities. For example you may be able to digitise some aspects of reporting or streamline the vehicle maintenance process.

Pure Waste:

Pure waste includes all activity that consumes resources (time, materials, money) but creates no value. They include:

  • Rework of any kind – having to rectify mistakes made because something was not done right first time
  • Unnecessary layers of approval
  • Production of reports that never get read
  • Non-productive meetings

Any activity categorised as “Pure Waste” is a prime candidate for elimination. Lean thinking demands that waste is banished!

The 7 Deadly Sins of Waste

We get so used to doing things this way or that way just because “that’s how we do things round here” or because “that’s the way we’ve always done it”. It’s so easy for any organisation, group, family or individual to just keep doing what they’ve always done. Over time bad habits build, we come to accept waiting time and delays as “part of the process”; manufacturers make more than they need to allow for faulty units, someone continues to write that monthly report even though we’re convinced that nobody reads it. When something new comes along (and especially in organisations) all sorts of excuses and reasons are found as to why it can’t be done; “everyone’s too busy”, “we do loads of that already”, “it’ll just have to join the queue”. The issue is that in the absence of a continuous improvement strategy there is no focus on what is happening within an organisation. People come to accept the status quo as the norm and allow delays, defects and all manner of other inefficiencies to creep in and take over.

Key to uncovering value and eliminating unnecessary work at Toyota is Taiichi Ohno’s categorisation of 7 fundamental forms of waste. By identifying and eliminating them any organisation would already be making leaps towards improvement – even if they did nothing else. And when combined within the overall Lean framework they are a fantastic aid to ensuring that an organisation focuses primarily on adding value to its customers, clients or consumers of its output.

An easy way to remember the 7 Wastes is by using the acronym TIMWOOD as follows:

1.   Transportation waste: This refers to physical items and data rather than the movement of people. For example sending forms that arrive in Southampton up to Manchester for processing only to be sent back again to Southampton before they can be fully approved.

2.   Inventory waste: Having too many of the wrong thing in stock and not enough of the right things. Having too much work in progress or unfinished goods. For services this could be too many open or partially completed cases.

3.   Waste of Movement: This refers to the physical movement of people. For example because of poor office design always having to go upstairs to visit important co-workers or walking halfway across the building to the nearest printer.

4.   Waste of Waiting time: People or things waiting around for the next action. It could be the delay in getting approval for that key item of safety equipment, a car off the road waiting for a spare part, or even the time spent waiting for your computer to come on line every morning.

5.   Waste of Overproduction: Put simply, making or doing things that are not required now. Building inventories of anything unnecessarily is anathema in Kaizen and Lean.

6.   Waste of Over-Processing: Over-engineering a product, including features or doing extra tasks that the customer has no requirement for. Filling in more fields on a form than you need to – and nothing worse than having to enter the same data twice!

7.   Waste of Defects: Just the time and effort wasted when the “things” that you make are wrong or faulty – typo’s in a report, wrong price in a quotation, a system incorrectly installed, a faulty widget. The Lean focus is to be always “right first time”.

These are just a few examples of the different categories of waste but look around. I bet you can see some of these things going on right now in your team, office, factory or call centre. How would it be for you, your employees and most importantly your customers if you took action now to eliminate these drains on your most valuable assets!