In this article, we explain the differences between value added activities and no-value added activities. We explore the 10 types of wasteful activities that exist in organizations today as well as how to identify and eliminate these activities through process improvement.
ELIMINATE WASTE, MAXIMIZE VALUE
Lean is a Culture of Continuous Improvement that focuses on eliminating waste and adding value to our customers. So how exactly do you define waste? Waste is any step in a process whether that be producing a product or providing a service that your customer would not be willing to pay for. In other words, waste is any activity that consumes your resources without creating value for your customer.
WHAT IS VALUE?
Value is defined by the customer. You may be surprised to learn that 95% of the activities in a process do not add value. In other words, customers only receive 5% of value from products and services they pay for!
Customers have expectations, and those expectations will vary depending on what type of service or product you are offering. Identifying waste in your process can increase the value to your customer through reducing cost, increasing the speed, improving quality or improving service levels.
Processes should be designed to maximize the value customers receive, and on the same token, should be critically examined to minimize non-value-added activities.
IDENTIFYING NON-VALUE ADDED ACTIVITIES
The steps in a process that do not add value are defined as muda or waste. There are 10 types of waste that exist in all organizations today. These wastes appear in every type of work environment - from manufacturing to professional services. We have outlined a summary of each type of waste below.
Layout: Are your staff making unnecessary movements to compete a task? Look for opportunities in how documents are delivered, spacing of equipment or tools, workplace organization.
Rework: Are there errors or mistakes in the output of your process? Not doing it right the first time will lead to rework, and huge loss of time for your team. Look for opportunities in data entry, billing or coding, information handovers and work instructions.
Overproduction: Are you producing more of something that is actually needed? Look for opportunities in inventory or paperwork. Are you printing too many copies?
Ineffective Current Systems: Do you have the right tools or technology to complete the process? Waste in this area could be keeping records in multiple systems, or system downtime interrupting work.
Process Steps not Needed: Are your staff doing more work that is necessary to complete a task? Look for opportunities to reduce process steps and improve clarity of work processes.
Poor Planning: Is your team taking the time to plan out the execution of a task or project? Has your team planned the required work in an effective manner?
Waiting for Work: How often are your staff or customer waiting for work to arrive or your product or service to be delivered? Look for bottlenecks in the process, handovers of information, and in approval processes.
Lack of Expectations: Are you getting what is possible from your people, processes and resources? Are your service levels clear and do your customers know when you will deliver? Look for ways to improve communication both internally and externally.
Lack of Assignment: Are your staffs responsibilities limited through specialization? Improve productivity through mechanisms to get additional work and cross-training.
Skills: Do your staff have the adequate training or education to complete their tasks? If not, find opportunities to improve skill levels.
ELIMINATING WASTE
Through process improvement, the wastes within a process can be identified and then analyzed to determine the root cause. From here, improvements ca be made to reduce or eliminate the waste. The first step to removing waste is understanding how your customer defines value. This will be your goalpost for any process improvement.
The second step is identifying the wastes that exist in your organization. These wastes can be identified by observing processes and objectively analyzing which activities add value, and which activities don't. Front-line employees interact with processes directly and will have great insights to share. Once you've identified the waste, you can take the necessary steps to improve the process.
HOW WE HELP
Hiring a consultant is a great way to improve your processes while engaging your team along the way, helping to create a culture of continuous improvement. At Chmltech, we are energized by the 95% of non-value-added activities within organizations! We specialize in improving processes to maximize the value companies deliver to customers.
Curious to learn more about how Chmltech can help your organization? Contact us NOW!