Value and Waste

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CustomerLow Cost

High QualityAvailability

Your CompanyProfit

Repeat BusinessGrowth

Cash !!$

Value !!

Understanding Value

Value-Added vs Non Value-Added

Value-Added

- Changes fit, form and function of product or service

- Transformation step has value to customer (customer would be willing to pay for it)

- It is done right the first time

Non Value-Added

- Everything else

Necessary - Has to occur to produce product or service

Unnecessary - Does not have to occur to produce product or service

Resources

Organizational Resources: - Man- Machine & other infra-structure- Materials- Method & information- Money- Market & brand

How often have you used the expressions:

“That was a waste of time!”or

“That was a waste of money!”or

“That was a waste of effort!”

Waste

Eliminating Waste

So what can we do to eliminate waste?

We first need to identify what is & is not waste, then we can look at ways of eliminating or at least reducing waste.

Identifying Waste

Operational ActivityOperationsValue added

- Any process that changes the nature, shape or characteristic of the product in line with customer requirementse.g. Pressing, welding, heat treatment.

!profitThis is where we make a

Operational ActivityOperationsValue added -Non

Work carried out which is necessary under current conditions, but does not increase product value.e.g. Inspection, tool change, maintenance.

!lossThis is where we make a

Identifying Waste

The objective is to raise the ratio of Value added operations to Non-value added operations and eliminate waste.

WASTE NON-VALUE ADDED VALUEADDED

OPERATOR TIME

VALUEADDED

NON-VALUEADDED

MORE TIME FOROTHER ACTIVITIES

Operation time

Waste is everywhere!The elimination of waste is a massive opportunity!!Lean Strategy is the best way to eliminate waste

Elimination of Waste

Flow Manufacturing

New BusinessSustainable Profits

DecreasedCost =

ImprovedFlow

DecreasedCost=

Eliminationof Waste

ImprovedFlow=

We know that there is a directlink between flow and cost

Understanding Value and Waste

- To go Lean and stay Lean, you continually need to understand customers and what they value.

- To satisfy customers, you will need to eliminate or at least reduce the wasteful activities for which your customers would not wish to pay.

- To do this, Lean leader Toyota identified three key areas to address: muda, mura, and muri.

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Lean Manufacturing Wastes

- When people think of waste in manufacturing they usually only think about all of the scrap material that gets thrown away or if your lucky recycled, they often forget about all of the other actions that waste our time, our resources and our MONEY..

- When someone who has had some contact with Lean Manufacturing seven talks about waste they are often talking about Muda, or the

+ wastes depending on your definitions), but they 8(or wastesoften forget the other wastes defined within the Toyota Production System; Mura and Muri.

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Muda (the 7 waste)

Muda is any activity or process that does not add value, a physical waste of your time, resources and ultimately your money. These wastes were categorized by Taiichi Ohno within the Toyota production system, they are;

the movement of product between operations, and ; Transportlocations.

the work in progress (WIP) and stocks of finished goods ; Inventoryand raw materials that a company holds.

the physical movement of a person or machine whilst ; Motionconducting an operation.

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Muda (the 7 waste)

; the act of waiting for a machine to finish, for product to Waitingarrive, or any other cause.

; Over producing product beyond what the customer Overproductionhas ordered.

; conducting operations beyond those that customer processing-Overrequires.

; product rejects and rework within your processes.Defects; failing to utilize the skills and knowledge of all of your Talent

employees.used machines-; failing to turn off lights and unResources

By-Products; not making use of by-products of your process

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Transportation

- Material/parts movement

- Unnecessary moving or handling of parts.

- Handling equipment moving with no parts.

- Raw material batch sizes not matching production batch size.

- Material stored a long way from point of use.

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Waste of Transportation: Example

Employee walks 35 feet to next station 32 times per day

Avg. walking pace = .227 seconds per foot.227 seconds x 35 feet = 7.9 seconds per trip7.9 seconds x 32 times = 252.8 seconds per day252.8 seconds x 260 working days = 18.3 hours per year18.3 hours x $20 per hour = $366 per year spent for employee to walk to next station

If stations were 6 feet apart, the amount paid to walk to next station would only be $63

Inventory

- Inventory makes control difficult and obscures the opportunity for

improvement.

- Delays action in dealing with faults and defects

- Reduces need to face up to fast tool changeovers

- Imbalance in facility capability

- Goods can become damaged or obsolete

- Creates unnecessary searching and movement of materials

- Takes up space18

Company rents warehouse space to hold extra inventory

Need 4,000 square feet to hold inventoryWarehouse space costs $4.00 per square foot per month4,000 square feet x $4.00 = $16,000 per month$16,000 x 12 months = $192,000 per year for storage

Waste of Inventory: Example

Motion

- Looking for tools, materials etc

- Double handling

- Turning

- Bending

- Stretching

- Walking ……. etc20

Waiting

- Waiting for material

- Waiting for maintenance

- Waiting for tool change

- Waiting for quality checks

- Waiting for next station

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Employee waits 20 seconds for previous operation to finish each part

20 seconds x 60 parts per hour = 20 minutes per hour spent waiting for parts 20 minutes x 8 hours per day = 2.67 hours per day spent waiting2.67 hours x 260 days per year = 694.4 hours per year spent waiting694.4 hours x $20 per hour = $13,888 spent on employee waiting for previous operation

Waste of Waiting: Example

Overproduction

- Making more than the customer needs

- Making in large batches

- Overrunning an unstable process

- To produce more than is required

- To produce before required

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Over-processing

- Wrong choice of equipment

- Bad definition of customer's needs.

- Useless operations

- Excessive movement in process cycle

- Too frequent inspections

- Excessive set-up or downtime

- Bottlenecks

- Unbalanced process24

Defects

- Scrap

- Rework

- Trimming

- Rejects

- Recalls

- Defects are the primary metrics in Six Sigma strategies.

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Talent

- Non use of people

- Skills

- Communication

- Creativity

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Mura (Waste of Unevenness)

Mura is the waste of unevenness or inconsistency, but what does this mean and how does it affect us? Mura creates many of the seven wastes that we observe, Mura drives Muda! By failing to smooth our demand we put unfair demands on our processes and people and cause the creation of inventory and other wastes.

One obvious example is production processes where the manager is measured on monthly output, the department rushes like mad in the final week of the month to meet targets, using up components and producing parts not actually required. The first week of the month is then slow due to component shortages and no focus on meeting targets.

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Muri (waste of Overburden)

Muri is to cause overburden, by this we mean to give unnecessary stress to our employees and our processes.

This is caused by Mura and a host of other failures in our system such as lack of training, unclear or no defined ways of working, the wrong tools, and ill thought out measures of performance.

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Mura, Muri and Muda

Finally Mura causes Muda, the seven wastes are symptoms of our failure to tackle Mura and Muri within our processes not the root cause!

is about the removal of waste; but not just Muda Lean Manufacturing(non-value adding steps), it is about removing Mura and Muri too. In fact by concentrating on solving Mura and Muri you prevent the creation of Muda.By working on Just in Time (JIT) principles with Heijunka, Kanban and other techniques you enable production smoothing and flow; removing the causes of Mura, unevenness. The other lean tools such as 5S help you to remove other causes of overburden removing Muri, overburden.

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Typical symptoms of Waste

- Excessive Cycle, Lead or Flow Time- Excessive costs- Poor quality- Inflexible production systems- Late deliveries- Excessive inventories- Dependency on work-around methods- Reactive fire-fighting- Daily management by exception

Wastes Effect

Transportation

Motion

Waiting

Over production

Inventory

Over processing

Defects

Overproduction is considered the "mother of all wastes" since it can lead to increases in all the other forms of waste.

Overproduction discourages a smooth flow of production and leads to excessive work in process inventory. This increases overall delivery times .

Adds cost, requires space, hides process defects, can encourage damage.

Adds time & cost and can be a safety issue.

Creates excessive lead time, causes bottlenecks, causes additional time & cost.

Leads to increased time & cost to transport & search, and increased Defects due to accidents.

Defects can lead to additional time and cost, and more critically it can reduce customer confidence.

Can result in scheduled work time being longer than needed, Parkinson’s Law in project task execution, increases in time & cost.

1. Specify value in the eyes of the customer.2. Identify the value stream and eliminate waste.3. Make value flow at the pull of the customer.4. Involve and Empower employees.5. Continuously improve in pursuit of per fection.

CONTROL MEASURE

ANALYZEIMPROVE

Lean Enterprise Principles

Practical work sample

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Questions

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