In today’s business age customers are expecting more value from products and services without having to pay more or wait longer. In order to support this expectation of a continuously improving value proposition, businesses have to take a long, hard look at their processes in order to identify ways in which they can be improved.
LEAN is a customer-centric methodology which is used to improve business processes by identifying what it refers to as “waste”. Waste in this context can be seen as anything that creates the need for extra time, effort, resources and/or materials which in turn leads to increased costs and longer lead times.
A common misconception is that LEAN only applies to the manufacturing industry due to its link to the Toyota Production System back in the late 80s, but the truth is that LEAN can be used across all industries and by businesses both big and small. This is because waste can be found everywhere, ensuring that no business is immune.
LEAN identifies 3 main forms of waste:
- “Mura” i.e. waste related to variation
- “Muri” i.e. waste related to overworking your people or equipment.
- “Muda” i.e. the almighty 7 LEAN wastes: Defects, overproduction, unnecessary transportation, waiting and more waiting, unnecessary inventory, unnecessary/excess motion & extra processing
To help you identify areas of waste, the LEAN process requires you to break down each business process into 3 categories of activities:
- Value-added activities
Activities are value-added when:
1) The activity changes/transforms the product or service in some way
2) It must be done “right the first time”
3) Customers are willing to pay for it
- Business value-added activities
With business value-added activities, the customer wouldn’t necessarily be willing to pay for them (because they likely don’t even know that they exist), but they are still required to fulfil a regulatory, administration or organisational requirement.
- Non-value added activities
These are activities the customer is not willing to pay for and are not required for any other reason. Non-value add activities need to go straight into the waste basket (so to speak).
Value Stream Mapping and process improvement are two techniques used within LEAN for understanding and highlighting the different steps of a process in order to identify those non-value or potentially wasteful activities.
The process involves creating a visual map of all activities, materials, resources & information flows required to provide a customer with a specific product or service. It is important, however, to gather as much supporting detail as possible and to also cover the business process from beginning to end. Without details regarding resources, processing time, manpower, outputs and associated cost, your wastages may not be as easy to spot.
Once non-value add activities have been identified, process improvement allows you to make process refinements and monitor the results. If total efficiency isn’t achieved after the first round, further refinements can be made until you’ve fine-tuned everything to perfection.
Do you think the LEAN approach to business improvement can add value to your business?
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