Monday, February 9, 2015

What should be the "target" value-add percentage in a process?

Hello everyone, Happy New Year a little late.  I was traveling on the road all of Jan so this was my first week at home.  Sorry for the blog delay.  Trying to spread the good words of "Lean Thinking" all over!!

This blog is a cross-blog share from where thought leaders are discussing this question--here are my thoughts below.

In the past several months I have had this question come up actually in different industries. So how should one determine or “calculate” value add percentage within a process (micro)? This can be subjective depending upon what you are measuring and how, but I know, based on my Japanese sensei’s, you can weave through a process and determine its value add and non value add content/percentages if you are conditioned to see it and categorize it. In manufacturing type work, by nature, can be easier to “see”. In M & I flow (for example) the “day and the life” of signatures needed on a document electronically, well– it’s not as easy but can be done if “go see” is involved with any primary process owner taking you through their steps.
In my infant learning stage of lean thinking, before we called it that, I was told a good goal to start with is a 70% value add process. This says that we understand with any process there can be minor layers of non value added categories (described below). Our first goal is to recognize it and second is the minimize it. For example where I worked in Plastics we had mold changes daily. It was an accepted process we embedded into our day, and the changes were part of set up or ancillary work that supported the process, but its non value add to the customer in all reality. Our goal is not to eliminate it in this case, but to minimize all the waste involved in it–so waste within waste. If mold changes were steaks we would want a filet mignon version.
I was taught by my sensei’s a tool called a Yamazumi board. This was a multi-function tool we could use for various things. This is basically a cycle bar chart in its essence, but this one is based on customer expectations which makes me back step into process capacity, machine capacity and manpower. Factoring all those in one could (if taken the time) can determine a takt time. If I have some level of takt time based on customer pull I can them determine a process necessary to meet expectations. Many are unwilling or unable to take the time to look through this lens of thinking for various reasons, some out of their control. The yamazumi can categorize a process into the various type of work it has. I’ve seen elaborate yamazumi’s the Japanese trainers would create for an entire line trying to minimize and re-balance the work to be as value added (without muri and mura) as possible. You would have colored magnets that could be moved around that would describe for example – waiting, walking, machine time, delay work, downtime, conveyance, rework and actual working time. This would be considered a “grasping of the situation”.

Once this is understood based on go and see then the challenge begins to try and minimize the non value added factors listed above and improve the process to achieve some stability for standardization. We cant improve without a standard so all this thinking helps up understand we need a starting point. If you can factor all these into a process and minimize waste to create a 70% value add process for an individual then you are creating a benchmark to be competitive no matter what industry you are in. If more organizations took the time to categorize work and develop people to see recognize the differences– the need for “fire-fighting” would minimize drastically. By determining value add from non value add it sheds a whole new light on process versus results and leading and lagging indicators and how organizations measure. When I answer the original question it can be overwhelming for individuals, leaders and executives to realize how much waste is really there and its the accepted norm. If you translate that “norm” to hemorrhaging costs then it gets “real” in a hurry! The buzz from my some of my sensei’s I still get guidance from still practicing today that 75-80% is sought after to be competitive with the kaizen spirit of always raising the internal bar. So a challenge for all LE readers is to try and differentiate value from non value add and then put them into categories to minimize. It’s really eye-opening, I promise. :) – 
Until next time
Tracey Richardson

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