To truly deliver value, we first need to understand what value is from our customers’ perspective. We call this definition of value the Voice Of the Customer (VOC) and we should use it as our guiding principle for everything that we do.
So, we have two types of process steps. They are: value add (VA) and non-value add (NVA). A value add process can be defined as one where the answer to all of the below is ‘yes’.
- Does the process task change the form, fit or function of the item?
- Is the feature / process step correct first time?
- Is the customer willing to pay for this step / feature?
If the answer to any of these is ‘no’ then we have a non-value add step. That doesn’t mean that we have to remove the step from the process, however, it does highlight the step as a cause of waste and an area of improvement from which we should seek to derive some value.
Waste process steps can be categorised as below:
- Transport: if physical parts or data need to be moved from one place to another to continue the process, this is wasteful.
- Waiting: any time that material, information, equipment or people are idle is waste.
- Over-production: to anticipate demand creates waiting (above) and inventory (below) issues.
- Defects: any part of a process where re-work is required / scrap is generated.
- Inventory: any raw material, items in production, backlogs of information or finished goods are inventory. They consume resources to manage and a big pile of stock doesn’t provide value to the customer.
- Motion: if the process requires people or goods to move further than is absolutely necessary, then this is waste.
- Extra processing: if we’re carrying out more work than is absolutely necessary, this is also waste.
We should mark NVA process steps on our process models.
The below model helps us to understand the customer wants & the relationship between their wants and their satisfaction.
Continual flow of materials through a process is how we achieve minimal waste. Any of the factors explained above add waste. Things in our process that we can look for that are wasteful and not valuable to the customer can be:
- Situations where materials are moved / processed in batches.
- Bottlenecks in a process that choke process flow.
- Stop / start process flows.
- Uneven pacing through a process.
- Physical movement of items back and forth through a process.
- Differences in sequencing / pacing for items going through the process.
- Time spent staging or preparing batches for the next step.
Think of this super optimal scenario. You have a bakery. You have one cake on the shelf. As soon as a customer picks that cake, a new one is baked and placed on the shelf immediately. What does that do? Well, it maximizes customer satisfaction as they have a nice, freshly baked cake and it improves our business as we don’t need to hold excessive inventory.
So, now let’s continue our analysis of value and start working through our cause and effect diagrams to identify which inputs (X’s) have the largest impact on our output (Y). We can then see the changes on X we can make to create the biggest shift in value for our customers.
To do this, we can write all of our input factors (X’s) down the left hand side of a table and all our outputs along the top. We can give the outputs a weighting (how important they are to the customer) – these weightings should be between 1 and 10.
Now, we have our ratings for the weight of each Y factor, we must create a relationship score. That is, how much does this input affect the variation (quality) of the output? This score should be between 0 and 9.
To calculate our total score and therefore understand the importance of each input we must multiply each input relationship value by the weighting for the output and add all the resulting figures together.
So we know that the total value for input 1 is: 29, input 2 is 122 and input 3 is 108. So, we know that changes to input 2 will have the greatest impact on the quality (variance) of our output & hence the greatest impact on our customer satisfaction.
Content based on study of the Six Sigma Black Belt course and Six Sigma for Dummies