World-Class, Lean Performance in the SMEs - Small and Medium Enterprises - by Carlo Scodanibbio, Industrial & Business Consultant - Lean Management Consultant

Carlo Scodanibbio
Industrial & Business Consultant
Lean Management Consultant

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Value Adding Management
Systematic Elimination of Waste

In operational processing, in any type of industry, at any moment in time, one of two things may take place: value-adding or non-value adding.
If one takes snapshots of an operational situation at random times,

process time analysis 1) Value may be added - or

2) Other "things" may be happening: "things" like idling, or storing, or controlling - things made by people, by machines, or by people and machines together, or even by nobody.

All those "things" have two common features: they consume time and they cost money.

A deeper investigations into those "things" reveals that they do not add value to the finished product or service. One by one:

This means setting-up a machine, a production line, a computer, a software program - means "changing-over" from one productive operation to another one - means "re-tooling" - means "preparing" for work, for production..... - means "warming-up" (of machines, lines, people....) - means "winding-down", at the end of a day or a production shift, yawning for the last 10 minutes left before go-home-time comes.... - means "organising" - etc.
During a set-up activity of any nature, time elapses, money is spent, but no value is added to the final output product or service.
Many people will disagree with that, but the crude reality remains: set-up activities do not add value.
Many of them are necessary, essential. Still, they do not add value.

This means storing goods, raw materials, finished products - means "parking" things (materials, components, paperwork) until they can be used - means "keeping-on-file" anything - means "putting-a-hold" onto something - etc.
Once again, storing activities make time elapse and money flow, but no extra value is added to the output product/service.

This means: handling, conveying, transporting goods, materials, products.... by hand, by transpallets, by fork-lift, by crane..... - means lifting, lowering, laying down, positioning.... - means people moving (for any reason) - means conveying, despatching (paperwork from office A to office B.....) - etc.
Moving things or moving of people takes time and costs money. But what extra value is added to the final product/service?
Once again, it's very difficult to explain to a client that a product or service costs so much because to produce it lots of moving and handling had to take place.....

This includes: inspecting, supervising, checking, re-checking, double-checking, controlling, monitoring, counting, re-counting, making-sure.... includes, for instance, checking or supervising somebody else's work (a letter typed by a typist or a wall plastered by an artisan....) - includes controlling quality of products produced by people or machines - includes counting goods ad re-counting them.... - includes making sure that somebody has done a job.....
In spite of what many enterprise people will say, these activities do not add extra value to the output product/service (...try to explain to a client that a product is very expensive because it has been checked by 50 different people 50 different times during its production process,,,,).
These activities, unfortunately, include also some typical/traditional management activities.
The criterion, revolutionary but simple, is "...if we just could do things right to begin with and once and forever there would be no need for inspecting and controlling.....".

If, in spite of all possible control/inspection activities, there are some errors made during processing, or some defects/non-conformities produced, these must somehow be dealt with.
People errors and mistakes may have to be recorded, analysed, investigated, classified, reported, and administered, in order to take adequate "corrective actions" - defective products or components may have to be re-worked, or repaired, or "de-graded", or destroyed, or disposed of, or sold as scrap... which requires handling them, moving them, counting them, and keeping records of, and making reports about, and.... - under certain QA programs, special procedures have to be implemented (segregation, analysis, recording, launching corrective actions.....) - etc.
All these and many other, similar activities take time and cost money, but do not add any extra value to the output product/service.

Plant, machines, equipment and, generally, "technology" are there to produce value.
When there is a "malfunction", a piece of equipment produces reduced value or none at all.
Equipment malfunctions include: break-downs, minor stoppages, idling, operating at reduced capacity, producing "fresh air", producing defective output, generating "yield" losses at start-up, etc.
When these and other occurrences happen, time flows and money flows, but reduced or no value is added to the output product/service.
Once again, it's very hard to explain to a client that a product or a service costs so much because the machine/s that produce it break down so often.....
The above list of non-value adding activities/occurrences is just a guideline, valid for any industry. The list is not exhaustive, but it gives sufficient criteria and food-for-thought.

Obviously, one needs not be too drastic, and consider totally "negative" any non-value adding activity/occurrence, such as any "storage" activity (including luggage stored in a luggage deposit), or control activity (like checking that all required tools are in fact available for a job....).....
BUT, in a world-class environment, the approach needs to be rather radical:

Any processing activity (or occurrence) that does not contribute to add value (as seen from the client point of view) to a product or a service, must be looked at very suspiciously: most probably, it's just pure waste.....

Traditional, old-world enterprises have tried to maximise efficiency and effectiveness of all significant activities.
They have created extremely efficient supervision systems, internal transport departments, quality control systems, set-up engineers, and automated super-star-galactica warehouses, without even querying if their existence was justified or it had any logic......

New-world enterprises need to look at processes with the value-adding angle of view, and, before anything else, must try to eliminate or reduce to minimal proportions all non-value adding activities. This approach is a waste-fighting approach.
After which, the remaining value-adding activities can be streamlined and rationalised for generation of high levels of value. (more »)

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