4.Let the customer pull product or service throughthe process.5.Perfect the process.
The determination of which featurescreate value in the product is made from the internaland external customer standpoints. Value is expressedin terms of how the specific product meets the cus-tomer’s needs, at a specific price, at a specific time.Specific products or services are evaluated on whichfeatures add value. The value determination can befrom the perspective of the ultimate customer or asubsequent process.
Identify the value stream.
Once value is identified,activities that contribute value are identified. Theentire sequence of activities is called the value stream.Then a determination is made as to whether activitiesthat do not contribute value to the product or serviceare necessary. Necessary operations are defined asbeing a prerequisite to other value added activities orbeing an essential part of the business. An example of a nonvalue added but necessary process is payroll.After all, people need to be paid. Finally the impactnecessary, nonvalue added activities have on theprocess is reduced to a minimum. All other nonvalueadded activities are transitioned out of the process.
Once value added activities and nec-essary nonvalue activities are identified, improvementefforts are directed toward mak-ing the activities flow. Flow isthe uninterrupted movement of product or service through thesystem to the customer.Major inhibitors of flow arework in queue, batch processingand transportation. Thesebuffers slow the time from prod-uct or service initiation to deliv-ery. Buffers also tie up moneythat can be used elsewhere inthe organization and cover upthe effects of system restraintsand other wasted activities.
Allow customer pull.
Afterwaste is removed and flowestablished, efforts turn to let-ting the customer pull productor service through the process.The company must make theprocess responsive to providingthe product or service onlywhen the customer needs it—not before, not after.
Work toward perfection.
Thiseffort is the repeated and con-stant attempt to remove nonvalue activity, improveflow and satisfy customer delivery needs.While lean focuses on removing waste and improv-ing flow, it too has some secondary effects. Quality isimproved. The product spends less time in process,reducing the chances of damage or obsolescence.Simplification of processes results in reduction of vari-ation. As the company looks at all the activities in thevalue stream, the system constraint is removed, andperformance is improved.The lean methodology also makes some assump-tions:•People value the visual effect of flow.•Waste is the main restriction to profitability.•Many small improvements in rapid succession aremore beneficial than analytical study.•Process interaction effects will be resolved throughvalue stream refinement.People in operations appreciate this approach.Lean involves many people in the value stream.Transitioning to flow thinking causes vast changes inhow people perceive their roles in the organizationand their relationships to the product.
Theory of constraints (TOC)
TOC focuses on system improvement. A system isdefined as a series of interdependent processes. Ananalogy for a system is thechain: a group of interdepen-dent links working togethertoward the overall goal. Theconstraint is a weak link.The performance of theentire chain is limited by thestrength of the weakest link. Inmanufacturing processes, TOCconcentrates on the processthat slows the speed of prod-uct through the system.TOC consists of five steps:1.Identify the constraint.2.Exploit the constraint.3.Subordinate other processesto the constraint.4.Elevate the constraint.5.Repeat the cycle.
. The constraint isidentified through variousmethods. The amount of work in queue ahead of a processoperation is a classic indicator.Another example is whereproducts are processed inbatches.
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Lean focuses on theremoval of waste, whichis defined as anythingnot necessary to producethe product or service.