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Analyzing for Value

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Learning Objectives

 Defining true customer value

 Analyzing customer satisfaction

 Pinpointing waste and its seven forms

 Building cause-and-effect matrices to analyze factors leading

to value

 Using Failure Mode Effects Analysis (FMEA) to analyze for

value
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Understanding and Achieving Value:
It’s Customer-Driven

 Voice of the Customer (VOC)

The set of product or service features that customers truly

desire — whether they explicitly express them or even
consciously know them

 Companies goal as the producer is to listen to the VOC

 In Six Sigma companies, the voice of the customer is

captured and cherished as the driving North Star in
improvement.
+ Ascertaining value
Two types of Processes:

 Value add- a feature or process step that truly adds value from
the customer’s perspective

 Non-value add- Features or process steps that do not add value

A set of three simple criteria always reveals whether some feature

or task has value

 Does the process step, task, or feature in question change the form,
fit, or function of the item being created for the customer?

 Is the feature created correctly, or is the process step or task

performed correctly the first time?

 Is the customer willing to pay for the process step, task, or feature?

Unless the process step, task, or feature in question generates

a “yes” answer to all three of these questions, you
characterize it as non-value add.
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 Categorizing a process step or feature as non-value add
doesn’t mean it must be eliminated.

 Steps and features identified as non-value add should always

be candidates for elimination, but often, because of
important regulatory reasons or requirements, we cannot
remove them.

 Removing non-value add steps isn’t the only place for

improvement.

 Process steps that add value can always be improved from

their current levels of efficiency
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Defining the seven forms of waste
All the non-value adding waste in a process or product falls
into one or more of seven distinct categories

 T: Transportation
 When parts, material, or information must be moved to continue a
process, that means waste has entered in the system

 W: Waiting
 Whenever a person, a part, a material, information, or equipment
sits idle without something being done to it, it’s waiting.

 W: Overproduction
 Overproduction occurs when, in anticipation of a future need, you
purposely produce more of an item than is presently needed
+  D:Producing
Defects
 a defective item means you have to rework or scrap it.
Not only is the original effort waste, but you also have t expend
extra resources to remake the item.

 I: Inventory
 Raw materials in storage, items in-process on the production line,
backlogs of information, and finished goods waiting to be
shipped are all inventory.

 M: Motion
 A process that requires people or equipment to move or walk
more than is minimally required to produce a product, feature,
and so on is waste.

 E: Extra processing
 When you perform more work on an item than I needed, you’re
creating extra processing, which is a kind of waste.
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Kano’s framework: Hearing the
voice of the customer
 Model for characterizing the various requirements from your
customer

 Kano believed that not all customer requirements are created

equal

 Kano’s model, the horizontal axis represents the level to

which the company meet a customer requirement.

 The vertical axis represents the degree of satisfaction the

customer experiences from how well or completely the
company meet the requirement
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+ Kano reasoned that customer requirements fall into three
categories,

Needs

 Needs are expected requirements that the customer assumes

will be in a product or process

 When needs are achieved then the customer’s satisfaction is

only neutral

 If the needs are not achieved then the customer is dissatisfied.

Wants

 These one-dimensional requirements are the stated

requirements from the customer

 The customer is either satisfied or dissatisfied in direct

proportion to how fully the company achieve or fail to achieve
these requirements
+ Delighters
 Expectations that the customer hasn’t anticipated and may
not even be aware of.

 Failing to deliver them doesn’t cost the company

 Identifying and achieving delighter characteristics is critical

to business success because they're innovative and
differentiate from the competition
+ Analyzing Process Flow for Value:
Introducing Take One, Make One
 A process where material and information flow continuously is one that
has minimal waste

 one way to identify waste and improve value is to look for disruptions to
flow

Indication of poor flow includes:

 Materials, products, or information being processed or moved in

batches

 Bottlenecks that choke the flow of a process

 Stops and starts in the flow of the process

 Uneven pacing of items through the process

 Physical movement of items back and forth across a process

 Differences or exceptions in the sequence or pacing of items through

the Process

 Staging or prepping of batches of items for a subsequent step

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There are two types of process flows:

 Single piece production flow

 Batch processing-where multiple items are advanced

through process steps together

 Batch processing always creates waste

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Cause-and-Effect (C&E) Analysis

 Not all factors have an equal effect on process or product

outputs

 A cause-and-effect matrix —a C&E matrix for short — helps

to discover which factors affect the outcomes

 It provides a way of mapping out how value is transmitted

from the input factors of the system (the Xs) to the process or
product outputs (the Ys)
+ Laying out the matrix
 list all the possible input factors (the Xs) as individual rows of
the matrix.

 This listing of inputs should come from a previously

completed process flow map or value stream map or a
fishbone diagram

 list the multiple outputs (the Ys) of the process or product

across the columns of the matrix
 Add Weights
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 give each listed output a weight score based on how
important that output is to the customer

 Weight scores range from 1 to 10, with 10 indicating extreme

importance and 1 indicating insignificance.

 Next add the relationship score. Analyze and quantify the

relationships between each listed input and each output by
placing a relationship score (on a scale of 0 to 9) at the matrix
intersection of each row and column
 Strong cause-effect relationships are scored as 9s
 moderate cause-effect relationships get 3s
 weak relationships are 1s
 no relationship means a score of 0
+ Figuring the final score
 With the scoring of the matrix completed, summarize the
results by calculating the weighted score for each row.

 Go to each row and multiply the first matrix cell score by the
first column weight

 Add that result to the second matrix cell score and multiply
the result by the second column weight, and so on

 Adding up the weighted scores for the entire row

 Place this weighted row sum in the far right column of the
C&E matrix