Value-added means those activities that change raw material or information into value for the customer. Any step that does not serve the purpose of providing value for the customer is non-value-added or waste. This type of activity adds cost or time but does not add value. One way to identify what areas of your business need change is by identifying waste.
For people with continuous improvement experience, it is easier to identify waste. They will see waste jumping out in front of them. For most people, finding waste is not an easy task. If you are one of those people, use the back-door method.
Waste is everywhere, and probably things that you see now as part of the process, are waste. With the back-door approach, you look for the opposite of waste, work. Work is the value-added activity in the area. When you cannot see waste, find the work, and everything else is waste!
Follow the following five points or steps while focusing on one process.
- Look at the three real things, the functional area, the facts, and work-in-process. Do not guess or let the emotions or company culture drive the way, use data-driven thinking. Be in the look-out for excess inventory.
- Ask what the operation is about, what is the purpose of the process?
- Ask why the operation is necessary? Is there a better way to accomplish that purpose?
- Everything that is not Work is waste. Draw the process steps, and everything that does not execute the function is waste.
- Ask why at least five times to find the root cause or reason for each step to exist. Ask how you can change the process. Create an improvement plan with the information gathered and execute it as soon as possible.
If you follow these steps every time, soon you will grasp the concept. It is important to understand the purpose of the area. Why the process exists and what is the value for the customer are important pieces of information for effective waste identification.