One of your goals as a successful business owner is to deliver high-quality products to the customer at the lowest cost. The goal of lean or continuous improvement is to provide the customer with the highest quality, at the lowest cost, in a shorter time. It sounds to me that both goals are the same, what do you think?
Continuous improvement achieves the goal by continuously eliminating waste, and you need to learn what it is and eliminate it. Waste is any activity that the customer is not willing to pay. They don’t have problems paying for activities that transform materials into finished goods or processed information. We call those activities value-added.
The customer does not pay for the cost of fixing errors, waiting time, or excess inventory. These activities are non-value-added or waste, and the target of continuous improvement is to eliminate them.
Waste has seven categories: transportation, inventory, motion, waiting, over-production, over-processing, and defects. There is another category added later, which is underutilization of people’s talents.
- Transportation is an essential part of operations, but it does not act any value from the customer perspective. The goal of CI is to minimize transportation to the minimum necessary.
- Inventory of raw materials is also a necessary evil, but you do not want to have excess inventory. Excess inventory is at risk of being damaged or become obsolete.
- Any motion of a person’s body that is not related to adding value is waste. Poor ergonomic designs make people move their bodies more than necessary causing safety and productivity issues.
- Waiting for materials, for approvals, for a phone call, or for shared equipment to become available are all examples of waste.
- Over-production is when we make too much because we are producing ahead of the real demand. Over-production creates more waste in the form of inventory, motion, waiting, and others.
- Over-processing is doing more than what the customer requires. A common example of this is when you receive items in a box that is three times the appropriate size.
- A defect is when we make a mistake, or produce defective items. Fix defective products comprise time, material, and other resources.
- Underutilization of people’s talents is not letting people work at their full capacity. Examples of this are lack of training, not trusting in their capacity to improve processes and siloed thinking.
You can use a process map to highlight the waste on the process. Make sure that you eliminate or minimize waste while designing the new process. Your strategy to increase profitability is to eliminate waste.
What are your business goals? Is one of them to deliver a high quality product at a low cost? Are you targeting to increase your business profitability? Do you want to grow your business? If you answer yes to any of the last three questions, then continuous improvement is the business strategy you are looking for. Contact me, and we will work together to improve your business processes from the customer perspective.