Week 3 Customer value

Question 1

Define Value, relative to customer value

Answer 1

If you are going to be value-added, you have got to meet all three criteria.
• Physically changing the process object
• Doing it the right the first time
• The customer paying for it

Everything else is non-value-added; we call that waste, or muda in Japanese.

If I’m not delivering value I’ve just got waste.

Question 2

Gemba, “going to gemba”

Answer 2

Gemba is a Japanese word that means “the real place.” In Lean, we use it to mean “where the value is added” or “where the action is.”

In Lean, it means, leave your office to go see where the real value is created.

It is not okay to start coming up with ideas to improve until you really knew the process.

Model introduce yourself, “here as an observer, I’m hoping to see the process how it runs today … through observation and data collection generating new ideas, if you have ideas to improve the process I will get them documented.”

Question 3

What is a defect; based on customer needs

Answer 3

In lean defect is defined on customer needs and requirements: Anything that does not meet the customer’s expectations is a defect.
Characteristics the customer requested:
- size of product
- weight of product
- color of product
Intended function
Simple rule, if service or product needs to be done again it is defective.

Requirements: the details to meet the customer need.
If it needs to be done again, it was defective; applies to customer internally or outside.

Question 4

Non-value added; defined as not having three attributes of value added, relative to customer value

Answer 4

Value added must be:
1) Change the form or function of a product, if necessary
2) get it right the first time
3) Know for a certainty that the customer is willing to pay for it.
COMPARE TO WASTE:

Question 5

Asking the right questions in order to assess value; relative to customer value

Answer 5

• where is the value in a particular step of a given procedure?
• When is machinery being used?
• When is data being entered?
• When are services being delivered?

Question 6

Identify value as steps in the process and organization, relative to customer value

Answer 6

• Is there value in the beginning steps of the process?
• Is there value in the middle of the process?
• Where is the value at the end of the process?
• Does this process generate value for the customer or are there entire processes that do not generate any value?
• Separate true value-add or non-value-add
• Customer does not pay for government reports, there’s no value, but if you’re not in business you provide no value.

Question 7

“Waste walk”

Answer 7

Practice GEMBA, put DOWNTIME on the left side of the paper and include those in the department and those outside the department.
- types of waste in the first column
- location in the second column
Share feedback and ideas being shared among the team.
Need 5s audit form knows they can add value,
we want them to know we have methods to help make their lives better.

Question 8

Needs of the customer, relative to customer value

Answer 8

Most basic problems customer is trying to solve.

Question 9

Non-value-add examples requirements, relative to customer value

Answer 9

• Inspection reports (non-value item, must be done to deliver to customer)
• Regulatory registration (non-value-added, not value added)
• Audits
• Compliance
• Invoicing (non-value-added, starting to see driven out, paying within 30 days of receipt)

Question 10

Opportunity cost, relative to customer value

Answer 10

While you are rebuilding a product or redoing a service for the first customer, there is often a second customer waiting for you.
- while you’re redoing for the first customer, the second customer is waiting.
-

Question 11

Causes of defects, relative to customer value

Answer 11

There are many possibilities but these will occur over and over:
• Variation in work processes
• Poor training or no training
• Poorly maintained equipment (dull part, something out of alignment, office, database out of date, problems that are past on to next department)

Question 12

Overproduction, relative to customer value

Answer 12

Overproduction means:
• Making more than what is needed
• Making things sooner than needed
• Making things faster than needed

Keep in mind, all of this applies to the service industry as well:
• Delivering more services than needed
• Delivering services sooner than needed
• Delivering services faster than needed

Each of these is an example of the waste of overproduction.

Question 13

Overproduction: greatest of all wastes (Taichi Ohno), relative to customer value

Answer 13

Greatest waste because it leads to all other wastes.
If I over produce I run into problems like:
• Defects - Poor quality
O=overproduction
• Waiting (product is waiting to move on)
Not-hiring right people - not listed
• Transportation, effort that doesn’t present value
• Inventory
• Motion that’s wasted to move around excess.
• Extra processing
(why are you making more than needed, why are making things faster than needed? answers that sound like, “just in case” is associated with waste of overproduction.

Question 14

Waiting waste, relative to customer value

Answer 14

Waiting has major cost impacts and other negative implications, including:
• Lost sales
• Customer dissatisfaction
• Low employee morale
• Increased inventory
•
•
•
Causes of waiting:
• Unreliable equipment
- Examples include mechanical failures, operational abuse, poor network connections, etc.
• Uneven workloads across process steps
- Uneven workloads exist when there is an imbalance of tasks from one step to the next
- if step one is 6 minutes, is 3 minutes per piece, that’s 3 minutes of waiting at step 2.
-

Question 15

Waste in batch processing relative to customer value

Answer 15

People and machines wait as a consequence of batch processing.
large quantities of pieces are all processed together.
- moving products in batch leads to resource waste.
- single piece flow is key way to go.
- waiting is pure waste.
Batch leads to excessive use of resources.

Question 16

Non-Utilized talent, relative to customer value

Answer 16

• When highly skilled workers perform low-scale work; we’re missing out on their input.
• If employees do not feel fullfilled they leave
• Turnover costs money in training and finding new employees.
• Productivity suffers
• Hiring outside when its not necessary

Motivation comes from having the knowledge and skill set of a subject, and the desire to succeed. Positive changes are derived from utilizing skills, and support and enthusiasm help make the workplace enjoyable.

All successful people have good people skills.

Question 17

Transportation waste, relative to customer value

Answer 17

Waste occurs when we move product or information from place to place. Act of moving product from place to place.
Next step should be right next last step, why is it not right at hand?
Examples:
- Forklift , hi-los, pallet jacks, dollies and the people moving stuff around.
- Server rooms and fiber optic cables to move information around.
- Full-time roles designed to move parts
- Maintenance on equipment to transport.
- Floor space required to store the equipment and transport everything
- File servers and large cable installations

Question 18

Inventory waste, relative to customer value

Answer 18

It is any material or information other than what is needed right now to satisfy the customer demand. Inventory is things awaiting further processing or consumption;
Overproduction leads to inventory, waiting consumption or wip.
It is the money system invested that it intends to sell.

Question 19

Eight wastes reviewed

Answer 19

DOWNTIME

1) D stands for defects, which is poor material quality.
2) O is overproduction or any extra parts.
3) W is waiting – waiting for anyone, or anything waiting.
4) N stands for non-utilized talent, which is high-skilled workers doing low-skill work.
5) T stands for transportation, which is the conveyance of materials
6) I stands for inventory, which is work in progress or safety stock.
7) M is the motion, which is bending, twisting, or ergonomics
8) E is extra processing, which consists of rework and polishing.

Question 20

Motion waste, relative to customer value

Answer 20

It is a lot of little movements that are difficult to see and measure so they are easy to ignore, but ignoring the waste of excess motion is a huge mistake.

“ing”, small actions like: reaching, stepping, bending, grasping, looking, walking that don’t add value.

Analyzing motion challenges the status quo.

Causes of motion: poor workstation layout, centrally located supplies (goes against intuition), inefficient work methods (methods or steps to complete a task).

Searching for electronic documents.

Work station layout, require excess, reaching bending, leaning lead to repetitive stress and wastes time. Put items close to the use, not just about physical, what about searching for documents, workers spend 2 hours searching for electronic information.

Centrally located: time to move to supply area and back. Risk of distractions to and from work areas.

Inefficient work methods: location of tools, equipment, resources.

Question 21

Extra processing, relative to customer value

Answer 21

Occurs when we do more than what was expected or would be paid for:
Examples of:
• Do more than what was asked or paid for
• Repeat steps or do rework
• Inspect, check, or verify
• Work around a difficult step by doing additional things
• Duplicate information or effort
Computer files in multiple places

Inspecting, verifying; why don’t you know your process produces a quality product already?

why do we spend time on rework?

Why do we have so much?
Have we examined the time we’ve spent for files that aren’t located in one easily accessible place?

Question 22

Costs of extra processing, relative to customer value

Answer 22

Spending any time on something the customer is not willing to pay for only increases our labor cost, and increasing our labor cost does not allow us to charge more money.

The customer’s only paying us to do it right the first time.

Is it really value added or this “extra processing”?

Question 23

Compound Waste, relative to customer value

Answer 23

Often one waste begets waste; for example:
1) overproduction creates an inventory (waste) which requires more storage which is another waste. If there’s a defect, in over production, I made a lot of it.
2) Dropping something in transport causes an injury which makes people wait and the thing in transport is causing unproductivity since the item is not being worked on.
Something else will be a consequence of waste.
Transportation can beget injury, waiting, inventory, a lot of things can happen while transporting.
Any waste has the potential of begeting more waste.

Question 24

Repurposed Waste, relative to customer value

Answer 24

Consider the following points on repurposed waste:
• What starts out as waste can be repurposed into something value-add
• Materials that may not be used for their original purpose may still be used for other purposes. You
need to look for those opportunities.
• Check with your materials review board. These people make decisions about the disposition of some nonconforming raw materials
• Downgrade a non-conforming part, looking for additional opportunities to avoid suffering a complete loss.

Question 25

5 ways to obtain the voice of the customer

Answer 25

1) Interviews and focus groups
2) Surveys
3) Market research
4) Complaints and Kudos
5) Data observations = analysis (6S) & Observations (Lean)

Question 26

Voice, interviews

Answer 26

Company representative, questions to potential customers, gathering data to refine needs.
PRO
- able to assess non-verbal
- clarify questions
- unfiltered responses
CON
- relatively expenses
- skilled interviewer
- watch for focus group motive, customer answers to provide themselves an advantage

Question 27

Voice Survey

Answer 27

Questionaire to customers
- paper or electronic
- rating or rank
PRO
- inexpensive
- results 
CON
- results not verifiable
- response rates are low

Question 28

Voice market research

Answer 28

internal and external data
information 3rd party
- inputs are market demo, customer specification
margin of competition, CSI, 
- outputs, sales forecast, sensitivity forecase, 
- advertisting budget from research
PRO
- large quantitiatve data
- industyr data
CON
- very expensive
- 3rd party consultant
- they may not know your business

Question 29

Voice complaints kudos

Answer 29

returned data
- common problems with service or product
- tracking
PRO
- very specific needs requirements not met
CON
-reactive, too late input
- difficult to track and analyze,

Question 30

voice data observation

Answer 30

Observe the actual use; work Most dependable data, anthropology
- Studying your customers
- dat
PRO
- observe problems customer 
- most unfiltered data
CON
- very expensive
-

Question 31

Customer IPO model

Answer 31

Input
Process
Output

Question 32

Data collection and analysis

Answer 32

Observation more lean,
Data more toward six sigma techniques.

Lean tools, focus on observation, see variation of method that may not show up in data.

• also, Gemba allows us to get input from people doing the work.
• By contrast with six sigma (statistical analysis techniques and analysis) elimination of variation.

Question 33

Voice of the Customer: Needs

Answer 33

Needs of the customer are the most basic problems that customers are trying to solve.

• Hungry
• shelter for travel
• storage for documents
• internet access
• blood tranfusions
• retirement
• mortgages

Question 34

Voice of the Customer: needs change

Answer 34

Things that cause needs to change:

• new problems
• external pressures
• new competition
• customer awareness
• new needs

Question 35

Techniques for obtaining the Voice

Answer 35

1) Interviews and focus groups
2) Survey
3) Market Research
4) Complaints and Kudos
5) Data observations

Question 36

Six Sigma V Lean

Answer 36

Six Sigma focus on statistical techniques with data analysis. Lean observes to eliminate waste.

Question 37

Integrating Six Sigma (analytics) and Lean (observation)

Answer 37

Where observation helps to see and eliminate assignable cause variation, data analysis helps to drive out common cause variation and make overall distribution a lot narrower.

Question 38

Voice / Data observations /

Answer 38

• Data collection and analysis vs. Observation
  Whereas Lean observes to eliminate waste, Six Sigma is more focused on analysis and elimination of variation in data.
• Integrating systems

Question 39

A process must be …

Answer 39

written down. Controlling it means you have it written down.

Question 40

Every task should have …

Answer 40

an objective that meets the organizations strategic plan.