Non Value Added Activities and Six Sigma

A consumer goods packaging and container manufacturer wanted to increase the profitability of their operations by increasing the yield of one of their key processes by 2%. The company focussed on improving the output of its metal bending operation in which a new set of dies was cast and strict tolerances were introduced. After incurring a lot of capital expenses and the cost of trials/PVD coating of the dies, the firm realized that it was only able to improve the yield by 0.7%. After the containers were manufactured using the new dies, they had to be packaged. 

However, after being packaged the customer order would change many times, and the container would then need to be repackaged- a process that would damage the container in approximately 30% of the cases. In the terms of Lean Six Sigma, the initial improvement in the metal bending operation is called a Value added activity because it contributes to the quality of the final container that the customer values and pays for. Packaging, unpacking, and repackaging are considered Non-value added activities in Six Sigma and are termed as ‘wastes’.

It is generally seen in industrial operations that the scope of improvement in an existing process is much less than that of the wastes. From the above example, it becomes quite clear that even if the company had been successful in bringing about the expected 2% improvement in the yield value, overall productivity would still have been low because of the waste and complexity of packaging. The experience of this container manufacturing company makes evident the principle of reducing cost using Lean Six Sigma: The opportunities lie in reducing waste, not in adding or improving a few value-add steps in an existing process. The right approach is to identify the output that the customer values and cut out anything that does nothing to improve the output.

The Lean Six Sigma cost reduction success is based on the following three insights about waste:

1. Every process has a significant amount of evident or hidden waste.
2. Wherever there is waste, extra costs are created.
3. To reduce the cost of a process, one must strive to reduce waste.

A unique concept is to use both lean manufacturing methodology and Six Sigma together to eliminate waste and control costs. Each of these when implemented alone cannot bring about the results that both together can.

Lean Manufacturing Alone:

These methods are very effective at reducing waste and increasing profits significantly. Yet, the organizations that implement Lean manufacturing only are not able to sustain it and also cannot trace the variation in the process. The goal of lean manufacturing is to increase the processing speed and improve production capacity. However, if the process deviates from the mean then its impact on productivity is immense.

Six Sigma Alone:

Six sigma is very effective at root cause analysis and its statistical methods but Six Sigma alone may not have rapid improvement events such as Kaizen can accelerate project results and completion rates.

Some forms of nonvalue-added activities are visible immediately but some come to the surface only after a proper audit.

MUDA is a Japanese word meaning “waste”. Muda is Value Added Activities (VNAs) in the workplace. It is very easy to remember the 7 wastes just by remembering TIMWOOD.

• Transportation
• Inventory
• Motion
• Waiting
• Overproduction
• Overprocessing
• Defects

1. Transportation:

In the supply chain, especially in transport management, there is a real need to eliminate waste and introduce more efficient processes.

DMAIC model followed by Six Sigma or define measure, analyze, improve, control can eliminate unnecessary routes to deliver goods faster, which means the process will take less time and fuel. 

2. Inventory:

This form of waste is easily recognizable. Inventory is the day’s pending sales waiting to be collected.

The supply chain remains the biggest cost contributor for most businesses. Lean Six Sigma establishes flexible processes to meet ever-changing customer demand, drive continuous flow and reduce batch sizes.

3. Motion

Improper arrangements in offices or factories can lead to unnecessary trips and delays. The physical activities of the operators must be analyzed to reduce losses due to movement.

Any movement or movement during production consumes time, which is added to the overall cycle time.

4. Waiting time

An emergency room manager who faced wait times that typically exceeded 90 minutes. This manager collected data and found that wait times were wildly variable.

A Lean Six Sigma cost reduction team identified multiple causes of delays, eliminating unnecessary steps and controlling work-in-progress levels, to reduce turnaround time.

Implementation of Lean principles in healthcare can improve care capacity by as much as 30% and reduce patient waiting time by 50%.

Reference:

https://www.mdpi.com/2227-9032/9/6/763/pdf

5. Defects

If flaws seem to haunt your process, causing customer complaints despite your best efforts to identify them, your Lean Six Sigma. The cost reduction project should focus on those wastes. These are excellent cost-saving opportunities because eliminating defects saves scrap, rework and repair costs while increasing yields and customer satisfaction.

6. Overproduction

Overproduction can be classified into 3 major types:

1. Producing more than is needed for the market
2. Producing earlier than needed to the market/ consumer
3. Producing faster than is needed to the market/ consumer

7. Over Processing:

This refers to the modification of a document or information. It also refers to unnecessary steps in the process or removing some unnecessary attributes or features.

 Examples of Over Processing Muda:

•  Adding business process due to lack of space
•  Performing an inspection step because not all inspections are value-added.
•  Repeating unnecessary product changes 
•  Retention of Additional Copy Information

Click on the link(add the link to the types of lean six sigma waste blog) ) to read more about MUDA. If you want to learn new age, Nonvalue added activity in Six Sigma then one good starting point is this course (Services – arrowheadco.net) from Arrowhead.