Companies are increasingly recognizing the importance of being customer-focused in the modern, competitive business landscape. They’ve understood how this trait can help them achieve and maintain a competitive edge over competitors.
In a struggle to achieve this goal, many organizations have adopted Lean Manufacturing principles, a methodology centered on maximizing value for customers while minimizing waste. You might wonder what exactly is”lean value” in the context of manufacturing. To help you understand lean value, we’ve brought you this article. Explore the definition of value, how it is identified, and its significance in driving efficiency and customer satisfaction.
The Customer as the Definer of Value
Lean manufacturing strictly defines value from the customer’s perspective. It represents anything that the customer is willing to pay and is able to meet their needs and expectations. This focus on customers is what makes lean extremely effective across various industries, be it manufacturing or service based, as it ensures all efforts are aligned with delivering value to customers.
An Example of Value
Here’s an example! Let’s consider buying a study table. If a customer receives it in parts, dismantled,, they’ll have to bear extra charges and cost to get it assembled, and make it functional. From the customer’s viewpoint, the value is fully delivered if the piece of furniture is fully functional, ready to use. This scenario helps us understand that value isn’t just about the product only, but the complete solution that meets the customer’s needs.
Identifying Value and Waste
Value StreamMapping
How to identify value and waste during manufacturing emerges as a legitimate question. Since the goal is effective delivery of such value to the customer, organizations must adopt practices that help them identify and differentiate waste and value. It’s better to map out their processes step by step to identify value-adding activities and eliminate those that do not contribute to the final product.
This is where the concept of Value Stream Mapping comes into action. It’s an effective tool that allows businesses to visualize the entire production process, from raw materials to the final product besides identifying value-adding and non-value adding activities.
| Value-Adding Activities | Non-Value-Adding Activities |
| These are the practices that contribute directly to transforming or adding value to a raw material or input into a final product or service the customer desires and is willing to pay for. | These are the practices that do not contribute to the final product but may be present in the production or delivery process to the customer. |
Essential criteria for value-adding activities include;
|
These activities are considered waste and should be minimized or eliminated. |
Waste and its Seven Types (TIMWOOD)
Taiichi Ohno, the architect of the Toyota Production System, identified seven types of wastes, whichinstantly became essential to lean principles. Commonly represented by the acronym TIMWOOD, these seven types of wastes are listed below.
| Sr. No | Waste | Description |
| 1 | Transport | Unnecessary movement of materials or products that adds no value. |
| 2 | Inventory | Excess products or raw materials that are not immediately needed. |
| 3 | Motion | Unnecessary movement of the staff or workers that do not contribute to product creation. |
| 4 | Waiting | Delays in the production process due to bottlenecks or lack of resources. |
| 5 | Overproduction | Production more than what is needed, leading to excess inventory. |
| 6 | Over-Processing | Performing more tasks or doing more work than is required to meet customer demands. |
| 7 | Defects | Flaws in products that result in rework or customer dissatisfaction. |
This waste not only requires thorough understanding, but steps to eliminate them for enhancing efficiency and delivering value to the customers.
Differentiating Necessary Waste from Pure Waste
Lean manufacturing practices also involve the concepts of pure waste and necessary waste.
Pure Waste refers to activities that do not add value and can be eliminated without affecting the final product. Unnecessary meetings or unusually long waiting times, for instance are considered pure waste.
On the contrary, Necessary Waste includes activities that might not be value-adding from a customer’s perspective, but are essential for ensuring the quality and functionality of the product. For example, testing a product before it reaches the market or customer is important as it prevents defects and ensures reliability. However, customers might take it as a delay and consider it unnecessary.
Lean Tools for Identifying and Eliminating Waste
Lean manufacturing offers a variety of tools and techniques to help organizations identify value-adding activities and eliminate waste. Some of the most effective tools include:
- 5 Whys: This problem-solving technique involves asking “why” multiple times to get to the root cause of a problem. It helps in identifying the underlying issues that contribute to waste. Eliminating these issues result in a product or service that’s packed with value.
- A3 Problem-Solving: A structured approach that uses a single sheet of paper to document the problem, analysis, and proposed solutions. All these steps encourage collaboration and clear communication, which ultimately incorporate value in the finished product.
- Gemba Walks: This practice involves managers visiting the actual place where work is done to observe processes, engage with employees, and identify areas for improvement.
The Role of Value in Lean Success
The success of Lean manufacturing hinges in the accurate identification and delivery of value. Organizations can accelerate and prioritize their efforts on activities that directly contribute to customer satisfaction. This results in operational efficiency besides enhancing the organization’s ability to compete in the market.
Moreover, understanding and delivering value is the key to building strong customer relationships. Customers are more likely to remain loyal to a brand that consistently delivers value and meet their expectations besides ensuring timely delivery.
Conclusion
Lean value is defined as the attributes of the products for which the customers are willing to pay, and thus becomes a cornerstone of lean principles. By adopting a customer centric approach and utilizing tools like value stream mapping, 5 Why, and Gemba Walks, organizations can identify value-adding activities, minimize waste, and optimize processes to deliver superior value. The ultimate goal of value in lean manufacturing is about creating products and services that meet customer needs and drive long term success for organization.
