The concept of waste in organizations has once again become important due to the emergence of concepts such as “Lean Company”, where the value we generate for the customer will be once more driven to the center of the company. The concept of a lean company is based on using fewer resources to obtain the same results that we have through a traditional system, identifying the value chain, and reducing waste and costs. These same principles are essential when we analyze whether a process is likely to be automated using RPA (Robotic Process Automation) tools, or when we seek to optimize it before automating it.
The business models of many service companies are often involving a large number of activities that do not create any obvious value for the customer, but companies are required to perform them.
Among these activities are the ones performed by support areas such as human resources, accounting, risk management, etc. As Beau Keyte and Drew A. Locher highlight in their book The Complete Lean Enterprise, Value Stream Mapping for Office and Services: “When a company walks the path to becoming a Lean company, it must challenge the entire business model.
Otherwise, the actions [without added value for the client] will remain unchanged and the company may not be able to comply with its business strategy and objectives”.
So one of the first actions when we seek to either implement the lean methodology or automate processes, is to identify the value chain within our services, and to be able to distinguish what is value and what is waste.
However, when we talk about services, it is not always easy to translate manufacturing concepts. Therefore, the approach of Keyte and Locher seems particularly valuable when they explain the seven types of waste (or molt, in Japanese) for the lean methodology, to which they have added one more, the underutilization of people:
- Overproduction: This kind of waste consists in producing more information or services than necessary, or before the client requires them. For example, preparing too detailed reports, highly detailed plans, financial planning too far in the future.
- Inventory: everything that exceeds the flow for a single “piece” or batch processing. Examples: process all invoices together once a week; perform all performance evaluations at the same time in the year.
- Corrections: Any activity that carries out to correct an error that has been committed. Examples: correction of errors in the entry of orders, issuance of credit notes due to errors in the invoice, hire a person who was not fully qualified for a position.
- Additional processing: steps that take longer than it should last, or complete activities that do not add value to the customer. Examples: the process of budgeting a company (it does not add value to the external client and its value can be questionable for internal clients), meetings that take longer than they should, request excessive approvals, ask the same question to a patient several times.
- Movement: movement of service and office personnel. Examples: walk to and from centralized files, printers, scanners, etc.
- Transportation: movement of information or materials. Examples: e-mail carrying, paperwork or customers from one person to another.
- Waiting: Customers or information waiting too long in order to be accepted or reviewed. For example waiting more than necessary to take a decision, to solve a problem, for a system to respond and so forth.
- Underutilized people: do not use people’s full skills and abilities. Examples: give people only limited responsibilities, insufficient training.
In order to identify these wastes in the office, Keyte and Locher recommend: “review the direction and objectives of the organization, and the process that contains the associated value chain.
Then, the team must identify only the “key waste” that actually obstruct the process to meet those goals. Finally apply the “five whys” technique.
For each example of waste, ask the question “why?” several times until you identify a reason for this specific waste. Repeatedly asking the question “why” leads the team to identify its root cause, and often to many surprises, questions and discussions. ”
One last reflection: the discovery of waste in our processes is a teamwork. Promoting a culture of openness, communication and recognition is essential to generate teams capable of successfully identifying and eliminating waste.
Author: Jorge Oropeza
Beau Keyte, Drew A. Locher; “The Complete Lean Enterprise, Value Stream Mapping for Office and Services”, 2016, CRC Press