What is a Process?

A process is an systematic activity comprising of smaller activities that culminate in an outcome — service or product. A process can take up time, space, and resources. All processes can be categorized into the following categories: Value-added, Non-value added but necessary, and Non-value added.

From the Customer’s Perspective:

1. Value-added: This step in the process adds form, function, and value to the end product and for the customer.
2. Non-Value-Added: This step does not add form, function, or assist in the finished goods manufacturing of the product.
3. Non-Value-Added-But-Necessary: This step does not add value, but is a necessary step in the final value-added product.

(2) & (3) naturally create waste, of which there are 7 types:

1. Over-Production: Producing more than is needed, faster than needed or before needed.
2. Wait-time: Idle time that occurs when co-dependent events are not synchronized.
3. Transportation: Any material movement that does not directly support immediate production.
4. Processing: Redundant effort (production or communication) which adds no value to a product or service.
5. Inventory: Any supply in excess of process or demand requirements.
6. Motion: Any movement of people which does not contribute added value to the product or service.
7. Defect: Repair or rework of a product or service to fulfill customer requirements.

It’s important to understand “Value” in terms of the customer. From the custoemer’s perspective, “Value” could be defined in the form of a question:

Which process steps (and associated costs) do our customers not have to bear?

It’s a revealing question — most companies are glad that they do not have to reveal how their product or service is created, for fear of their inefficient processes and wasteful operations revealed to the customer.  This stance is sometimes aptly called "not revealing how the hotdog is made", amicably referring to the unknown contents of the hotdog.

Process Cycle Efficiency

There is a metric that helps to identify how much of a process is actually value-added.  It requires a few things:

1. Map the process.
2. Identify the Value-added steps, non-value added steps, and the non-value added but necessary steps.
3. Stratify your map according to the items in #2
4. Add a time dimension to the process steps.

Once you have completed steps (1) – (4), then you can simply calculate how much is actually value-added, as a percentage.  The time for the entire process — end-to-end — is called a cycle time.  To identify the Process Cycle Efficiency, you just divide the value-added time by the cycle time for the process.

Process Cycle Efficiency = (Value-added Time / Cycle Time)

For example, take the hypothetical process below:

The process above has a cycle time of 860 seconds.  So, the Process Cycle Efficiency could then be calculated by doing the following:

Process Cycle Efficiency = 182 / 860 = .21, or 21%

In other words, only 21% of the process above is considered value-added to the customer. 

Data like this can help the firm increase their value-added percent to the customer by eliminating or reducing the waste in their process.  Doing this would put the customer first and allow the firm to "get their house in order."  I consider the above excercise to be simple, yet incredibly helpful for the firm to make sure that they provide maximum value to the customer; it’s almost a fudiciary duty to the customer. 

Think about your processes?  How much is really value-added to the customer? 

For articles on queueing theory, time-traps, operations, lean and six sigma, please visit the links below:

• Order Pipeline of Events

• Variation for Dummies

• On Game Theory

• Queueing Theory 1

• Queueing Theory 2

• Queueing Theory 3

• Queueing Theory 4

• On Time-Traps and Waste

• Applied Regression Analysis

• Team Sizing

• 5S

• Click-to-Ship Processes

• Root Cause Analysis

• Lean at Krispy Kreme

• Theory of Constraints and Camping

• Lean for Software Development

• Don’t Waste the Customer’s Time

• Featuritis and the Focus on the Customer

Backcountry.com is a local Utah company that has experienced meteoric growth and acolades from the likes of PC Magazine, Internet Retailer, Inc Magazine and the Inc. 500, and Forbes.  Since I’m now a Utah resident (moved here 13 months ago), I’m very happy to see local companies as successful as Backcountry.com. 

To help me learn more about the company, I checked out their site and noticed a historical timeline.  I quickly took that data and Ajaxified it.  Below is my version of the timeline they present, in a funner format. 

Congratulations and much success to Backcountry.com.  Check them out and buy something from them; I’m certainly going to support good local companies, like Backcountry.com. 

Click on the image below and enjoy the timeline.

Here is the ajaxified timeline of Mark Cuban NBA Fine History. Enjoy.

I was amazed to learn that Mark Cuban’s cumulative fines from the NBA are currently at $1,455,000 USD. That is a lot of money that he could’ve avoided paying if he excercised some self-control.

Another way to think of Mark’s fines is in terms of opportunity costs: suppose that $1.4 Million was the amount he wanted to make as a charitable donation, instead of penalties given to an already wealthy organization — the NBA. Below are the top ten things that Mark Cuban’s fine money could have gone towards:

1. Assuming $25,000 per child to adopt from China, Mark Cuban could have adopted 58 children from China and given them better lives in America.
2. Mark’s fine money could have supported a staff of 405 doctors in assisting Darfur Refugees and Vaccinating close to 200,000 people.
3. $1,455,000 could have gone to support Mothers Without Borders’ 3828 volunteers to Zambia, Africa to build wells, teach in schools, build-up farms, assist in HIV/AIDS Awareness, and many other positive ways.
4. Assuming $60,000 per home, Mark’s fine money could have built 24.5 homes in the United States for the needy through Habitat for Humanity.
5. Assuming a GDP of 239,419 for South Africa, Mark’s fine money could’ve increased the South Africa’s GDP six-fold (6x).
6. Through Unitus, Mark Cuban’s fine money could have helped 14,550 entrepreneurs in third-world countries through innovative and entrepreneurial microfinancing, each typically take on a loan of $100.00 USD.
7. Through Books for Soldiers, Mark Cuban’s fine money could’ve have purchased 97,000 donated units of books, DVD’s, or other supplies, at an estimated $15.00 per donated unit, to our soldiers in Iraq, Afganistan, and elsewhere in the world.
8. Mark’s NBA Fine could have helped to support 1 facility relocation for USAID, enabling hundreds to volunteer and contribute to disaster relief and help the lives of people in places such as Africa, India, Tunisia, and others.
9. Mark Cuban’s NBA fine money could have purchased 2 year’s worth of supplies for The Boys and Girls Clubs of America.
10. Mark Cuban’s NBA fine could have provided 121 uninsured americans with healthcare, at an estimated ~$12,000 per year.

Again, I have nothing against Mark Cuban — I actually like the guy. It is a shame, though, all that good money could have gone to something good, instead of to the NBA.

Also, if Mark Cuban does, indeed, match his fines and donates that to a charity, then great job. I don’t know if he does or not and haven’t found evidence of that. I have a commenter below that claims that, but has not provided evidence of it.

Here is the ajaxified timeline of Mark Cuban NBA Fine History. Enjoy.