What is Waste?

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There are 3 types of activities, 2 of which produce waste:

1. Steps that definitely create value.
2. Steps that create no value, but are necessary given the current state of the system.
3. Steps that create no value and can be eliminated.

(2) & (3) naturally create wastes, 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?

The answer to that question will define the non-value added steps that ought to be eliminated or reduced in order to bring more value to the customer.

Sometime ago, I was involved in evaluating a major process. Software Engineers, Industrial Engineers, and others were involved. We wanted to know how much waste there was in the process and determine how much could be eliminated. Eliminating waste can also be defined as “how much value could we unlock” or “how much burden do our customers *not* have to bear?”, as defined above. It was a fun excercise and it was quite revealing. Below is what we produced:

Above is the as-is, end-to-end map for the process that we evaluated. On the left-hand side are the activities that we determined to be value-added. On the right-hand side are the wasteful activities that could be eliminated. If the customer were to have her say, I’m sure she would prefer not to bear the costs and burden of the righ-hand side activities. Eliminating non-value added activities would unlock tremendous value and bring satisfaction and cost savings to the customer.

The above example and excercise above was for a manufacturing-type activity. But, the same worldview and approach could be taken for any process or service. In software, for example, there is a lot of waste involved in producing software, much of which could be eliminated.

Today, take a good look at the world around you. What waste, burden, and associated costs do you and your customers have to put up with? What can you do to help reduce the customer’s burden?

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