Friday, May 9, 2014

Can Your Team Pinpoint the Value-Added?

We often hear company team members say “We don’t deal with the customer.” Team members are seldom aware of how their daily tasks connect to customer satisfaction. This is why it is so important that every organization recognize what its customer’s value and align its activities to deliver that value.

Lean manufacturing is based on identifying and eliminating waste focusing on removing non-value added activities from your company's processes while streamlining those that add value. Waste is anything that doesn't add value to the end product or any activity for which your customer is unwilling to pay. Defining value-added is the first step.

So, the three criteria for value-added are:
  1. It must be something the customer finds valuable and is willing to pay for
  2. It must physically change the form, fit, or function of the product/service
  3. It must be done right the first time
People often have a hard time distinguishing between value added, necessary non-value added and non-value added or waste. Interestingly, many team members just accept these "wastes" as merely the necessary evils of doing business.

How you answer these questions can help to assess each process step and see where waste might be hiding in your organization.
  • Are you producing more than consumers demand?  
  • How much wait time is there between production steps? 
  • Are your supply levels and work in progress inventories too high?  
  • Do you move materials efficiently?
  • Do you work on the product too many times?  
  • Do people and equipment move between tasks efficiently?
  • How much time do you spend finding and fixing production mistakes?  
  • Do you use workers efficiently? 
A key to achieving these improvements is utilizing your most valuable resource, your team. As each person better understands what your customers’ value, the easier it is for them to see ways to cut cost and deliver more of what the customer wants and is willing to pay for.

Finding ways to keep your employees involved and engaged in everyday improvements has been on our minds a lot lately. It was the topic at our last MMTC 360 event on May 1st and it will be a breakout session at this year's Proud to Manufacture in Michigan Conference at Cobo Hall this June. Mark your calendars today and register to join us in Detroit on June 10th and 11th. 

Since 1991, MMTC has assisted Michigan’s small and medium-sized businesses compete and grow. Through personalized services fitted to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.mmtc.org.

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