Discussion Questions
Module 3 Discussion: Voice of the Customer
Discussion Board: Voice of the Customer
What is one method that you have used to gather the voice of the customer (VOC)? What were the strengths and weaknesses of that method for gathering VOC information?
Guidelines
Submit your initial post of at least 250 words by the due date at 11:59 p.m. ET.
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Defining Value Topic
Introduction
In this lecture, we will discuss defining value. Its a critical concept of Lean, however, its
often an underemphasized aspect of Lean.
How Do We Define Value?
We define value by studying our process from start to finish to understand where the
problems occur. By thoroughly understanding where the problems exist in the process, we
can focus on wasteful non-value add activities that lead to many of these problems. In
Lean, we can identify and eliminate waste by focusing on activities that are considered non-
value add or waste. We can accomplish the identification of waste by performing the
following:
DOWNTIME identify any waste throughout the process
Waste walks perform observation to go and see the waste for ourselves
The tools of Lean tend to be internally focused, and thats the strength. We can focus on
processes that we have control over. Lean is appealing to management because:
We save time
We save money
With Lean, the goals of management are to save money and speed up processes. However,
the important work is to focus on the customer first. We must understand the customer
requirement in order to deliver value. If we lose the focus on value and forget what is
meaningful to the customer, even though we eliminate waste, we can still go out of
business.
We can still deliver value with a lot of waste in the process, but it will cost much more to
deliver. If you do not deliver value, everything you do is waste.
For a Lean effort to be effective, you must focus on defining value and eliminating waste in
everything you do such as reduction in the amount of transport, elimination of excess
stores of inventory and wasteful employee motion.
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The Voice of the Customer
Needs of the Customer
Determining the needs of the customer is a fundamental requirement for Six Sigma. In order to
meet their needs, first we must understand the customer requirement. Needs of the customer are
the most basic problems that customers are trying to solve. In order to satisfy the needs of the
customer, we may eliminate waste or redesign the process once we understand the requirement.
It may include the following examples:
People get hungry, so they need a place to eat
When people travel, they need shelter
Companies need electronic document storage
Companies/people need Internet access
In healthcare, patients need blood transfusions
Clients need to save for their retirement
Clients need mortgages
The needs of the customer could be problems within their process or requirements in order to
produce the product or service such as the following:
New problems are introduced
External pressures are now surfacing
New competition is entering the market
Customers awareness and understanding of products, markets, or competitors have just
changed
New needs have been introduced
Requirements
Requirements could be presented as features, characteristics, or needs that customers define in
order to produce products and services.
Requirements can be identified as a result of product specifications, service guidelines, hours of
operation, machine limitations, number of employees, and the number of shifts. There may be
constant updates to the product or service based on changing needs so products and processes
will also need to change in order to meet those customer expectations.
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Examples of Needs vs. Requirements
Here are some examples that highlight the differences between needs and requirements:
Need: People need to eat
Requirement: Person wants a fresh salad with fruit and without nuts
Need: Company needs to purchase and install electronic document storage
Requirement: Company needs three terabytes of storage and automatic backup
Need: Patient needs a blood transfusion
Requirement: A+ blood delivered in sterile conditions with anxiety management
to combat nervousness
Obtaining the Voice of the Customer
If either a need or a requirement, here are five common techniques for obtaining the voice of the
customer, each with their own pros and cons.
1. Interviews and Focus Groups
Interviews or focus groups require an assigned company representative to ask prescribed
questions to current or potential customers. The answer is important, and documentation
of all details discussed is critical. Here are a few pros and cons:
Pros:
Youll receive first-hand knowledge of nonverbal cues like body language and
tone
Questions can be clarified
Unfiltered responses will be received
Cons:
Interviews are relatively expensive both in money and time
Unable to reach, connect or interview all customers
Requires a skilled interviewer; if your company does not have a skilled
interviewer, then you may have to subcontract it out
Must watch for focus group motives; customers may not always answer truthfully,
or they may answer in ways that provide a personal advantage
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2. Surveys
Surveys are used to collect information by sending out a questionnaire to a large sample
of customers either paper or electronic. Here are a few pros and cons:
Pros:
Inexpensive
Gain a lot of information relatively quickly
Gain both quantitative and qualitative data
Cons:
Results are not verifiable
Response rates are relatively low
Responses may not be representative of a random sample
3. Market Research
Market research uses a companys internal data as well as industry data to understand
products, customer needs, services, and competitor information.
Often third parties will provide market research solutions because their specialty is
complex data analysis.
Examples of inputs into market research:
The market demographics of an area
Customer specifications of similar products
The margins of your competition compared to your company
Customer service index, or CSI
Examples of outputs of market research:
Sales forecasts
Sensitivity analysis that show how much a particular feature of a product or
service relates to sales or profitability
Advertising budget
Pros:
Large amounts of quantitative data
Gain industry data that may not be accessible to your company
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Cons:
Very expensive
Usually requires third-party consultants to do the analysis who may not
understand your firm
4. Customer Complaints
Customer complaints use customer dissatisfaction data to determine common problems
customers face with a product or service; they gather this data from sources such as:
Returned product information
Customer letters
Customer phone calls
Companies may have customer management systems that are used to collect and track
customer complaints; however, this information may not be current or may not always be
captured or completed.
Pro:
Gain very specific feedback on needs and requirements that are not met
Cons:
Reactive: you must wait until there is a problem before understanding the data
Difficult to manage, document, track and analyze
5. Observations
Going to the Gemba or the place where the work is taking place can be valuable.
Observations provide the most unfiltered and valuable data regarding customer needs and
requirements.
Pros:
Observing problems that customers may not recognize as problems
Unfiltered data
Observe nonverbal cues
Cons:
Very expensive
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Takes a lot of time
Must schedule time with the operators in advance
Example of data observations
When implementing a new electronic storage software for videos, an employee was asked how
she liked the new software. She said she loved it, and it was easy to use. When the interviewer
observed the worker using the software, it was discovered that she was only using a portion of
the softwares capabilities. She expressed to the interviewers that parts of the software took too
long to work through the prompts.
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Voice of the Customer Data Observation
Introduction
This lecture will discuss the roles that data analysis and observation
play in Lean and in Six Sigma. It will also explain why both are
ultimately needed.
Data Collection and Analysis vs. Observation
Data collection and analysis can be done from a distance. The benefit
of data analysis is that someone sitting at a computer thousands of
miles away from where these data were originally generated can
complete this work.
Observation requires a representative to witness the process. With
todays technology, we can observe the process from a distance with
Skype or other technologies.
Data Observation and Lean
Lean tools and techniques are focused on observation. This means
we will go to the place where the work is happening and ask
questions that will clarify the process. This is a Lean concept, which
suggests that nobody should say how to change a process until they
have observed it long enough to truly understand it.
Valuable data can be collected while observing. This data tend to be
somewhat biased because the observer and the collector are the
same and are focused on one process. However, it is not without
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value. Observation also increases interactions with value-adding
employees.
Data Analysis and Six Sigma
Six Sigma tools and techniques that focus on data analysis include:
Statistically valid surveys
Statistical techniques to analyze
Observation to detect variation in the process
Whereas Lean observes to eliminate waste, Six Sigma is more
focused on analysis and elimination of variation in data.
Integrating Systems
Both systems are needed and serve as a matter of importance.
The process of observation illustrates the following:
Variation within the method or process may not show up
immediately in the data
Interactions with the people that contribute value or provide
non-value activities in the Gemba
The rationale to eliminate waste and create flow
Data analysis (statistical techniques) provide the following:
Reveals any variation in data that may not be observable with
the eye
Provides a scientific way to analyze and drive out variation
Helps to reduce common cause variation
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Observation in the area of focus will assist the team identify
and eliminate assignable cause variation by firsthand data
analysis. Observation of the process assists to drive out
common cause variation and make overall distribution more
narrow.
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Voice of the Customer Identifying Value
Introduction
In this session, we will look at value, as it is defined by Lean Six Sigma. We
discussed value by ensuring the following criteria have been met:
1. The form or function of a product or process is changed if necessary
2. It should be right the first time
3. We should know for certain what the customer is and is not willing to pay
for
Value must be identified at every level of the process from the largest
organizational function to the smallest activity on the front lines. Where is the
value and where is the waste?
Ask the Right Questions
In order to assess value, the following questions must be asked:
Where is the value in a particular step of a given procedure?
When is machinery being used? What are the parameters?
When are data being entered?
When are services being delivered?
Value is identified as steps in the process:
Is there value in the beginning steps of the process?
Is there value in the middle of the process?
Where is the value at the end of the process?
We will also look for value at the organizational level. Does this process
generate value for the customer or are there entire processes that do not
generate any value? You must also be sure to think about separating true
value-add from non-value add. What is the impact on the customer based on
our three criteria?
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Critical to Quality Characteristics (CTQ)
Once we define value, we can verify Critical to Quality (CTQ) characteristics.
CTQ are measurable characteristics defined by the customer. Once we
understand customer requirements, we can then put processes in place to satisfy
each one of those requirements. We will collect data and monitor metrics linked
to each requirement that will ensure the process is consistently operating as
intended.
In order to define CTQ the following questions must be clarified:
1. What are the customer requirements?
2. What processes do we put in place to ensure each customer requirement is
being met?
3. What metrics will we collect to verify each of the processes are working as
intended?
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Types of Waste
Introduction
When discussing waste for lean six sigma, there are 3 (three) categories of
relevant activities or process steps. These categories are:
Value-added
Non-value-added but required
Non-value-added
For a process step or activity to be differentiated as value-added,
the following three criteria must be met:
There must be a change in the form or function of the product or
service
The customer must be willing to pay for it
It must be done right the first time
The criterium, the customer must be willing to pay for it, refers to the
value added to the product or service and the customers willingness to pay
the cost associated with the process steps and/or activities needed to
create the product, service, or any portion of these.
Non-Value-Added but Required
Activities that are non-value-added but required do not meet all three
criteria for being value-added and are required by our customer or our
industry.
If the process, step, or activity is not value-added, it is either non-value
added but required or non-value added.
Examples of non-value-added requirements
Inspections where the customer requires inspection reports
Regulatory registration, audits and compliance in regulated industries
o Food and drug administration (fda)
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o Federal aviation administration (faa)
Third party certifications (iso)
If a process step or activity is not value added but necessary, it is categorized
as non-value added. non-value steps or activities are called pure waste, or
muda in japanese.
Japanese classify 3 types of waste:
Muda = futility; uselessness; wastefulness
Muri = unreasonableness; impossible; beyond one’s power; too
difficult. By force; perforce; forcibly; compulsorily; excessiveness.
immoderation
Mura = unevenness; irregularity; lack of uniformity; nonuniformity;
inequality
We will focus on pure waste, or muda. Waste can run between 20 and 40%
of revenues in a typical organization. we use the acronym downtime to remind
us of the 8 forms of waste. They are:
DEFECTS
OVERPRODUCTION
WAITING
NON-UTILIZED
TALENT
TRANSPORTATION
INVENTORY
MOTION
EXTRA
PROCESSING
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We will examine the eight forms of waste in detail during
upcoming sessions.
Please remember that some forms of waste are more applicable
to manufacturing, while others apply equally well to service environments.
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Defects
Introduction
It is now time to discuss the D in DOWNTIME defects. This is the
first type of waste. Defects are the most detrimental form of waste.
Many of these defects are as a result of overproduction.
What Is a Defect?
In lean, we define defects based on customer needs and requirements.
Any product that does not have characteristics that the
customer requested or doesnt function in the intended manner is a
defect. Any service thats not provided in the manner or timeliness
expected by the customer is a defect.
Defects are defined by the customer. The customer can be internal or
external. An internal customer is inside your organization and the
external customer is the ultimate customer who pays for the goods or
services. if it needs to be done or touched again, it was defective. That
includes anything from making a minor adjustment to complete
scrapping and reproducing a product or service.
Remember one of the criteria in the value definition is done right the
first time.
There can be defects in the:
characteristics that the customer requested
Size of product
Weight of product
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Color of product
intended function of the product
Any service that is not provided in the manner or timeliness expected
by the customer is defective. A simple rule to remember is, if a product
needs to be done or touched again, it was defective.
Defects are the most costly form of waste. If you must discard or redo a
product or service, there are several associated costs including:
The cost of raw materials
The cost of labor to produce the product or provide the service
Customers may be lost because they are tired of waiting for
their order stuck in the scheduling queue
Labor to Produce
The costs to produce defects have been expended with no resulting
customer revenue. it costs just as much to make a defect as it costs
to produce something good. Instead of making a defect, which
we cant sell, we could have used the time to make something good
that we could then realize revenues and profit.
Employees are paid to do a job, and this means to produce. If no
production occurs, waste in time and money will occur. This particularly
applies to services. Often 75 percent of a companys costs can be
Labor. Time for people to do work is expensive, especially if they do not
achieve a product or service that can be used for these expenses.
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Hidden Costs
Think about some of the hidden costs in defects. A good example of this
would be ones electricity or computer systems.
Opportunity Costs
Think about lost opportunity costs. While you are rebuilding a product
or redoing a service for the first customer, there is often a second
customer waiting for you. And they are waiting because you are still
Serving the first customer.
Causes of Defects
Some typical causes of defects include:
Processes incapable of meeting customer expectations
Variation in work processes
Poor training or no training
Poorly maintained facilities
Compromised quality at the expense of speed
Conclusion
In lean, we spend a lot of effort trying to do things faster in order to
reduce costs. However, there is a caution needed here. Have we gained
anything if as a result of increased speed, we produce defects? We may
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increase speed but as a result we may end up with defects and
increased, not decreased, costs.
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Overproduction
Introduction
The o in the acronym DOWNTIME stands for overproduction.
Waste, in this case, is making more than whats needed, making
things sooner than they are needed, or making things faster than they
are needed. Of course, overproduction applies to services as well as
manufacturing.
We discussed defects as one of the most costly forms of waste.
Some waste, however, leads to other forms of waste and
overproduction fits in this category. As a result, it is considered by many
to be the greatest of all wastes.
For example:
Overproduction can lead to more defects if there are quality
issues
Overproduction results in increased inventory
Overproduction results in waiting before the next order can be
processed
Causes
the phrase just in case is often used to justify overproduction. just in
case of what?
just in case we have quality problems
just in case we have scrap
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just in case we have unplanned downtime
And the list of just in case goes on
Costs
The costs associated with overproduction include:
Labor costs to make more than needed
Transporting, storing, and retrieving excess material
Carrying costs of inventory
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Waiting
Introduction
The w in the acronym DOWNTIME stands for waiting. the waste
of waiting is idle time where no value-added activities occur.
We experience waiting in manufacturing and in service environments,
where it may even be more common. waiting has major cost impacts
and other negative implications, including:
lost sales
customer dissatisfaction
low employee morale
increased inventory
Causes
Unreliable equipment
o Mechanical failures
o Poor maintenance
o Employee training
Uneven workloads across process steps
o Imbalance of tasks from one process step to the next. If one
process step takes 5 minutes and the next takes 2 minutes,
the second process step will need to wait 3 minutes.
Batch processing is when large quantities of work are all
processed together
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o Downstream process steps must be supplied in batches from
upstream process steps. They need to wait until the batch is
ready.
o What happens if a quality issue is discovered downstream?
Everyone must wait until the quality issue has been resolved
in the system and the system is refilled.
Conclusion
This course, you will learn about lean tools such as total productive
maintenance (tpm), standard work, and one-piece flow that will
help you to minimize the waste caused by waiting.
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Non-Utilized Talent
Introduction
We are now at the N in our acronym, DOWNTIME. It stands
for non-utilized talent. Non-utilized talent is when highly skilled
workers perform low-scale work. Originally, there were only seven
forms of waste; non-utilized talent was added recently as the
eighth waste.
Cost
A major cost to the organization from non-utilized talent includes
unmotivated employees, resulting in increased turnover
It often costs 33% of an employees salary to replace them. On
average, this costs $15,000 per employee replaced.
Additionally, you may have to use overtime to cover for
employees who leave while they are being replaced, which can
take months.
Another cost from non-utilized talent is not taking advantage of
employees expertise, knowledge and experience to improve
the organization.
Causes
Waste from non-utilized talent can be caused by:
Convenience we use available people for low level tasks
not considering their higher skill level
Poor personnel scheduling
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Poor human resource policies and practices
Poor leadership
Types of Waste
Non-utilized talent consists of:
Employees working below their knowledge, experience and
skill level
Not soliciting input from the employees who know the most
about the process
Conclusion
Having employees involved in lean activities can lessen the
waste caused by non-utilized talent.
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Transportation
Introduction
The T in the acronym DOWNTIME stands for Transportation.
Transportation waste results from excess movement of product
or information from place to place.
It is a related, but slightly different waste from motion. Motion waste is
when we, as employees or associates, are moving to get to the place
where value is added. In this instance, waste is in how we conduct the
movement, i.e. straightforward and with as little unnecessary
movement as possible.
To remove transportation waste, ask the question:
Why are the value-added steps not consecutive?
o By removing the transportation step, would the process go
directly to the next value-added operation?
Cost
What are the costs associated with transportation waste?
All the equipment and infrastructure needed to move product
and information around
The cost of maintaining the equipment and infrastructure
The space needed to store the equipment
The labor associated with the transportation waste
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Causes
Some causes of transportation waste are:
Poor facility layout
Overproduction
Excessive inventory
Conclusion
Later in this course, you will learn about cellular design or
cellular layout to address poor facility layout. We already discussed
overproduction and will focus on inventory waste in the next session.
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Inventory
Introduction
In the acronym downtime the i stands for inventory. inventory
waste is the storage of more information, or more material than is
needed in order to satisfy customer demand.
Inventory is materials awaiting further processing or consumption; as a
result, its often overlooked as a waste. Inventory is also the money the
system has invested in purchasing things it intends to sell.
Cost
What costs are a result of inventory waste?
Inventory carrying costs can be as high as 25% of the value of the
inventory annually
Obsolescence of inventory
The cost of maintaining the equipment and infrastructure to
transport inventory
The space needed to store the inventory
The labor associated with the transporting of inventory
Causes
Some causes of inventory waste are:
Overproduction
Batch processing
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Conclusion
In module 5, flow and pull, you will learn about an alternative to batch
processing called pull, or one-piece flow. This processing method
will greatly reduce inventory. As you know, this is beneficial in that
overproduction has negative effects on inventory.
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Motion
Introduction
m stands for motion in the acronym downtime. Motion waste is
death by a thousand cuts. It is small movements that dont add value
-ing words such as reaching, stepping, bending, grasping, looking,
walking, etc. We waste time every day with these simple little motions.
Motion vs. Transportation
Motion and transportation wastes are similar. What is the difference?
Motion: small movements within a work area with the intent to
add value to the product
o Small routine people movements within a work area in the
course of doing a job
Transportation: large movements with the intent of relocating
materials or reaching another destination
o Encompasses large movements with the intent of
relocating materials or people reaching another destination
Cost
What costs result from excessive motion?
Wasted time. Even a few, seemingly insignificant, seconds here
and there multiplied by the number of employees adds up to big
dollars over the course of a day, a week, a month or a year. Five
seconds an hour of wasted motion for ten employees equates to
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867 hours per year. Wasted time can amount to 25% of an
employees time.
Excessive motion can result in repetitive motion injuries such as
sprains, stress injuries, and even carpal tunnel injuries, which are
caused by repeated movements that overextend your wrist. The
costs of these injuries include medical treatment, workers
compensation claims, and overtime to replace the injured
employee.
Causes
Some causes of excessive motion include:
Poor workplace layout that requires excessive walking, reaching
and bending to do the work. Ideally, we want things to be at arms
length and at the persons height to avoid walking, reaching, or
bending.
Centrally located materials and supplies that people need to go
get or go use. How far to you need to go to retrieve
materials from a central printer?
poorly organized electronic files. Do you spend a lot of time
searching for computer files or an email?
Inefficient work methods with non-value added steps
Conclusion
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A good lean tool to analyze and eliminate the waste due to motion is a
spaghetti map, which you will learn about in module 5, flow and pull.
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Extra Processing
Introduction
The eighth and final form of waste is extra processing. It is the E In
the acronym DOWNTIME. Extra processing is anytime that we do more
than what was asked or paid for, when we repeat steps or do rework,
anytime we inspect or check or verify, or when we
duplicate information or effort.
We talked about inspection when we discussed non-value added
but required or necessary steps or activities. There are times
when inspection is required, but it does not meet the criteria for value
added; so, it is always considered waste due to extra processing.
A well-designed and validated process should be robust enough
to produce a product or service that yields acceptable results.
We should not need inspection to tell us that.
NOTE: Companies may have legacy processes, meaning designed and
developed years before customer requirements were established or
incorporated into the process, or regulatory requirements were
mandated. In order to avoid the cost of redesign and validation,
companies use testing to ensure compliance. Also, some companies
utilize in-line/in-place automated inspection and/or testing. And yes,
there are costs associated with these remedial actions. Generally, it
comes down to a cost/benefit analysis for the business. However, when
new equipment is purchased or facilities are updated, there is an
opportunity to for removal of extra processing steps or activities.
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Cost
What costs are a result of extra processing?
Spending any time on something the customer is not willing to pay for
only increases our labor cost, and increasing our labor cost does not
allow us to charge more money. The customer is only paying us
to do it right the first time.
Additional equipment and tools needed to measure, inspect, and
verify.
Hiring more employees to do inspections.
o Quality Assurance departments.
Costs associated with extra processing versus scrapping
noncompliant parts.
o Example: An organization spends dollars in order to save a
part that costs cents.
Time spent looking for computer files that are not where they are
supposed to be or are not located in one easily accessible place.
Causes
Some causes of extra processing waste?
Not understanding customer requirements.
Process not capable of producing acceptable products or services.
Process produces defects.
Process has too much variation.
Non-value-added process steps.
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Deburring, or trimming.
o Sometimes there are entire departments associated with
deburring the parts.
o Why do we allow it to come off that equipment with a
defect on it?
Rework
o How do we have time and effort to remake a part instead of
making it correctly the first time?
Excess or duplicate information on computers and in-service
organizations
o Makes it difficult to locate items.
o People might be working on a document simultaneously if it
is saved in multiple places.
Conclusion
Now that we have described the eight forms of waste and the
costs associated with each, you can easily see how the cost of waste
can account for 20 to 40% of revenues in our organizations. It adds up
quickly.
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Compound Waste and Repurposed Waste
Introduction
Forms of waste do not always operate singularly. One form of
waste can result in one or more other forms of waste. So, I not only
have the primary waste, but I also have secondary forms of waste. We
call this compound waste.
Two of the common examples of compound waste are
overproduction and transportation waste.
Overproduction
Compound waste
Inventory: The material that was overproduced needs to be
stored.
Defects: If the process produces defects, they are in the
overproduction.
Transportation: The material will need to be moved at least once
and probably more than once.
Waiting: Customer is waiting for their order in the scheduling
queue.
Costs associated with overproduction and compound waste:
Material in inventory may become lost or obsolete.
Inventory carrying costs.
Material can be damaged during transportation.
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Lost opportunity cost. Could have made something that could
have been sold now.
Labor for producing unneeded good
