Seven Wastes of the Extended Value Stream
Most people who have had any exposure to lean thinking have heard of “The Seven Wastes.” Taiichi Ohno, the former Chief Engineer at Toyota that popularized the Toyota Production System, is responsible for identifying the seven wastes of manufacturing. As he observed activity on the shop floor, he identified the following wastes:
Overproduction
Transportation
Unnecessary Inventory
Inappropriate Processing
Waiting
Excess Motion
Defects
In 1996 James Womack identified an eighth waste, the waste of underutilized employees (with respect to their ideas/minds), in the book Lean Thinking.
The idea of the lean value stream is to continuously work to eliminate the sources of these wastes based on their relative contribution to key lean metrics. Many organizations have reached the point in their lean journey in which they are working to create a lean extended value stream. That is, they would like to work on the value stream that includes their suppliers and customers. This value stream stretches from raw materials to the end user. One key to successfully achieving a lean extended value stream is to understand the types of waste one might find in the extended value stream. This article attempts to help the reader understand the implications of the seven wastes for the extended value stream.
1. Overproduction – Overproduction simply means producing more than what is actually needed by an upstream process or customer. On the shop floor, this generally occurs because changeover times are high, equipment is unreliable, the process is unreliable (causes defects), and standard cost accounting metrics are used. In the extended value stream, overproduction certainly occurs for some of these same reasons. However, probably the biggest reason for overproduction is poor information flow (communication) between facilities. Improved information flow between facilities is one of the key characteristics of a lean extended value stream.
2. Transportation – Moving product does not create value; this is amplified when examining the extended value stream. Unnecessary transportation is generally caused by making supplier selection decisions based on single points in a value stream rather than seeking to optimize the entire value stream. Proper selection of supplier/facility location is critical to a lean value stream.
3. Unnecessary Inventory – For the extended value stream, unnecessary inventory is generally the result of poor information flow and batch processing. Suppliers often hold inventory to support a lean customer; this ultimately gets passed on to the customer in the form of higher pricing and/or poor quality. Sometimes, suppliers and their customers are holding redundant inventory. Extended value stream mapping will expose this waste.
4. Inappropriate Processing – In the door-to-door value stream, this usually refers to using larger scale equipment than necessary; it also refers to building in rework to a process. In the extended value stream, it can also refer to using the wrong suppliers and/or the wrong process. With regards to rework, many times organizations rework parts after they come in from a supplier simple because of poor communication between facilities.
5. Waiting – This waste refers to operators waiting for machines as well as product waiting (inventory). This waste is generally the same for the extended value stream as the door-to-door value stream.
6. Excess Motion- Generally, this waste applies to production personnel having to move out of their work area to locate tools, materials, etc. Like the waste of waiting, this is essentially the same for the extended value stream as the door-to-door value stream.
7. Defects- This waste refers to defective product and information (paperwork). Its unique application to the extended value stream is defective product moving between facilities. This results in additional waste in the form of excess inventory and rework.
8. Underutilization of Employees’ Minds/Ideas – This waste could be changed to “Underutilization of Suppliers’ and Customers’ Minds/Ideas.” Organizations rarely approach their customers and suppliers to leverage their know-how with respect to manufacturing processes, information processing, and product design. This is a very important waste of the extended value stream.
“The seven wastes” is a powerful tool for implementing lean manufacturing in a facility. When analyzing the extended value stream, one must consider the seven wastes with a slightly different paradigm.
About the Author
Darren Dolcemascolo is an internationally recognized lecturer, author, and consultant. As Sr. Partner and co-founder of EMS Consulting Group, he specializes in productivity and quality improvement through lean manufacturing. Mr. Dolcemascolo has written the book Improving the Extended Value Stream: Lean for the Entire Supply Chain, published by Productivity Press in 2006. He has also been published in several manufacturing publications and has spoken at such venues as the Lean Management Solutions Conference, Outsourcing World Summit, Biophex, APICS, and ASQ. He has a BS in Industrial Engineering from Columbia University and an MBA with Graduate Honors from San Diego State University.
