NVA = Non valuable activity
One of the first things we should do when trying to reduce cost is improve our processes. And first of all we need to see which activities give us value and which ones don’t . One of the strongest tools used in lean production is value mapping.
So in this post we will look for activities that don’t give value and learn to deal with them.
I will start with examples and add the theoretical process in other posts.
So let’s start with a couple of definitions and then go to the examples:
What is a process?
A set of activities done in a specific order.
Every process will usually have an internal or external client. The client is the one who needs the result of the process whether it is a product or a service.
What is NVA?
An activity that does not contribute value to the customer. If you don’t understand now, wait for the examples.
Most activities in most processes don’t have value to customers and we will deal with them by removing or automating them.
Think about Uber and how you can get someone to pick you up and drive you almost in one click. Or how Amazon made shopping as automatic as possible. You can push a button (Dash button) without even going on the internet and they will deliver in 24-48 hours. Just think how many activities were in those processes before these two great companies removed them.
Examples:
1. Name: send lab samples – get lab results
The customer sends a sample to the lab and asks for the results of specific tests (we will do only 2 tests in the example). The value for the customer are the results and as quick as possible.
1. Our goal:
Shorten the time the customer will wait for the results and increase the lab capacity to process more samples
2. Activities done by the lab technician:
1. Write down which tests are needed to be processed in the lab journal.
2. Enter the sample to the first test waiting on the buffer line.
3. Do the first test.
4. Write down the result.
5. Enter the sample to the second test waiting on the buffer line.
6. Do the second test.
7. Write down the result.
8. Check if all the requested tests were done
9. Write the results in the lab journal and sign them.
10. Write the result to the customer.
11. Notify the customer that the results are ready.
3. Sorting the activities to added value and no added value:
3.1 Value added activities: 3,6, 10, and 11.
3.2 Non added value activities: all the rest. The customer doesn’t care about the rest of the activities. Those activities are “lab procedures” and the “standard work order”, but they don’t deliver value to the customer.
4. How to improve that process?
1. Outsourcing some activities so that the lab technician will not do them:
Examples
1. If the list of tests to be done will be chosen by the customer from a web site, a transmit of any kind or even a default coming from the data base, then the lab technician will not need to do this activity.
2. Activities 4 and 7 can be done automatically by the testing hardware. Almost every test device today allow the device to write the contend into the lab database. Again nothing to do for the lab technician.
3. Activity 8 is also not necessary, since the lab data base knows if we completed all the tests or not.
4. If the system will send SMS at the end of the tests then we will not need activity number 11 as well.
2. Paralleling: Doing a test in parallel of other tests
1. Usually there is no reason that a sample will do 2 or more tests in parrallel. We need either large enough sample so we can devide to different tests or getting a few samples in the beginning from the customer. Doing that will get the lab results much faster since the sample does not need to wait in every line.
3. Cancelling activities:
Usually it is hard to find activities to be canceled, but let me assure you that in every process you can find many of them. We need to understand who benefit from each activity and why we are doing it. In our example, activity 9 can be canceled. We can use the lab technician user name when he logs into each test device as the signature. When the test device record the test result into the database it can also record the lab technician user name
5. Conclusion:
In my professional life i seen many labs that usually works with the process i described earlier. How ever if you look at labs that process blood samples you can see how they improved the process. Usually your doctor will send electronically the tests he wants. You will usually send multiply blood samples so they can use it in different devices. The device will record your test results and the results will be available online (if your clinic support a personal web site)
6. Then why everybody don’t work like that?
“Because that is how WE work”
“It is to expensive to change”
“Nobody, ever, suggest we work differently”
7. Summary
1. Usually the cost of making the Database changes is not too expensive.
2. You can show a fast return on investment when you decide to improve the lab process instead of hiring another lab technician.
3. Reducing the cycle time and giving faster answers to the customers might not be a competitive advantage in some organizations but if this is a lab that support the production, then you will have less scrap and less downtime.
4. Most important, your internal or external customer is happier when he gets the results faster.
2. Name: Replenish low cost inventory
I am refereeing to buying, screws, adhesives, rubber bands, shredding papers and even some office supply. Usually it is impossible to know exactly how many items we have from each of them.
1. Our goal:
Reducing the time we invest in every purchase order for many of the items that have a small annual cost. Most organizations have many low cost items.
2. Process activities:
1. The stock-keeper finds out that there is not enough stock.
2. The stock-keeper asks the planner to replenish the inventory.
3. The planner calculate the amount to order and open a purchase requisition.
4. The buyer as for a bid from the relevant suppliers
5. After confirming the price and the supplier the buyer generate a purchase order.
6. The purchase order get confirmed by another person at least.
7. Sometimes the purchase order also need a financial confirmation.
8. The buyer will send the order to the supplier.
9. Buyer will open a receipt certificate ( a document that allow a specific warehouse to accept the goods)
10. The supplier deliver the goods and provide shipping documents.
11. The stock-keeper gets the stock and confirm the amount and the basic quality against the receipt certificate.
12 The stock-keeper sends the documents for someone to enter it to the data base (of course if there is a bar code this step is not necessary)
13. Only now the inventory is updated.
I will stop the process here before we start with the recipes and the payments. Remember that the above process is the old process and some organization already changed it.
3. Sorting the activities:
First lets figure out who is the customer of this process. The customer is the one that needs the output of the process. So, in this case the production or the maintenance will be the customer. They want available stock when they need it.
Added value activities:
Activity 1 is value added since it finds out that there is not enough stock (Assuming you can not have a precise number of items in the data base for every screw). Activity 11 (getting the stock and update the inventory) also have value. And of course number 10 which is the actual delivery.
Non added value activities:
All the rest ! The other activities don’t give value to the customer that wants inventory when he needs it.
4. How to change the process
4.1 Standardization of the activities:
4.11 Find out that there is not enough stock – Although this is a valuable activity we can almost automate it. We will have every item in 2 drawers. When the consumer takes the inventory he will take it from only one drawer. If the inventory in that drawer ends then we will start taking from the other drawer. We will have a note with item number in every drawer, so when a drawer will be empty the note from that drawer will arrive to the stock keeper. He is not going to look for out of stock item, but receive a note any time half of the stock ends up.
4.12 How much to order – Every time we will order the same amount (which is about one empty drawer). The amount to order will be on the note in the drawer, so no need for the planner.
4.13 No value activities done by the buyer – When dealing with low cost items we can decide in advance who will be the supplier, so no need for the bid. We can make a big bid between suppliers that will supply all kind of small items for the whole year. That way, we will get a higher discount. So if we have the item number on the note and the amount, supplier, and price in the data base, we can generate an automatic purchase order.
The new process: stock keeper will get a note for out of stock item an scan the bar code on the note. The bar code will generate a purchase order for the item with the right amount, the right supplier and the right price. The data base will also check for financial limitations, and if none exist then the system will send the purchase order to the supplier and open a receipt certificate to be approved when the inventory arrives.
4.14 Control – Every 3-6 months the planner make sure that the amounts of each items are correct and that there is no extra ordinary quantity that was received.
4.2 For braver people – We can use the “bread man” method to eliminate even more tasks.
5 Summery
Many times i witness organizations that used a lot of papers and a lot of small operations that were not necessary. Planners did not have time to plan correctly for the changes in the most impacted materials and buyers did not have time to negotiate on the important items that can actually have a difference. Just imagine dealing with only 300 items that you deal using the original process. Again, we get almost zero value to the client that only wants inventory when they need it. I am not sure how big is your organization, but if you have many many buyers and planners, look around at your processes.
Post summery
This was the first post dealing with improving processes. As i said, i wanted to start with examples and only in later posts we will look on the methodology.
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ThePlanningMaster@gmail.com