Maximize your Customer Value – Think Lean, Go Lean and Stay Lean

How many times have you heard that Lean means minimizing waste? Lean is more than just minimizing waste. Lean is to maximize the customer value while minimizing waste.

A popular misconception of Lean is that it is suited only for manufacturing. This is absolutely not true. Lean can be applied to any process and in all kinds of business.

In my opinion, Lean is simple to implement in any organization. Lean does not have to be implemented throughout the organization at once. Lean can be started slowly at first and make gradual small and sustainable improvements. Pick any department, any process, no matter how small it is, identify waste, find the cause and fix the process to reduce waste.

We do the improvement process every day because we will never going to reach the perfection; rather we will strive to attain perfection.

Implementing Lean in your organization will not only increase the customer value but also reduce the waste, which in turn, reduce the cost of making the end product. The end product could be as simple as making a wooden chopsticks, or developing a multi-million dollar software product, the process is same – identify waste, find cause, reduce waste and repeat. Implementing Lean will also boost the employee morale and their productivity.

Lean should not be used as a tool for resource reduction or random cost cutting; rather Lean should be used to create value through reducing waste.

Throughout this article, I will be very cautious not to use the term “eliminating waste”. Instead, I will be using the term “reducing waste” because, in practice, it is almost always not possible to remove waste completely.

For the sake of simplicity, the below example assumes that a software development company, Solo Corp, has 5 change requests in queue for their Vendor Management Software System. All the change requests in the queue are handled by one customer representative and will be implemented by one developer. Furthermore, the customer representative takes 1 hour to validate each request and the developer takes 1 day to implement each request. The product will be built after all the 5 issues are completed. The product is then tested and released to the customer. Moreover, for simplicity, we will not consider any overlapping time and assumes that there is minimal wait time between fixing, building, testing and releasing. Also, assuming one work day is equals to 8 hours.

Veronica, who is an end-user of the Vendor Management System, enters a change request, so that she will be able to enter 9 digits for the zip code instead of the current 5 digits. Since there are 5 change requests already in the queue, it takes 5 hours before the customer representative validates Veronica’s ticket. After the validation, the ticket will be placed in the development queue, which will remain in the queue for the next 5 days. The developer takes 1 day to implement Veronica’s change request. When we put this process on a “value stream map”, it looks like the below.

The total time took for Veronica from the time she submitted the ticket till she received the fix is 8 days. The value added time is about 2½ days, which includes 1 hour to validate, 1 day to fix, 4 hours to build, 4 hours to test and 2 hours to release. The rest of wait time is non-value added time, which is a whopping 5½ days out of the total 8 days. The 5½ days of non-value added time is considered as “pure waste”.

Total time = 64 hours (8 days)
Value added time = 19 hours (approx. 2½ days)
Non-value added time = 45 hours (slightly over 5½ days)

How do we reduce the 45 hours waste?

The Lean process has three key steps:
  1. Identify waste.
  2. Analyze the waste and find its root cause.
  3. Fix the root cause and repeat the three steps.

Applying the Lean process steps to the change request processing, we have identified the 45 hours as the waste. The root cause for the waste may not be the wait itself, but could be another process which is causing this wait to happen. In the above case, the non-value added wait (waste) is happening since there is only one developer fixing the issues.

To fix this root cause, how about training the developer if he is not fluent with the programming language? How about borrowing unused developers from other teams? What about eliminating unnecessary documentation? Maybe, one of these actions reduces the development time by 4 hours for each change request. The 4 hours reduction in development for each change request will reduce the development queue from 5 days to 2½ days.

The new value stream map will be:

Total time = 40 hours (5 days)
Value added time = 15 hours (approx. 2 days)
Non-value added time = 25 hours (slightly over 3 days)

By reducing the 4 hours of development on each ticket, the total time took for Veronica from the time she submitted the ticket till she received the fix is 5 days instead of 8 days.

The above process value stream map can be divided into three types of work.
  - Value added process steps
  - Non-value added process (necessary waste)
  - Non-value added process (pure waste)

Pure waste is anything that does not add any value to the end product. The pure waste can further be classified into eight categories.
  - Overproduction: Making more than what is needed.
  - Waiting: Time wasted waiting for the next step in the process.
  - Inventory: Storing excess products which are not being processed.
  - Transportation: Unnecessary movements of products and materials.
  - Over-processing: Higher quality than required by the customer. Extra features not required by the customer.
  - Motion: Unnecessary movements by people.
  - Defects: Efforts caused by scrap, rework and other incorrect information.
  - Skills: Under-utilizing the people’s talents.

Tom and Mary Poppendieck have translated the manufacturing wastes into software development wastes.

To reduce waste, first you need to identify the waste. Remember, no matter how good your process, waste always exists. Once the waste is identified, find out the root cause by using tools like brainstorming and cause and effect diagrams and reduce the waste.