Page 139 - Six Sigma Demystified

120 Six SigMa DemystifieD

waste in the product value stream if the departmental efficiency produces out-
comes that do not serve the customer’s needs or require inputs that increase
costs for suppliers without adding value. While standardization of product com-
ponents makes the individual processes more efficient, this efficiency can come
at the cost of customer value. Think about the typical experience of purchasing
a new car. You buy “the package,” which includes features paid for but not
needed, because it is more efficient for the production and delivery processes.
This batch- imposed waste is compounded if changes occur in design or cus-
i
tomer needs because the work- n- process (WIP) or final- good inventories
require rework or become scrap. Note that these concepts are not limited to
manufacturing; businesses in the service sector also can generate waste. Think
of the hamburgers cooked in advance, waiting for an order, or checking account
statements that come at the end of the month, long after they potentially could
prevent an overdraw.
Three common reasons for considering batches are

• When the cost of movement of material is significant

• When the setup time dominates the per- item cycle time
• To accommodate processes designed for multiple product or service types

An example of the first case is shipping a batch of items when a particular
customer really wants only one or a few items. Because of the perceived cost of
shipment, the customer has to make the choice of paying for and receiving
inventory that will not be used immediately (or perhaps ever) or of waiting to
place the order until he or she needs more than one of the items. A remedy for
this particular type of waste is to reduce the space between the supplier and

the customer so that shipping charges are reduced. The efficiencies of offshore
production may be less than perceived if the true costs of the supplier shipping
to consumer, the consumer holding unused inventory, and the consumer wait-
ing for delayed shipments are considered. On a more personal level, think of
the extra pantry, cupboard, and freezer space needed since the advent of ware-
house shopping. Consider also its impact on cash flow and the waste associated
with the unavailability of funds for other purposes.
Some processes are designed to accommodate processing of multiple items.
For example, most modern ovens are designed with large capacity. This allows
us to cook the turkey, the stuffing, and the potatoes at the same time on Thanks-
giving Day. But what if we only want to bake a few cookies? We might as well
cook a full batch to use the oven efficiently, even though we really would prefer