Page 316 - Six Sigma Demystified

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it is a source of waste and should be removed. More detail is provided in the
“Value-Stream Analysis” section of Chapter 6.
Although it may be your initial tendency, don’t limit your value stream to
the walls of your organization. Fantastic sums of money have been saved by
evaluating value streams as they move from supplier to customer, often because
of mistaken concepts of value or attempts to achieve operational savings that
diminish the customer value.
Although we often think of physical inventories of product or work in
process as useful for satisfying customer demands, lean thinking challenges
this assumption. Instead, we should view inventory as money spent on partial
work that generates no income until it is completed. Inventories hide prob-
lems, such as unpredictable or low process yields, equipment failure, or
uneven production levels. When inventory exists as work-in-process (WIP),
it prevents new orders from being processed until the WIP is completed.
Although these concepts are most clearly identified with manufacturing pro-
cesses, they persist in service processes, where inventory may refer to health-
care patients, hamburgers at a fast-food counter, or an unfinished swimming
pool under construction.

Interpretation

Visibility, velocity, and value are key focus points of lean. Visibility (or transpar-
ency) allows the organization to see progress and barriers to success. A focus on
value forces resources to activities important to customers. Improved velocity
allows us to be more responsive to customer needs. Velocity can be improved
by the following means:

• Increasing completions per hour

• Removing unnecessary process steps

• Reducing movement of material and personnel
• Reducing process/product complexities

• Reducing errors that require rework

• Optimizing process
• Reducing waiting

• Reducing work-in-process