One of the key concepts of lean, is the maximization of customer value through the minimization of waste. This ultimate focus customer value is the reason lean companies are so competitive. After all, wastes have associated costs and costs drive prices and consume profits. What customer or business wants to pay for something that doesn’t bring any perceived value?

The Types of Work
To better understand the concept waste, we need to first understand the 3 types of work. Not all work is created equal. All work or activities can be classified under the following 3 categories:

  1. Value Added

    As its name indicates, value added processes add value to a product. Activities are determined to be value-added if the following 3 conditions are met:

    1. The work must change the form fit or function of the product.
    2. The work must be correctly performed the first time.
    3. The customer must be willing to pay for the result.

    If any of these three steps are missing, then it can’t be considered value-added.

  2. Essential Non-Value Added

    This is work that doesn’t add any value but must be completed to meet customer needs under present conditions.

  3. Waste

    Also known as “muda”, waste adds no value and customers are not willing to pay for it. It’s important to look at work from the customer’s point of view and ask yourself if you would be willing to pay for it if you were the customer. Sometimes, even if you would be willing to pay for it, the cost is too high or involves too many non-essential steps.

You can compare waste to defragmenting a computer drive. Defragging consists of rearranging data to make space available. When data is fragmented there are unnecessary bits that are using up memory, similar to the useless amounts of waste taking up our space and time within our processes.

By identifying where the value-added segments are and moving or removing the non-value-added parts, you improve the performance of your computer. This is just like eliminating waste from your process improves its performance by radically reducing the time it takes a computer to execute a task.

Customer Request and Fulfillment

Fig 1. In order to fulfill a request faster, we must eliminate unnecessary tasks.

It makes sense that we should try to spend most of our time conducting value-added work. Unfortunately, if your organization is like most, lean analysis would reveal that wasteful activities consume much if not an overwhelming majority of our total production lead time.

Lead Time Through Value Stream

Fig 2. Total lead time through the value stream

Even more unfortunate, many companies attempt to reduce overall lead time by merely making value-added activities much more efficient.

Traditional improvement focus: Make value-added work more efficient

Fig 3. Traditional improvement focus: Make value-added work more efficient

In reality there’s much more value to be gained by reducing or improving the efficiency of wasteful activities, before focusing on value-added tasks.

Improving Non Waste

Fig 4. Its more beneficial to focus on eliminating waste than improving non-waste.

The 7 Deadly Wastes
Before we can eliminate waste, we must first be able to identify it. Lean categorizes all waste in terms of seven different types.

  1. The Waste of Defect:

    Work that is less than the level the customer has requested.
    Some examples of this in a manufacturing environment are:

    • Rework
    • Scrap
    • Missing Parts
    • Wrong Parts
    • Yield Loss

    The waste of defects is also referred to as the waste of correction.

  2. The Waste of Inventory:

    Any material or work on hand other than what is needed right away that is needed to satisfy customer demand.
    Some examples of this are:

    • Excess raw materials
    • Work in process
    • Finished goods
    • Supplies
    • Spare parts
  3. The Waste of Processing:

    This is also called the waste of over processing. This happens when something is designed in such a way that uses more resources, like space energy or people than what is really required. The usual root cause for this waste is a lack of understanding of our customer’s needs.
    Some examples of this are:

    • Machines that are faster or slower than needed
    • Equipment that uses more energy than needed
    • Redundant work
    • Cleaning an area multiple times
  4. The Waste of Waiting:

    Things that create idle time because of materials, machines or information that are not readily available result in this waste. This waste is not easily visible to the eye since oftentimes it’s replaced with over production or busy work. When it does become visible however, it’s vital to keep people from working just to keep busy since this does more harm than good.
    Some examples are:

    • Waiting for materials
    • An accountant waiting for information to be able to close the books
    • Warehouse employees waiting on a forklift
    • Waiting for supplies to arrive to be able to continue work
  5. The Waste of Motion:

    Any movement of people that doesn’t add value to the product creates this waste. By nature most motions is mostly wasted. By closely studying motion and the time it takes to complete a task, it’s often possible to improve manual operation times by 30-50%. Also eliminating the waste of motion is a key part in reducing change over times.
    Some examples of this are:

    • Walking
    • Lifting
    • Reaching
    • Choosing
    • Arranging
  6. The Waste of Transportation:

    The movement of material that adds no value to the product.
    Some examples include:

    • The movement of material using carts, forklifts or your arms and legs
    • Moving finished goods to storage
    • Moving work in process to the next step
    • Moving between functional areas
    • Moving parts to the line
    • Walking around for signatures
    • Moving items to quality assurance
  7. The Waste of Over Production:

    This happens when we produce more products than the customer needs. The reason why this is the biggest of all wastes is that it often leads to the other wastes in one form or another.
    Some examples are:

    • Making extra parts
    • Forecast production
    • Economic order quantity lot sizes
    • Piece rate production
    • Production to maximize utilization or absorption
  8. The Waste of Skills:

    While not universally referenced, in recent years, many lean experts have defined an eighth waste of skills. Wasted skills occur anytime people do work that is less valuable than their full potential. For example, the more valuable use of a welder’s time is probably welding rather than sweeping. That said, some non-welders might excel at welding if only they had the training.

Preventing and reducing each of the deadly wastes is a component behind the extreme competitiveness of lean companies.