Creating Value vs. Eliminating Waste
Two issues to consider when considering Creating Value vs. Eliminating Waste. Nothing is as ‘straightforward’ as you think.
First, is the issue of Customer defined value (along with wants & needs, features & benefits). The customer can only express their wants. They value what they think they want. While Lean Design, DFSS, QFD, and others are great methods to codify customer’s expressed wants and guide usable actions by the producer, these methods are built on the assumption that the customer can adequately express their needs. The customer is usually choosing between features from different competitors, not expressing their current or future needs.
Second, Lean operates with focused attention on ‘Eliminating Waste.’ While investigating industrial improvement methodologies used in the last 100 years, I ran across the expression ‘Removing Unnecessary Costs’ from Value Engineering. At first, the two expressions appear to say the same thing. However, there are great implications in their subtle differences.
My conclusion, so far, is that ‘Removing Unnecessary Costs’ is a broader approach. While Lean focus on the five principles (Specify Value, Value Stream, Flow, Customer Pull, and Perfection), Value Engineering focuses on five questions (What is it? What does it do? What does it cost? What else will do that? What does that cost?). Answering those last five questions properly, thoroughly, in business terms is extremely challenging.
Most people feel they have already identified the problem. However, most problem statements describe symptoms, not the problem.
An example of the differences is the story of a metal plate on the outside of a missile. It was costly and had a long lead time.
The Lean department spent six months eliminating waste, and the new cost of this plate and lead time were cut in half.
Afterward, the Value Engineering group worked on the same metal plate issue to see if more could be done. After three days the metal plate was eliminated!
It turns out that during the product development, electronic sensors were needed on the outside of the missile. The metal plate was created to protect the sensors during flight. Once in production, the testing sensors were no longer needed and removed. However, the protective plate stayed.
As production matured, each engineering department thought another group needed that plate. When everyone got in the same room and started to ask 1) what is it? 2) what does it do? they found that no one needed the plate! The group actually determined it was a detriment to the overall performance of the missile.
I’ve grappled with many improvement methodologies. How do they integrate and what contribution does each make to an organization? My advice is to learn the strengths and limitations of multiple methodologies. Don’t ignore the assumptions the methods are based upon.
Everything has its place, the trick is to match the appropriate methodology with the current situation.