Lean Manufacturing - Value and Waste

SKU: C-1097Duration: 18 Minutes

Pay-per-view (PPV) format perfect for individual users.

Get immediate access to this interactive eLearning course online. Must be used within 30 days, expires 48 hours after launch.

Language:  English

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Course Details

Specs

Training Time: 18 minutes

Compatibility: Desktop, Tablet, Phone

Based on: Industry Standards and Best Practices

Languages: English

Value represents the need of the customer, the voice of the customer. If companies don't pay attention to value, they may end up with unhappy customers walking away from them, resulting in a low brand reputation. Lean thinking enables companies to understand what customers are willing to pay for. If it is of no value to customers, then it is considered waste. Waste consumes energy, money, and is of no value to the customer. This interactive online course provides an approach to how Value and Waste are perceived by customers and how to remove steps that do not create value, promoting only those activities that do provide value.

Learning Objectives

  • Define value and waste
  • Identify how companies may misinterpret definitions of value and waste
  • State the difference between value-added activities and non-value-added activities
  • Identify costs and activities that are required for business function
  • Describe how companies can benefit from increasing customers' perceived value of a product
  • List the benefits of eliminating waste along the entire process

Key Questions

The following key questions are answered in this module:

What is value?
Value represents the needs of the customer.

What is waste?
Waste is any thing or any activity that consumes resources without adding value to the product or service.

What are value-added activities?
Value-added activities are activities that contribute to the quality of a product or service that customers are willing to pay for and increase the perceived value of a product.

What are non-value-added activities?
Non-value-added activities (waste) are those activities that affect organizational efficiency, delay the delivery of product, and do not increase product performance, therefore, does not add value from a customer perspective.

Sample Video Transcript

Below is a transcript of the video sample provided for this module:

Each person perceives value differently. Therefore, when dealing with customers, organizations contend with the subjective importance customers give to a product or service at the moment they order it. With all the possibilities, can any organization control the customer value perception of a product or service? The answer is NO. All an organization can do is, potentially through marketing, present an "image" that may appeal to customers and make them remember the product and brand when placing an order. In the end, it will always be a customer's perception. A customer goes to buy a pair of shoes. She doesn't care about the number or order of process steps needed to fabricate the shoes. She doesn't care how much paperwork was filled out within departments or if there was a need to redesign the shoes. All the customer cares about is that the shoes fit her feet, they are comfortable, the color and style are what she is looking for, and most importantly, they are at a "good" price. The manufacturing world attributes value according to the amount of labor that went into the production of a product instead of an objective measure of the usefulness of a product. Customer satisfaction measures have shown that the value of a product is determined by how much it satisfies the customer's preference. The problem lies in that organizations tend to concentrate on what they are able to deliver rather than what it is that the customers really want and if they are willing to pay for it. Lean manufacturing requires that companies must start by defining the value of the product or service in the eyes of the customer, because, to customers, value is only relevant at a specific price, quality, and point in time. In other words, value represents the needs of the customer. At the end of the day, it doesn't matter whether a company has come up with a great idea for a product. If customers do not see the value or have no need for a product, they will not be willing to pay for it. By having a clear understanding of the value customers assign to a product, companies are able to set a target price for it. This will then allow the company to define the cost to produce the product and still make a profit. When companies find themselves not able to meet this production cost, they will start focusing on eliminating "obstacles," known as "wastes," so they can deliver the value the customer expects and still make money. Let's look at an example of this. During the hurricane season, a cell phone service company sends text messages to its customers, helping them get prepared for a hurricane landfall. The text gives the instructions to turn on the Wi-Fi to be able to communicate at any moment, anywhere. Would customers see any value in this text message? Many customers would, since the action is aimed to improve the performance of the devices. Customers will subjectively give importance to this text the next time they have to shop for new devices or service, even if this company's prices are a little higher than others.
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