Creating Customer Value or Should I Say Removing Non-Value

I have seen many companies trying so hard to get their employees to work harder creating more value for their customers. Trying constantly to keep a competitive edge over the competition. And yet when they look around, their employees are already working very hard. In fact, I’d say, people are busy 99% of the time trying to do a good job. So how does a company today meet this challenge: it is in the things the people do. The process! It is not the “people” that create the value, but the activity (process) they do that creates it. You can actually see this by looking at the “things” (paper or product) in the process evolving into customer needs. If you focus on the “things” in the process and NOT the people you will see that those “things” sit there not doing anything 99% of the time. So to increase value to your customers you need to take the time wasted by the things in the process just sitting doing nothing and remove it.

How do you do that? Simple, by looking at the entire process. Look at things people are working on. If you see things that no one is working on, then you can bet there is no value being added. Those steps/activities should be eliminated thus removing wasted time from the process. This concept is applied using what is called a Value Added Flow Analysis and I am going to quickly give you the “How To” perform one.

Value Added Flow Analysis

1. Capture all the steps in the entire activity/process from beginning to end.
   1. To do this you follow one of those “things” (paper or product) from the receiving dock to the customers hands.
   2. Record everything that happens and how long it takes. I mean everything! Including, for example, the “step” of the thing (order) sitting in a briefcase or notebook as it is transported back to the office to be entered into your system. Or the “step” of the thing (your lunch order at a restaurant) sitting on the note pad as it travels to the kitchen. EVERYTHING! This list will be long both in time and steps.
2. Next you will take this list and look at each of those steps and determine if it is value-added or not. So how do you  determine if it is value-added? Value-added steps can be identified by answering three questions about each step. All three questions have to be answered YES! If any are answered no then they are “non-value added steps” and need to be put on the list to be eliminated or improved. Here are the three questions:
   1. Does the thing in the process change? If the “thing” is paper was some information recorded on it? If the “thing” is a product was something added to it?
   2. Does the customer care about the change? In other word are they willing to pay for the change that happened to the thing in the process.
   3. Was it done right the first time? Remember that you, as a customer, do not what to pay for mistakes or redos and you surely do not want to wait for the error to be corrected. This is of no value to you.
3. Once you have identified all the value-added steps then you need to eliminate or significantly improve all of the others. In a simple world you would just eliminate all of the non-value added steps. But in our world, that is not so easy to do. However, I do feel that you can eliminate about 75% of them.

Eliminating Non Value Added Steps

How can I be so sure that you can eliminate 75% of these steps; experience. Over the years I find over and over again that you can eliminate about 75% of the non value added steps. Look at one of your processes. When you first developed this “process” it was done a certain way. If lucky that way was written down as a procedure. But as time changed so have customer needs and to meet those needs you have adjusted your process. Over time with all the “adjustments” you now have a process that has several steps that are not needed any more to meet old needs that are no longer there. Another example maybe that the “process” has been handed down from employee to employee (no documentation) and each has done it slightly different. So in time the process has shifted from a originally good one to one that is different during which time the customer needs have changed as well. In either case steps have been left that create no value for your customer and need to be eliminated.

Non Value Added Step Improvement

OK not everything can be eliminated. Why? Because many times we have more than one customer set of values and we have to prioritize, not eliminate, what we are doing. Be careful you are not micro managing something for you own interest and NOT your customers. A good example of a non value added step that can not be eliminated is Taxes. The “Paying Customer” does not care whether you pay them or not. But to stay in business you have to. Some look at the IRS as another customer (although not a paying one). So in these cases you have to look at ways of completing those steps as quickly and correctly as possible.

Well there you have it. How to create value without something new, but by eliminating waste. That is of value to the customer in that it reduces cost without reducing quality and they receive it sooner than expected. As always, if you have any questions feel free to contact me.