Transforming waste into value: The Toyota Way of process improvement

According to Jeffery Liker's book The Toyota Way, most company processes are believed to be 90% waste and 10% value-added effort. Value-added activities in a process are those that add value for customers by improving a product or service in a way that the customer will pay for. With this in mind, how should a firm go about methodically improving a process in order to achieve the greatest number of improvements as rapidly as possible?

The concept of waste reduction and value optimization in business processes has gained significant traction in recent years, with many companies adopting lean methodologies to streamline their operations. This approach, pioneered by Toyota and later adopted by numerous industries worldwide, has proven to be a game-changer in terms of efficiency and productivity. By focusing on eliminating non-value-adding activities, businesses can not only reduce costs but also improve customer satisfaction and overall competitiveness in the market.

Systematic process improvement is carried out in three stages: waste elimination, value-add optimization, and continual improvement. Before beginning this initiative, a company must identify its processes and prioritize the ones it want to enhance.

To improve the process, start by reducing obvious waste. This is accomplished through the fundamental practices of process mapping, 5S, and the seven deadly wastes.

Mapping is a method that was originally used to expose and remove waste. Surprisingly, process mapping is thought to decrease anywhere from 40% to 70% of waste in a process. Typically, manufacturing processes benefit from value stream mapping, whereas administrative procedures prefer swim lane process maps.

5S, a foundational improvement concept developed in Japan, promotes and sustains a well-organized, clean, and efficient workplace. This improves productivity, quality, and safety by making faults and waste more obvious. It uses a five-step method to sort, arrange, clean, standardize, and sustain the work process.

Identifying and eliminating the seven deadly wastes—transportation, inventory, motion, waiting, overproduction, overprocessing, and defects—can dramatically enhance a process by streamlining operations and increasing efficiency. The traditional practices of "going to gemba," "standing in the circle," and Training Within Industry's (TWI) "job demonstration" can assist detect these wastes.

Finally, by methodically eliminating these wastes, businesses may quickly and drastically streamline processes, enhance profitability, and build a more flexible and responsive system.

It's important to note that the process of waste elimination is not a one-time event, but rather an ongoing effort that requires commitment from all levels of the organization. Leadership plays a crucial role in fostering a culture of continuous improvement, where employees are encouraged to identify and address inefficiencies in their daily work. This cultural shift can lead to a more engaged workforce and a company-wide mindset focused on delivering value to customers.

Optimize Value-Add

With the easily identifiable, low-hanging waste removed from a process, process owners may now focus on optimizing the value-added portion. This is a more targeted, tactical activity.

To begin, we use TWI's Job Methods technique to break down the process and establish standard tasks. Standardized work is the process of determining, teaching, and enforcing the optimal sequence, timing, substance, and outcome for a certain job or task.

When it comes to process optimization, there are two key areas to consider: process time and crew size. There are various sorts of process time, including the important metrics of cycle, lead, and Takt time. These are the three most widely utilized throughout processes.

• Cycle time refers to the amount of time spent physically creating an item or completing a process.

• Lead time is the time between when the order was received and when it was delivered.

• Takt time is the rate at which processes must operate to meet client requests.

The crew size represents the best number of individuals to run a procedure efficiently. To determine the crew size for a work area, divide the sum of cycle time by Takt time.

Value-added work can be optimised and standardised by using key process KPIs and crew size needs. Once it is consistent and reproducible, you may start constantly refining the process.

As companies delve deeper into process optimization, they often discover that technology can play a significant role in enhancing value-added activities. The integration of automation, artificial intelligence, and data analytics can provide valuable insights and streamline operations even further. For instance, predictive maintenance algorithms can reduce downtime in manufacturing processes, while machine learning can optimize inventory management, ensuring that resources are allocated efficiently across the value chain.

Continuously Improve

Continuous improvement is the iterative process of standardizing, measuring, and improving work. The emphasis is on maintaining a steady process flow through good work cell design and process balancing.

Mike Rother's management book Toyota Kata contains an explanation of the improvement kata. It introduces a four-step methodology of scientific thinking for iteratively learning and improving through small and rapid experiments. We employ this method to convert an optimized process into a one-piece flow.

One-piece flow is also known as continuous flow, single-piece flow, or "make one, move one." In one-piece flow, parts travel through a process step by step, with little or no work-in-process (WIP) in between. In an optimized process, cell design is used to reach the desired state.

Cell design is a workplace structure that organizes the people, machines, and procedures involved in a product's processing sequence to enhance flow. The objective is to save time and motion, eliminate travel, and improve communication and collaboration. A proper cell design is created using two main enhancement methods:

• 3P stands for production, preparation, and procedure. It is an approach that assists businesses in improving their processes with the purpose of increasing efficiency, streamlining production, and reducing waste. 3P is carried out using diagrams, sketches, and prototypes of the process flow and cell design.

• "Yamazumi" means "to stack up." A yamazumi chart is a process improvement tool that uses a stacked bar graph. Using a Yamazumi chart, you may evaluate individual step cycle times and segment them in the most effective way in a work cell.

Using the improvement kata and cell design, optimized processes can be iteratively enhanced to be as efficient as possible.

The journey of continuous improvement often extends beyond the boundaries of a single organization. Many companies are now recognizing the value of collaborative improvement efforts with their suppliers and partners. By sharing best practices, aligning processes, and working together to eliminate waste across the entire supply chain, businesses can achieve even greater efficiencies and create a more resilient and agile ecosystem. This collaborative approach not only improves individual company performance but also contributes to the overall sustainability and competitiveness of entire industries.

Businesses can systematically improve their processes by removing waste, optimizing value-added operations, and iteratively enhancing them. It can not only streamline operations, but also boost profitability and responsiveness, resulting in considerable gains in overall performance.