Know the Value of Non-Value Added

Technical Corner

A Cautionary tale about implementing lean…

So you just completed your “Lean Manufacturing” class and you have management’s commitment to implement lean practices within your organization. The term “Non-value-added” is defined as: “waste or something the customer is not willing to pay for”. You call a team meeting to investigate the plant floor and identify the “non-value added” processes within the facility. After a week’s investigation the team returns to discuss their initial discoveries of “waste” in the system. The meeting starts off with several engineers listing their discoveries. The team prioritizes the list of tasks and spots within the plants process flow. They find that there are several areas deemed as “buffers”, which fit their definition of non-value added work in progress.

The team prepares a report for management which identifies several conveyance systems that can be removed and replaced with additional tooling. This is considered great news for the new product plan changes which include the need for additional tooling and assembly lines. Now that they have approval the team starts implementing these changes within the system concurrently with the development of the new product launch.

The additional plant floor space acquired from removing some non-added value buffers is considered a big win over a plant addition. The construction cost avoidance of not having to widen the footprint of the facility, and being considered a lean organization is the overwhelming choice of action. It appears that the team has done their homework and is ready to create the new lean design!

After a couple months the team has the new plant floor CAD layout and it accommodates all of the new tooling elements for the new product launch without any building modifications. Management is pleased with the efforts of the newly formed lean task force team.

The highly anticipated launch day has arrived! The team has a well-deserved celebration and is greeted by their president who delivers the new product launch speech. Demand has been higher than expected and there are orders stacking-up! The plant was historically capable of producing 60 jobs per hour (JPH), and this is the rate the launch will require to keep –up with customer demand.

After a few months production most of the minor launch hiccups have been ironed –out, but the plan still seems to be falling significantly below previous 60 JPH mark. The team holds several performance meetings to carry out analysis on the floor metrics of the various lines. All of the equipment seems to align to historical levels with no known exceptions. There has been no recorded increase in tooling availability; all of the MTBF & MTTR’s are within their specifications. Furthermore, there have been no changes to the number of changeovers, and operating pattern. Management is now faced with re-examining some of the implemented “lean recommendations” and the questions of: “What about the buffers?” are starting to surface!

This is a classic example of some common errors when implementing a so called Lean Facility. The company now is in a costly position of lost revenue, reconfiguring recently installed tooling, and incurring additional construction costs. Not to mention an absorbent delay in the launch of their new product. How could this have been avoided?

Protective Capacity*

The lean team had tunnel vision and implemented their newly found information to the exact definition of “Added value to the customer”. They were persuaded into thinking that they could become a leader in lean manufacturing and cut all waste out of the system. They completely abandoned the notion of “Protective Capacity”; the ability to store units to support bottlenecks and constraints. Manufacturing equipment will always be subject to adjustments and failures; they are usually rated with a known reliability and availability factor. Protective Capacity usually comes in the form of an “over-speed” or a “buffer”. An over-speed is an upstream operation having a faster cycle time; which creates a “push” to the next inline operation. A buffer stores units, acting as a de-coupler between synchronous tooling stations. Both are effective techniques to minimize the effects of stochastic downtimes on synchronous stations. Remember that a line of 8 stations that all are rated at 95% availability might seem like a productive line. But… that equates to (.95^8) for an overall availably of 66% for the line!

The company has learned a valuable lesson the hard way. They might have had good intentions on becoming a lean manufacturing company; but they failed to encompass the entire manufacturing design parameters involved in successful lean implementations. Lean manufacturing does not equate to elimination of all key buffers within the facility. There are many successful lean manufacturing companies that might have near “piece to piece part flow”, but it requires high tooling reliability’s and a highly trained work force to act immediately upon a failure. The key is a balance of buffers and lean part flow within most manufacturing facilities. Conducting a discrete event simulation is one of the most effective techniques for establishing a well-balanced lean design. The study can predict sensitive areas within the system as well as predict potential bottlenecks and constraints. Furthermore the constraint location can actually be designed and protected to assure achieving program targets.

How is a lean design tested through simulation?

If the lean team had developed a simulation of their new lean CAD layout, and populated it with historical data sets including cycle times, respective downtime, and operating patterns they would have had greater insight into the areas where buffers are beneficial to overall system throughput. The team could have conducted several “What If” analyses on different buffer configurations within the layout. This analysis would have included testing extreme lean scenarios or adding small buffers between synchronous stations. They could have also explored creating robust areas within the plant, which are deemed as low cost tooling. These are excellent opportunities to exploit a push, which provides some additional low-cost protective capacity.

Buffers can also reduce the impact of planned downtimes, including lunch breaks. Some large companies might stagger their lunch times to avoid lines within the cafeteria. Buffers can be strategically placed to minimize the effects of planned resource breaks, avoiding tag-relief replacement workers. There are many forms of buffers such as overhead conveyance systems or overhead mezzanines which can be incorporated to maximize floor space and minimize aisle congestion.

Lean Manufacturing is much more than just addressing so called “non-value added buffers”. There are several other important factors within a true lean system from standardization, reliability, trained work-force, reduction of defects, the list goes on. In this brief article we point out one of the most common errors when companies blindly attempt to become a lean organization overnight. It is usually the obvious buffers that are wrongly scrutinized. Becoming a lean organization will require several layered attempts in a large company such as automotive, appliance, etc. The use of simulation will become a key asset in your company’s journey to becoming leaner.

*Protective Capacity is a term developed by Dr. Eli Goldratt, author of The Goal.

Brian Harrington


Brian Harrington

Brian Harrington is a Six Sigma Black Belt with 20 years operations research and simulation experience at Ford Motor Company. He designs and implements manufacturing process improvements which incorporate many conflicting objectives such as robust, flexible, and lean systems. As part of FMC’s “Advanced Manufacturing Team” he has expertise in several simulation packages, including over 20 years with SIMUL8.