Kaizen Part II: Pulling the Value from Waste - BodyShop Business

Kaizen Part II: Pulling the Value from Waste

Simply put, the objective of a lean business is to continually identify and eliminate waste. As waste is eliminated, more value is produced, which means a more efficient model.

Simply put, the objective of a lean business is to continually identify and eliminate waste.

As waste is eliminated, more value is produced, which means a more efficient model. You begin to require less and less resources to produce better and better results.

In last month’s article, “Kaizen: Break to Make Better,” we outlined the first steps to getting there:

1. The customer must be the architect of your business process. This means you must understand who your customer is and what it is they want from you. And you must understand this thoroughly because you’ll build your business model to deliver these things to them. It’s as if you’re letting the customer design your business to produce exactly what they want.

2.You must thoroughly map out and understand all activities required to take your customer from the moment they appear until they receive the completed work and the money is in the bank. When I say understand, I mean understanding some very specific aspects of the current activities:

  • How long does each take to perform?
  • How long must it wait between steps?
  • Is the task one the customer is willing to pay for?
  • How far does the product move/travel during this step?
  • How far does the person travel during this step?
  • How often is it done correctly on the first try?
  • Does it add value to the customer requirement, or is it waste?

These are the elements of understanding your current state value stream, and hopefully, you’ve read last month’s article and started mapping yours.

That said, we’re now ready for the second half of kaizen: creating the future state. We’re talking about creating a value stream – creating an interdependent flow of activities through your business. We haven’t used the term value stream much in the past. Why? Mainly because, in the traditional collision repair operating model, there’s little value being produced. (The ratio to value-added activities to non-value added activities is disproportionate; there’s a lot of waste.) Another reason is because the term “stream” refers to flow, which, in the typical body shop, is nearly nonexistent. (Most cars continually start and stop and move toward completion in a completely random order as directed by a production manager.)
This is, however, where you must go. You must create a value stream – an interdependent series of activities for whose outcome a customer is willing to pay.

Examining Our Value-Added Activities
Let’s start where we left off: What are the value-added activities that we currently perform? If you’ve outlined the elements of your process in detail (a process elements map), we’ll need to review the tasks. Let’s use last month’s hypothetical example of the parts process, starting after the estimate is written and the job is scheduled …

  • A note to order is written and attached to the customer’s file.
  • The file is sent to someone’s desk.
  • The parts person (PP) prints out the parts list.
  • PP researches type of parts available.
  • PP calls several vendors to check availability.
  • PP waits for callbacks.
  • PP decides on vendors.
  • PP generates purchase order.
  • PP faxes purchase order.
  • PP creates a note about status for the file.
  • PP moves file somewhere while he waits.
  • A parts driver arrives and unloads some parts.
  • PP locates file.
  • PP locates purchase order.
  • PP checks parts against purchase order.
  • PP signs the invoice.
  • PP moves invoice to place to be received.
  • PP moves the parts somewhere.
  • Invoice is received into management system.
  • Invoice is photocopied.
  • Invoice is filed away somewhere.
  • Parts are delivered to technician.
  • Technician opens parts.
  • Tech identifies damaged or incorrect parts.
  • The whole process starts all over again.
  • Additional parts arrive; some above steps are repeated.

Where’s the value in this process step called “Parts”? In other words, which tasks listed above are ones that the customer would be willing to pay for? I’ll give you my opinion – the only activities here that add value to the customer requirement are ordering the correct parts, those parts arriving and those parts being delivered to the tech. None of the ancillary activities add any value to the customer requirement.

So the value-added activities are:

  • The parts person generates a purchase order.
  • A parts driver arrives and unloads some parts.
  • The parts are delivered to the technician.

Three tasks out of the 26 shown are value-added, meaning that 23 steps are waste. Not a very effective step.

Now you may disagree with me on the necessity to perform the other 23 steps, but realize that we’re not discussing their necessity. We’re talking about their value. The only value in the “parts” step is getting all of the correct parts to the job.

If you’ve completed a current state value stream map for an area of your business, review it with your team. Identify as a group the tasks that you believe add value to the customer. Summarize the measurements you’ve taken. For example, out of 30 steps, two have value. We travel 3,000 feet to complete the step. It takes 57 minutes to perform the step. The product waits around untouched for 2.5 days and so on.

Out of all this activity, what are the measurements for just the value-added steps? Fifty feet of travel? Three minutes time? This is the real eye opener for you and your team. You have actual data showing massive amounts of waste in your business. You also have a clear outline of what needs to be fixed and just how much improvement you can expect. Now it’s time to build the new way.

Building the New Way
So what are the rules for creating the new way? How do you begin to create the future state value stream? The first question would be: “Can we just perform these value-added activities alone and get the desired results?” Meaning, can you stop performing the non-value activities? In some cases, you may be able to eliminate tasks, but usually what you’ll find is that some of the current steps are required.

The next question is: “Can we improve any of these tasks so that it takes less time to perform, less travel distance, less waiting or improves the yield?” (Yield is the percentage of time you do the step complete and correct on the first try.) Remember, what we’re trying to do is eliminate waste.

What must happen now is brainstorming. The current state mapping exercise is designed mainly to expose the waste — to provide evidence to the team that the current way can be improved. In the “parts” example above, the right question to ask is this: “If the value in the parts process is getting the correct parts to the job, how can we do this in less time with the least amount of waste?” (Refer to the seven types of waste we discussed in prior articles.)

This is where understanding waste becomes most important. The team should spend time here just talking through the current process, seeing how much waste they’ve been performing in the past and figuring out how to create less travel distance for the people and product, less waiting, less rework, less inventory, less overproduction and less over-processing.

For the sake of the argument, here’s the waste that I can see in the above outlined parts process:

  • Not all the parts required for the job are understood on the first try. This is the waste of rework. The process has a designed-in rework step called a supplement. This supplement is really a comeback on the original estimate. It essentially doubles the work required to get the right parts to the job. (All the current parts steps must be repeated, by design. Fix this and you can cut the process in half!)
  • There’s a lot of checking, reviewing and confirming tasks. This is both the waste of rework and over-processing. Rework in the regard that checking work shouldn’t be required if it was done properly, and over-processing in that instead of developing the right way, we just stick with the old.
  • Lots of notes and handling extra paperwork is the waste of over-processing and rework. It also generates the waste of excess people and product movement. Why do so many steps need to be taken to pass along the information about the parts? Why does the parts process deliver such random results that each parts order needs to be tracked and managed to this extent?

In this brainstorming session, the team will need to think through solutions to improve the process. Start with yield improvement ideas. Have the group think about ways to improve the step so that on the first try, the step itself delivers the desired results more frequently.

In this case, how could we perform the parts process so we only order them once and they all show up correctly on the first try? Here are some possible ways:

  1. Do something differently with estimating. Instead of guessing what’s wrong with a vehicle or only writing for what you can see, could you build a way to identify 100% of the damage up front so that no parts would be missed?
  2. Build a way to identify the “correct parts” for a job before you order them. Could you know up front whether alternative parts or OE should be used? Could you build a way to best identify a part so that the correct one is actually ordered?
  3. Could you negotiate a deal with your vendors so that all the jobs parts showed up at once? Could this eliminate the rework of receiving the same parts order multiple times?

Create a yield improvement form for the group to use. Just have them list out the ideas on a sheet of paper. Have them project the cost of implementing the idea as well as its projected improvement on the current yield. Use the current state measurements you’ve taken to understand the improvement.

And make sure everyone understands that no idea is a bad one. Don’t let them limit themselves to current available technology or thinking. This is about creating things that have never been by identifying problems that no one realized existed. You’ll need to save these documents when complete.

Choosing a Direction
Once you have the concepts written down, decide as a group which way you want to go. Use the cost of implementation and projected improvement on yield as a guideline. Obviously, the least cost with the biggest impact would be the low hanging fruit and should be implemented now. The more expensive ideas may be something you’ll do down the road.

Lay out the basic steps of how the new process will work. This will be the future state process elements map. Use the same form as in the first exercise of mapping the current state. Don’t worry about the exact tasks at this point. Just get the overview.

For example, the new process may look like this:

A customer requires an estimate:

  1. A partial dismantle is performed on the vehicle to identify all the damage.
  2. Special tools are used to see inside hidden areas.
  3. A “parts type” list by customer type is referred to, showing what type of parts to use.
  4. Correct parts are identified — somehow.
  5. Availability is confirmed — somehow.
  6. All parts are ordered electronically — somehow.
  7. File is placed in a visual “parts ordered” area with due-by date being the arrival date.
  8. All parts arrive and are correct on first try.

Now I’m not going to tell you how to do this, and this isn’t how we do it. It’s for you and your team to create. The point is, based on your current way and the measurement you’ve taken, can you create a better way? The answer is always yes. There’s always a better way to do anything, and it’s those who discover it who achieve real success.

Next step: distance improvement ideas. Based on the new way you’ve brainstormed, how can you perform the tasks with the least amount of distance required for the people and the product? Create a form similar to the yield improvement. Let the group think through solutions for improvement. For example …

  • Can you move the parts closer to where the work happens?
  • Can you move the computers closer to where the work happens? The fax machine? The copier? The tools used? Where the vehicles are parked?

Same rules apply. What’s the least expensive and most effective? Plan on doing these.
Next, move to time improvement ideas. With the new way in mind, can you reduce the amount of time required to perform the work? Again, create a form for the group to use as they brainstorm. Some ideas …

  1. Can you dismantle cars faster by having the right tools in the immediate area, easily accessed?
  2. Can you move parts faster by storing them on wheels?
  3. Can you get to the estimate faster by getting better and complete customer information up front?

Important: Don’t get hung up on trying to create the absolute best way. A better way is good enough. Remember, this is just the beginning. This entire process is based on continual improvement. If your design isn’t good enough, it’ll surface as you move into the continual improvement part of lean. This process will evolve over time, and you’ll have many opportunities to change things. Just let a better way be better.

How to Perform the Work
Once all these elements are thought through, bring the group together to review. Using all the ideas, decide on how you want to perform the work in the new way. Write these new basic tasks down on your future state elements map. You’ll now need to pull this together into an executable process.
Here are the rules for creating the new way:

  1. The new work must be performed in the proper sequence. Think through the logical sequence of how the work should happen.
  2. The new work must be performed properly. You must decide exactly the right way to do each task, and the right way must be written down. This will become the standard. This is where you’ll determine the details of how the work should be done.
  3. The work must flow from step to step until completion. The proper sequence must be followed. You may not move in reverse. In other words, build it so the work required at each step is 100% complete before it moves to the next step. It may never jump around between steps out of order.
  4. The work must be right-sized. The amount of work designed into each task should be just enough (on average) so that the when the step is complete, the next step is ready for the work.
  5. The status of the work must be visually represented so that anyone can clearly understand if the work is on track and correct.
  6. The work should be made mistake-proof. When you think through the new way, make it more difficult to do it the wrong way than the
    right way.

The Future State
To summarize this future state process design, you’ve thought through a new way to perform a step of your business process based on the measurements of your existing process. It was designed so that it delivers more work, performed correctly on the first try. It requires less movement for the people and the product. The tasks take less time to complete. The work moves from step to step in order. There’s a standard way to do the work that’s documented. The work area is laid out so that the status of the work is visually understood. The work area and tools used are designed so that it’s difficult to do the work incorrectly.

I realize this seems like a very complex process — and that the collision repair business isn’t this difficult. The truth is, you’re right. The collision repair process isn’t a very complex one. The problem is that the current process is simple, but very complex to execute. It’s a management-intensive process. And because there’s no system or standard way, a “just get it done” style develops, which requires extra management and resources to get it done. So you wind up with a shop full of expeditors looking to get their own work through the system with no regard for the other work.

What we’re describing here is a more complex process to develop that’s very simple to execute, a process with very little need for management intervention, a process where work flows naturally from step to step without interruption. You can take the time to build this system now, or you can keep struggling with the daily chaos and firefighting. You choose, but the work must be done either way.

Next time, we’ll take you through the 5-S activity, the actual implementation of the new way. As usual, feel free to contact us if you need any help. Until next time …

Contributing editor John Sweigart is a principal partner in The Body Shop @ (www.thebodyshop-at.com). Along with his business partner, Brad Sullivan, they own and operate collision repair shops inside new car dealerships, as well as consult to the industry. Sweigart has spent 21 years in the collision repair industry and has done everything from being an independent shop owner to a dealership shop manager to a store, regional and, ultimately, national director of operations for Sterling Collision Centers. Both Sweigart and Sullivan have worked closely with former manufacturing executives from Federal-Mogul, Morton Thiokol and Pratt & Whitney in understanding and implementing the principles of the Toyota Production System. You can e-mail Sweigart at [email protected].

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