How Operational Intelligence and Lean Six Sigma help finding and removing waste

My colleague, Michael Skinner, Pre-Sales Consultant on Analytics explained in a previous blog post How Operational Intelligence tools and Lean Six Sigma improve business processes. In this new article, we provide a concrete example (use case) of how Lean initiatives and real-time Operational Intelligence tools combined allow organizations to find and remove waste.
Lean defines waste as anything that stops an organization from getting on with value-adding work. By eliminating waste, Lean gives operational staff more time to work more effectively and achieve more.

Lean identifies three categories of activities:

• Value-adding: this is the crucial activity that delivers customer value and that a customer would be willing to pay for the organization to do.
• Non-value adding (but necessary): activities such as auditing, health and safety and so on that are required for legal or regulatory reasons but that does not directly add customer value.
• Waste: any other activity that does not add value and is not required.

Lean Thinking uses a range of tools to identify and remove wastes from a process, starting with value stream mapping: the value stream being the flow of work and information from the start of the process right through all process steps to the completed process output.

Lean wastes are usually categorized as one of eight types as follows:

1. Transport. E.g, hand-offs of work between processes or teams
2. Inventory/Stock. E.g, built up work in progress (“WIP”) or finished work
3. Movement. E.g, having to move unnecessarily because of the inappropriate location of needed tools
4. Delays/Waiting. E.g, waiting for approvals/sign-offs, or other work to finish OR Missing deadlines
5. Overproduction. E.g, processing on a schedule rather than on demand OR Doing more than is necessary “just in case”
6. Over-processing. E.g, additional unnecessary process steps OR Multiple work organizational categories OR Multiple or repeat assessments
7. Defects/Errors. E.g, not doing something right the first time
8. Skills/Talent. E.g, inappropriate use of staff skills e.g. using over-qualified staff for simple tasks OR Having staff do only non-value-adding tasks

Real-time Operational Intelligence tools (such as Axway Decision Insight), through its ability to track and display process activity in real time, can help Lean practitioner to quickly identify and measure where wastes such as WIP, delays, hand-overs, over-production, over-processing or defects are occurring, allowing systemic action to remove these wastes. The real-time analytics capabilities of such tools enable Lean practitioners:

• to map out and collect real-time data for the complete end-to-end value stream for any number of processes;
• to identify problems before or as they happen, allowing early active intervention to prevent wastes such as defects or delays impacting the process or delivery of customer value.

Real-time Operational Intelligence tools allow measuring not only volumes and timings, crucial to spotting where wastes are occurring but also the financial value of doing (or not doing) an activity per process step or work item. This allows targeted intervention on the highest cost wastes and confirmation of the impact of waste removal activities in both works (volumes and timings) and financial (cost savings) terms. With the ability to integrate real-time data from multiple systems and sources, the tools allow waste to be identified as it happens and corrected immediately, leading to faster decision-making, identification of improvement opportunities and facilitating continuous improvement. Moreover, by providing an end-to-end view of the complete value stream, they help avoid the problem of sub-optimization; that is, improving individual parts of the process without improving the whole process. Some examples of how such tools support identifying and removing waste are: