The seven wastes can be summarized with the acronym: DOTWIMP.
- D: Defect in the output, as identified in the eyes of the customer.
- O: Overproduction by producing goods and services before they are actually required.
- T: Excess Transportation in relation to the unnecessary additional movement due to poor facility layout, typically as a result of processing by department versus in a cell environment.
- W: Waiting occurs whenever an assembly or subassembly is not moving, resulting in no value being added.
- I: Excess Inventory, when capital is unnecessarily tied up in raw, work-in-process (WIP) and finished inventory goods. This may also result in damage and obsolescence.
- M: Excess Motion, from the perspective of less-than-ideal employee ergonomics.
- P: Over Processing, which results from inefficient processes that use more steps or tools than are actually required for the desired outcome.
The seven wastes have been used successfully to improve both transactional and manufacturing processes. But there is a simpler and perhaps more logical way to apply the seven wastes to transactional processes.
Consider a typical process:
For this case, assume that two departments are involved in the process. The improvement team creates a flow chart of the as-is process and asks the following questions:
- Is each process activity done correctly and in a consistent manner? Does the activity add value? (In other words, is the customer willing to pay for the activity? Is it done right the fist time? Does the activity change the product being processed?) Are any activities done out of sequence?
- Are the interfaces between and within departments defined? Do they work? Is there clear ownership of the interfaces?
- When decisions need to be made, are the criteria clear and understood?
- Where does each process step lead? Sometimes steps lead nowhere, usually as a result of a decision made long ago but never revisited. Sometimes this also occurs when there is no clear process output or identified customer.
- Is rework to correct defects a part of the process? What are the root causes of these defects?
By answering these critical questions, practitioners can set out to improve the process. To illustrate the above questions, here are eight process problems, followed by corresponding actions that should be taken to achieve improvement. For transactional processes, practitioners will find this framework a logical and perhaps more appropriate extension of the seven DOTWIMP wastes.
1. Process problem: Activity done incorrectly or inconsistently.
A client had a payment process in which customers were required to match their payments to the correct accounts. The goal was to have the customers accomplish this task prior to the next bill being sent in 30 days. Approximately 7 percent of the time the matching of payments to the correct accounts was not possible and the payments went into “suspense.” A total of 14 people did nothing but investigate these suspended funds.
Once the process was mapped, as many as eight different approaches were discovered to resolve these issues, necessitating a process map that expanded to 44 pages. Many of these approaches were inefficient, so the improvement team identified the best solution and trained the entire work force to use that method. The result was a reduction in the total staff from 14 to 6 people.
Improvement actions: Provide guidance, standards and work instructions. Hold people accountable once they are trained.
2. Process problem: Activity done out of sequence.
A company’s sales force had a centralized point of contact to handle special requests for services. The majority of these requests were standard; however, an increasing number required specialized skills or other requirements. Many times, the sales force did not identify these requirements up front, causing embarrassing situations where the staff provided a solution only to discover, in front of the client, that the solution was not a viable.
Based on a review of prior requests in this category, a series of questions were provided to the sales force to have answered while they were with the customer. Potential answers to these questions were also provided to minimize potential misinterpretation by the customer or the sales staff. To assure that this was done thoroughly, the team utilized a failure mode and effects analysis (FMEA) approach. While completing the FMEA, all possible questions and potential answers regarding the problem were made clear. The result benefited the organization by:
- Allowing the sales force to appear more in tune with customer needs.
- Reducing the potential for the sales force to not deliver the required solution on time.
Improvement action: Insert a process step, being careful not to impact upstream process steps or outcomes.
3. Process problem: Activity done out of sequence.
Many organizations now require their employees to display identification badges to enter the building; some require badges to allow access to the company’s computer network. Most of the time, these are treated as two unique processes, even though much of the same information is scanned for each process. The impact to organizations is lost productivity to new hires or transferred individuals.
An organization integrated these two identification requirements and provided new hires with the appropriate instructions detailing the required information. Human resources also provided security information prior to the start date. Upon arrival for work – even prior to the employee going through benefit and payroll sign-up – the employees under the new process were immediately directed to security and IT to initiate the identification badge process. Upon completion of the payroll documentation, badges were issued.
Improvement action: Change the sequence of activity.
4. Process problem: Excessive cycle time to process applications.
Applications for loans at a financial institution were taking in excess of 25 days to approve. The application process was conducted using paper forms, which were sent to various departments for authorization. A team mapped the process to identify all the functions required to touch the application and discovered that they were spread throughout the building. The team decided to measure the actual linear distance the paper application traveled and discovered it was 6,000 feet – more than a mile. The solution seemed obvious: eliminate all the transport by co-locating group members. The distance was immediately reduced to 200 feet, and 23 days were reduced from the cycle time. All of this was accomplished without making any technology changes.
Improvement action: Eliminate the biggest non-value-added step of the process.
5. Process problem: Inoperable interface.
This always comes across as a computer or technology issue, but in many cases it is just the interface between two functions. A team was working on improving a process for scanning documents. Due to volume and business pressures, the goal was to reduce overall costs while accomplishing their mission. During this process, it was discovered that one of the feeders of the documents had all of the necessary information already in electric form but, to meet the organization’s needs, the feeder printed the documents and sent them to the scanning department. This not only increased the volume of work for the scanning department, but also increased paper expenses and added to the organization’s carbon footprint. Had the organization mapped the entire process end-to-end, this would not have occurred.
Improvement actions: Define interface between functions and assign ownership and accountability
6. Process problem: Decisions made improperly.
Many examples exist regarding how decision criteria – whether it is a workmanship issue in manufacturing or something in a transaction process – are not properly defined. Clear definitions are critical to eliminate variation in interpretation by different employees. During review of an audit process for approved mortgages, for example, a team realized that there were major differences between each of the auditors as well as the 500 or so underwriters approving the mortgages. This created two issues:
- Loans being declined or approved that should have been approved or declined. This is a business financial risk issue and/or a customer issue.
- Excessive time reconciling the findings of the audits. This is a productivity issue.
To resolve these problems, the team went through the various credit policies and risk models to further clarify the definitions, and conducted training sessions with all underwriters via case studies. Underwriting management then conducted random attribute agreement analysis studies (Gage R&R for discrete data) to keep tabs on the consistency of the decision. Finally, the audit group applied the new operation definitions to their audit and tracked the long-term trends of delinquencies of the loans.
Improvement actions: Establish operational definitions, train staff and post decision review.
7. Process problem: Process leads nowhere.
When we say a process leads nowhere, the underlying fact is that there is no value in a process step, or series of process steps. These steps, when researched, typically have been in place for a while and probably were important at one time. Lean Six Sigma Belts need to challenge the current need for these types of steps and eliminate as many as possible. These steps will typically fall in the category of “business value added” or “business required.” Many examples can be found, but one that tends to stand out in many organizations is multiple approvals required for expense reports. This not only interjects delays in the process but creates a non-trusting environment.
Improvement action: Eliminate the step.
8. Process problem: Institutionalized rework.
Examples of this situation are widespread in the transactional-process world. Eliminating this rework requires cultural change. Improvement teams must help to shift expectations so that certain people are prepared to do particular tasks, without having to check downstream. In other words, employees must develop ownership of the quality of the product they produce, whether it is a purchase requisition or a memo.
Improvement action: Identify upstream causes, take corrective action and monitor to sustain the gains.