2021
Mira Ahonen
APPLYING LEAN FOR
PRODUCT DEVELOPMENT
PROCESS
2021 | number of pages: 61, number of pages in appendices: 1
Mira Ahonen
APPLYING LEAN FOR
PRODUCT DEVELOPMENT PROCESS
Companies are seeking competitive advantage through product development activities. New innovative products need to be launched fast while at the same time retaining high quality and low costs. Product development projects are typically unpredictable and complex. The process and the results vary from project to project. Multidisciplinary collaboration is prerequisite for successful project.
The aim of this thesis was to gather information about the commissioner company’s product development process from lean perspective. Lean is a data-driven methodology to reduce the lead time of a process. Lean highlights the importance of delivering value for the customer and identifying the process wastes for further development activities. All activities in the process which are not increasing the value from the customer’s perspective are classified as a waste. Lean distinguishes 8 categories of waste which are also applicable in administrative processes like product development.
This thesis utilizes commonly used lean method called Value Stream Map for studying the efficiency of the commissioner company’s product development process. The semi-structured interview method was selected to gather data of the product development process efficiency, cross-functional information flow, and problems identified by employees.
The study revealed many potential development areas to increase the process efficiency. It was typical that project tasks were idling on employee’s to-do list waiting for required inputs. By increasing the projects transparency for every stakeholder, introducing appropriate communication plan, and learning from the past projects, more efficient product development can be achieved.
KEYWORDS:
Lean, product development, Value Stream Map, process efficiency, information flow
2021 | 61 sivua, 1 liitesivua
Mira Ahonen
LEANIN SOVELTAMINEN
TUOTEKEHITYSPROSESSIIN
Yritykset pyrkivät parantamaan kilpailukykyään kehittämällä markkinoille uusia tuotteita. Uusien innovatiivisten tuotteiden lanseerauksen tulee olla nopeaa, mutta samalla yrityksen tulee huomioida kustannustehokkuus ja ylläpitää korkea laatu. Tuotekehitysprojektit ovat tyypillisesti monimutkaisia ja huonosti ennustettavia luonteeltaan. Prosessi ja tulokset vaihtelevat projekteittain, monialaiselta projektitiimiltä vaaditaan vahvaa yhteistyökykyä tavoitteiden saavuttamiseksi.
Tämän opinnäytetyön tavoitteena oli tutkia toimeksiantajayrityksen tuotekehitysprosessia Lean- näkökulmasta. Lean-menetelmän tavoitteena on tietoon perustuva prosessin läpimenoajan nopeuttaminen. Lean korostaa asiakaskokemuksen tärkeyttä, ja keskittyy prosessihukkien tunnistamiseen sekä niiden vähentämiseen. Prosessihukkaa ovat kaikki sellaiset toiminnot jotka eivät lisää arvoa asiakasnäkökulmasta. Lean-oppien mukaan hukat jaotellaan kahdeksaan eri kategoriaan. Lean-menetelmä on lähtöisin valmistavasta teollisuudesta, mutta se on täysin sovellettavissa myös hallinnollisiin prosesseihin kuten tuotekehitys.
Tämä opinnäytetyö hyödyntää Value Stream Map (suomeksi arvovirtaselvitys) -menetelmää, jonka avulla selvitetään yrityksen tuotekehitysprosessin nykytilan tehokkuutta. Tutkimukseen kerättiin tietoa puolistrukturoidun haastattelun avulla prosessin tehokkuudesta, osastojen välisestä tiedonkulusta sekä työntekijöiden havaitsemista ongelmista tuotekehitysprosessissa.
Tutkimus osoitti useita kehityskohteita, joiden avulla yrityksen tuotekehitysprosessia voidaan tehostaa. Tyypillistä oli, että projektitehtävät seisoivat työntekijöiden työpöydällä odottamassa tarvittavia syötteitä. Lisäämällä projektien läpinäkyvyyttä kaikille sidosryhmille, ottamalla käyttöön tarkoituksenmukaisen kommunikaatiosuunnitelman, sekä hyödyntämällä aikaisempien projektien kokemuksia yritys voi tehostaa tuotekehitysprosessiaan merkittävästi.
ASIASANAT:
Lean, tuotekehitys, arvovirtaselvitys, prosessitehokkuus, tiedonkulku.
LIST OF ABBREVIATIONS 6
1 INTRODUCTION 6
2 IMPROVING PROCESS EFFICIENCY WITH LEAN 8
2.1 Introduction to Lean 8
2.2 Value 8
2.2.1 Value-added and non-value added activities 10
2.2.2 Customer needs 13
2.3 Waste identification 16
2.4 Value Stream Mapping 22
2.4.1 Value stream mapping process 23
2.4.2 Current state map 26
2.4.3 Future state map 26
2.4.4 Measuring and analyzing the process 27
2.4.5 Value stream mapping tools 28
2.4.6 Drawing Value stream maps 29
2.5 Lean Product Development 30
2.5.1 Product development process 32
2.5.2 Value stream mapping in product development projects 34
2.5.3 Critical success factors for NPD projects 35
2.6 Cross-functional teams 36
3 CASE STUDY: CURRENT STATE ANALYSIS WITH VALUE STREAM MAP 40
3.1 Background 40
3.2 Research objectives 41
3.3 Research methods 41
3.4 Results 44
3.5 Validity and reliability 54
4 CONCLUSION 56
4.1 Summary of the thesis 56
4.2 Reflection 57
4.3 Further usability 59
APPENDICES
Appendix 1. Interview questions
FIGURES
Figure 1. Example of process map with lead time and value added ratio (Bradley 2015).
11 Figure 2. Two approaches for improving process efficiency (Helsingin kaupunki 2017).
13 Figure 3. Maslow's hierarchy of needs (Wright, 2017). 14
Figure 4. Kano model (Wright 2017) 15
Figure 5. Value stream mapping process (Wright 2017). 23 Figure 6. Process map with lead times (Bradley 2015). 28 Figure 7. Correlation and usefulness of mapping tools and wastes (Hines 1997). 29 Figure 8 Framework for product development process (Rafinejad 2007). 32
Figure 9. Exerpt of the value stream map. 48
Figure 10. Distribution of reasons for NVA-times in the whole process. 49 Figure 11. Distribution of departmental NVA-times in the whole process. 50 Figure 12. Distribution of reasons for NVA-times in the critical path. 51 Figure 13. Distribution of departmental NVA-times in the critical path. 52 Figure 14. Distribution of the identified problems and development areas in NPD
process. 53
EQUATIONS
Equation 1. Value adding ratio of the process (Bradley 2015). 12
Equation 2. Little’s law (Bradley 2015). 27
TABLES
Table 1. Waste categories in product development (Ciarapica 2016) 20
B2B Business-to-business
B2C Business-to-customer
ERP Enterprise resource planning
LPD Lean product development
NPD New product development
NVA Non-value adding (activities)
PL Private label
R&D Research and development
RACI Responsible-Accountable-Consulted-Informed SIPOC Supplier-Input-Process-Ouput-Customer
TtM Time-to-market
VA Value adding (activities)
VAR Value adding ratio
VSM Value stream map
1 INTRODUCTION
In 2020’s globalized business environment, companies are striving to achieve competitive advantage by bringing new innovative products on market. But that is not all, companies need to launch those products faster, with lower costs and retain high quality.
Most importantly, companies need to offer only products what customers really want, when they want, and at the price the customer is willing to pay. Product development processes are typically complex and unpredictable by their nature, causing extra challenge for organizations to keep schedules and budgets.
The aim of this thesis is to improve the efficiency and information flow of product development process in South-Western Finnish food company. The goal of this work is to recognise the current process and to identify major barriers for efficient information flow and cross-functional collaboration. Commissioner of this thesis is a food company, located in South-Western Finland.
Product development process in the company employs marketing, sales, R&D, production, procurement, supply chain, quality, and finance departments. Diversity and simultaneity but also the nature of the new product development projects causes challenges for project management in the company. Number of handovers between interralated tasks is high, and schedule is tight especially in the last phase of the process.
Company has already recognized problems that cause process wastes and delays in schedule. At worst, failures in product development projects cause financial losses due rejection or withdrawal of products. By improving company’s internal project performance it is possible to increase external competitiveness. Recognized problems are related to missing or uncentralized information, unclear roles or responsibilities, and project management tools that are not working or bring into use. Effective information flow and cross-functional collaboration are significant factors for improving product development project’s efficiency and reducing the lead-time of the projects.
Lean management is potential approach for improving project efficiency in the case company. Lean is a data driven philosophy which ultimate goal is to reduce lead time by eliminating wastes and seeking perfection with continuous improvement events. Lean thinking emphasizes commitment of the entire organization and respect for the people.
Lean methodologies and tools enable down-to-top approach for making sustainable improvement for organizations project performance. There are research results which
support the applicability of lean methods for product development process. (Radeka 2013, p. 3−6.)
Research questions
1. What is the product development process in the case company, and how efficient it is?
2. What are the major barriers for information flow and collaboration in case company’s product development process?
Structure of the thesis
Theoretical framework of this thesis consists of theory of lean, product development process and communication in cross-functional organization. The main focus is in value stream mapping, that is a lean tool to visualize and analyse process efficiency.
Research is based on case study of the commissioner company’s product development process. The main research method in this thesis is semi-structured interview with quantitative and qualitative questions. This method is applied to gain detailed information of the current product development process.
2 IMPROVING PROCESS EFFICIENCY WITH LEAN
2.1 Introduction to Lean
Japanese term Muda is one of the central terms in lean literature. Muda means waste, in lean context specifically it means human activities which ties up resources but creates no value. Activities like rectification of mistakes, producing items nobody really wants, downstream people waiting for upstream activity delivery, or goods and services which are not something that customer really wants. Lean thinking provides a way to specify value, organize value-creating actions in the best sequence, perform these activities effectively without interruption whenever someone request them. Necessary starting point for lean thinking is to define value. Value should be defined by the ultimate customer in terms of a specific product (good or service, often both at once) which meets the needs of the customer at a specific time and at a specific price. (Womack, Jones 2003, p. 15-16) There are various definitions for lean, most of them focus on the same three key elements of customer value, minimising waste and continuous improvement.
Lean is not a project methodology, it is more likely a way of thinking. (Wright 2017, p.
17.)
2.2 Value
The most critical starting point for lean thinking is value. Jim Womack defined value from the customer’s perspective: “The right product to the right customer at the right price and the right time.” A product can be anything that company delivers to the customer; tangible product, software or service. If a product delivers sufficient value compared to its competitors, it will be a successful product in theory. In reality this is not always true, and most organizations extend the definition of value to include the business value.
Business value is the ultimate criterion including the profit and competitive advantage that company gains by delivering the product. All new product ideas need a strong business case to justify the investments of time, energy and money to deliver customer and business value. (Radeka 2013, p. 15−28.)
Understanding what represents value for the customer is essential to ensure that this can be delivered and that effort is not wasted on developing products or services that
customer do not want. Often this include items that are not directly related to the service or product provided, but how it is marketed, sold, delivered and installed and after sales serviced. For example in hotel services friendliness of reception staff, loyalty programmes and accessibility are all important. Providing quality is important from the customers standpoint, but also for the business. Poor quality will lead to loss of reputation and wasteful costs of rectifying the defects. The customer experience is always subjective, so it is important to get a broad variety of views – also from prospective customers in a wider market. (Wright 2017, p. 43−54.)
Value is created by the producer, and from the customer’s standpoint this is the reason producer exist. According to Womack 2003, there are at least three kind of distortions in managing businesses what comes to defining value. One common problem specially in American industries is that senior executives have forgot to focus on day-to-day realities, specifying and creating value for the customer, and replaced with focus to immediate needs of shareholders and financial mind-set. In Germany it is found totally reverse distortion of value specification. Executives could ignore the need for short-term financial performance but were capable to go into great detail about product features and new processing methods. The problem in this case is about who specified their value. Value was specified by engineers running the companies. Complex designs produced with ever more complex machinery were asserted to be exactly what the customer wanted and what the production process needed. Strong technical functions and highly trained technical experts leading Germans firms led to situation were products with many refinements and complexities were pushed to the markets, and nobody else was really interested of those but the experts themselves. Managers justified this kind of products with claims like “the customer will want it once we explain it”. Product failures were often explained by that “customers were not sophisticated enough to grasp the merits of the product.” The third distortion can be seen in Japanese business culture. Japanese firms strive for keeping their design and manufacturing operations in home to satisfy societal expectations about long-term employment and stable supplier relationships. This makes it more difficult to adapt local needs across the world, or deliver precise orders when needed. Every country probably has its own unique distortions, but common for everywhere is that definition of value is skewed by the power of preexisting organizations, technologies and undepreciated assets. Common comment from managers around the world is “This product is what we know how to produce using assets we already have. And if the customer is not willing to pay about that we will just adjust the price or add bells and whistles”. Therefore lean thinking must begin with
conscious attempt to precisely define value in terms of a customer. (Womack, Jones 2003, p. 16−19.)
2.2.1 Value-added and non-value added activities
It is the customer who decides is the product or service worth the price charged. She or he will buy it if company’s offering is worth of the cost. If the value of product or service to the customer is reduced for the sake of the better internal business performance, the company’s existence can be jeopardized. If executing process steps that will do nothing to enhance the attractiveness of the product to customers, those kind of steps can be shortened or even eliminated in order to reduce the overall lead time of the process.
(Bradley 2015, p. 29−45.)
Value-added activities are the steps that needs to be taken for the product to be more complete product and reach the customer. The customer states what she or he needs, and the contractor makes it and delivers it satisfying or even delighting the customer. In manufacturing environment, it is easy distinguish value-creating activities because they transform materials into goods concrete way. In administrative processes it is more complicated to capture value. Different stakeholders promote different aspects of value dear to them, often conflicting with one another. It is important that everybody involved in the process is reaching for the final value proposition with the best of experience, competence, wisdom and consensus. All other activities, including things that seem essential, are actually waste.
Lean thinking classifies all work activities into three categories:
1. Value Added activities
2. Required Non-Value Added activities 3. Non-Value Added activities
(Oppenheim, 2011, p. 14−18.)
(Bradley 2015) suggests to determine value from customer’s perspectives by asking following questions for each process steps:
1. Would the customer pay more because this step is performed?
2. Would the customer’s satisfaction be increased because this step is performed?
3. Would the customer choose the product or service generated by this process over a competitor’s product or service because this step is performed?
4. Does performing this step increase the probability of repeat business?
For a step where answers to these questions is yes, it can be said that the step is value- added (VA) step. When the answer to these questions is no, so called non-value added (NVA) step is identified. The lead time of NVA steps is also called waste. VA and NVA time is visualized in lean process maps using zigzag line below in the process steps (example in figure 1.)
Figure 1. Example of process map with lead time and value added ratio (Bradley 2015).
NVA time is noted on the peaks of the zigzag line and VA time is listed in the troughs. This makes it convenient to add up all the NVA times because those data are all aligned on the same vertical level on the zigzag: The total NVA and VA times are noted at the right end of the zigzag.
Lead time can be computed by adding together NVA and VA times, but there is also another use of the sums. By computing the percentage of lead time where something productive is being done to the product or service, the result is information of value-added ratio (VAR) .
𝑉𝐴𝑅 = 𝑉𝐴 𝑉𝐴 + 𝑁𝑉𝐴
Equation 1. Value adding ratio of the process (Bradley 2015).
Lead time and VAR describes the overall performance of the process. It is typical that VAR is astonishingly small number. Many processes, before lean is applied, have VAR on the order of 1 percent or even less.
It is important to map, analyze and improve processes to prevent using majority of the processing time to contribute nothing to the desirability of a product or service to the customer. The extra unproductiveness adds cost, reduces quality, and reduces customer satisfaction. The most significant value of computing the VAR is to emphasize how much time in a process is wasted. Worth noting is that vast majority of NVA is waiting time, and customers will not probably pay more money for its products or service because it spends more time gathering dust in the process (the rare exceptation to this rule is wine, where aging is an essential part of the process). Disagreement of whether some process step is VA or NVA may arise. Good ground rule is to consider these steps as NVA where such disagreement arises. (Bradley 2015, p. 29−45.)
Helsinki city’s development framework Kehmet introduces a visual example of different approaches for process improvement (in figure 2). As mentioned earlier, value adding time in processes are typically very small number, and by focusing to improve those value-adding activities the results are not significant. Focusing to reduce and even eliminate non-value-added activities (major of the process) it is possible to achieve greater results.
Figure 2. Two approaches for improving process efficiency (Helsingin kaupunki 2017).
2.2.2 Customer needs
Customers only buy products or services because they have a need. Maslow categorized the human needs in his hierarchy (in figure 3.) Maslow’s hierarchy states that each of us has base need for sleep, water and food (physiological), and he suggested that we focus in the direction of fulfilling our lowest unmet need at the time. When those needs are partially fulfilled, we move up the pyramid to the higher needs for safety, belonging, and esteem. At the top of the pyramid is self-actualisation, where person usually feels to be at the peak of his powers, using all capabilities at the best and fullest. All suppliers are seeking to meet one or more of the above mentioned needs. (Conley 2017.)
Figure 3. Maslow's hierarchy of needs (Wright, 2017).
The Kano model
Successful product need to fulfil one or more of the needs identified in Maslow’s hierarchy. Professor Noriaki Kano developed the Kano model in 1984 from his studies of customer satisfaction and loyalty. The Kano model helps producers to scientifically understand and document all potential customer requirements to prioritize development efforts and focusing to the features and benefits that most influence satisfaction and thereby increase customer value. The Kano model grid (in figure 3) consists of satisfaction-axis and execution-axis. (Wright 2017, p. 50−55.)
Figure 4. Kano model (Wright 2017)
Satisfaction
The Y-axis shows satisfaction of the customer from low at the bottom , to high at the top.
Satisfaction is subjective, and will vary between customers and products or services.
Some products have a neutral impact because those are expected to work. For example when buying a washing powder, the satisfaction level will likely be neutral – just meeting the expectations. However, if finding a new brand at a lower price and it washes shirts cleaner,with nice smell, the satisfaction level will be higher.
Execution
Execution-axis represents execution, or fulfilment from low on the left, to high on the right. This points how well the provider is able to execute, or meet, the requirement for the good or service. Execution covers the whole life of the product or service from initial marketing, production, sales, delivery, and post sale support. The scale for execution is from poor to excellent.
Kano model uses the grid to illustrate three distinct categories of value related attributes:
basic requirements, performance factors and excitement factors. Basic requirements are the ones that customer expect and assume will be included. When performed well, customers will be neutral. If basic requirements are not delivered, it will cause dissatisfaction in customers. Performance factors are those that customers can easily
define, communicate and even measure. If these requirements are executed badly, it will cause low level of satisfaction. If executed well, they will bring high satisfaction.
Excitement factors are the nice surprices that differentiate the product from its competitors. (Wright 2017, p. 50−55; Paterson 2015, p. 11−13.)
2.3 Waste identification
Many tasks and activities need to be performed in businesses. Some of these activities add real and direct benefit for the customer in the form of a product or service. A product they can see and buy, conveniently available, delivered where and when they need it.
Businesses need also undertake other activities to stay in business and operate in a legal manner, for example supportive activities like financial accounting, health and safety, human resources, IT infrastructure and regulatory/compliance activities. These supportive activities needs to be undertaken, but in a way that waste is minimized.
Activities that do not add real value to the customer, or are required to operate the business, are referred to as ’non-value added’ and can be considered as a waste. Before waste can be reduced or removed, it must be recognized. Recognization is the biggest challenge for organizations. (Douglas 2015; Wright 2017, p. 18−35.)
Waste can occur in many forms, and lean classifies it on upper level to three categories.
In Japanese terms, these are;
1. Muda (futility, uselessness) 2. Mura (unevenness, inconsistency) 3. Muri (overburdening)
(Yankelevitch, Kuhl 2015, p. 28.) Muda
In traditional lean thinking, concept of waste is connected with non-value added activities, anything that does not contribute to meet or exceed the customer’s expectations. Non- value added activities, NVA’s, are often referred to as the seven deadly wastes. These activities add costs, but do not promote a product to be transformed into a more complete product from a customer’s perspective. These were originally identified in a manufacturing environment by Toyota executive Taiichi Ohno (1912-1990). The seven (plus one included later) generic wastes are;
1. Waiting. The time when work unit is waiting for the next value adding process step and no value is being added. There are several reasons that cause waiting during the course of the day, like waiting for materials to be delivered to working area, waiting for inspection to perform a required task, waiting for information from different sources (engineering, supervision, scheduling), or waiting on the equipment cycle time to run through. This kind of waste can be reduced or eliminated by making processes as seamless as possible.
2. Overproduction. Overproduction means producing more, sooner or faster than is needed. Overproduction may lead to increased need of working capital or misallocation of resources.
3. Inventory. Inventory is about excessive storing of components or finished products. Inventory can be between the processing steps or at the end of a process waiting for sale to a customer. Overproduction accumulates inventory.
4. Defects. Defects in goods and services cause excess cost because products needs to be discarded or reworked, both of these cost time and effort.
Repairing defects cause kind of a double negative impact because defect employs various departments. Reworking of defected product also consumes time in which new product cannot pass through the system. If defective goods end up to the customers, they may become dissatisfied and penalize the company by not purchasing additional products.
5. Transportation. Transportation is moving of raw materials and finished goods from place to place. Transportation between processing steps within a factory or between links of supply chain is non-value added operation because product is not being transformed into a more finished stage. Transportation between steps is required and usually cannot completely be removed, but deeming all transportation time to be waste focuses attention on finding new solutions. In a factory environment this often means moving workstations closer together.
6. Overprocessing. Overprocessing is when processing product or service characteristics that are not valued by the customer. These types of activities are typically considered as value added within the organizations. Research of
customer expectations, needs and desires may reveal that customer would not pay more for a good or service with these characteristics.
7. Wasted motion. Wasted motion occurs when individuals take more steps than necessary to complete a process. Motion and appearance of hard working does not mean that anything of value is being done for the customer. It is common that excessive turns and twists, lots of walking, uncomfortable reaches or pick-ups, lots of turnarounds, and on and on, is included in everyday work. The time used for excess motion incurs cost. Other costs associated with this category include worker injury, compensation costs, and costs associated with ergonomic issues.
8. Underutilized worker and equipment resources. Represents the time that could be used on activities that create value for customers. Worker or production equipment (or any other process resource) is idle. Reorganizing process flows can sometimes help to utilize employees and equipment to fuller advantage.
Underutilization of talent can also be seen as a waste. Part of lean thinking is an expectation that everybody should be fully engaged. Every employee should feel that their thinking – not just their labour- is critical to success.
(Carreira 2005, p. 49−65; Bradley 2015, p. 40−41; Hill 2018.)
There is a close relationship among overproduction, waiting, and inventory: both overproduction and waiting result increases of inventory, or any other work unit that is flowing through the process. All these categories of waste have one important characteristic in common. They add cost and reduce the profitability of your operations.
(Carreira 2005, p. 65.)
Waste categories were originally discovered in manufacturing process environment.
However, these are easily applied to administrative and service processes. For example, transportation can be seen as the exchange of data between the parties at different steps of a process when services are being provided (for example processing applications, invoices, or insurance claims). Overprocessing can be thought of as providing some aspect of a service that is not valued by a customer, such as providing an unnecessary detail and accuracy of a documentation. Defects can be errors made in the execution of administrative process and the delivery of services. Overproduction in administrative and service processes generate backlog of work at one processing step just like in
manufacturing, but the work backlog is often in the form of electronic representation rather than a physical pile of work-inprocess (inventory). Waiting, wasted motion and underutilized resources are quite similar to the manufacturing environment. (Bradley 2015, p. 41.)
Alternative waste types are studied widely in product development processes. For example Mascitelli (2007) found ten types of waste in product development to be : chaotic work environment; lack of available resources; lack of clear prioritization of projects/tasks; poor communication across functional barriers; poorly defined product requirements; disruptive changes to product requirements; lack of early consideration of manufacturability; over designing; too many meetings; and e-mail overload. Oehmen and Rebentisch (2010) aggregated them in to eight wastes in product development: Over production of information, over processing of information, miscommunication of information, stockpiling of information, generating defective information, correcting information, waiting of people and unnecessary movement of people. Christof Bauch (2004) work integrates all other models, and suggests ten categories of waste in table 1.
(Ciarapica 2016.)
Table 1. Waste categories in product development (Ciarapica 2016)
Type of waste Description
1. Waiting A. Waiting for capacity available B. Information is waiting for people
C. Waiting for data, answer, specifications, results, approvals, decisions, releases, signs
2. Transport/handoffs A. Excessive data traffic B. Handoffs
C. Stop and go tasks /task switching D. Ineffective communication 3. Movement A. Information hunting
B. Remote locations C. Lack of direct access
4. Overprocessing A. Unnecessary detail and accuracy B. Unnecessary features and processes C. Inappropriate use of competency D. Use of inappropriate tools/methods E. Excessive approvals
F. Excessive transactions
5. Inventory A. Exceeding capacity utilizations B. High system variability
C. Large batch sizes
D. Unnecessary testing equipment and prototypes E. Excessive storage
6. Overproduction A. Poor synchronization as regards time and capacity B. Poor synchronization as regards contents
C. Over-dissemination of information D. Redundant tasks
7. Defects A. Deficient information quality B. Erronous data and information C. Poor testing and verification 8. Reinvention A. Poor design reuse
B. Poor knowledge reuse 9. Lack of discipline A. Unclear goals and objective
B. Unclear roles, responsibilities and rights C. Unclear rules
D. Insufficient readiness to cooperate E. Poor schedule discipline
F. Incompetence/ poor training 10. Limited IT resources A. Poor compatibility
B. Poor capability C. Low capacity
Mura
Mura is about unevennes and inconsistency . Mura can be found from situation where flow is not even and there is variability in how the process steps are synchronized with one another. Uneven flow and unbalanced workloads tie up valuable capacity in one or more process steps. Capasity that could have been used in another process was lost—
in other words - wasted. (Yankelevitch, Kuhl 2015, p. 36). If production process has too much work to do one day, and another day it idle from lack of work, that kind of process can be described as a mura process. (Nelson 2016, p. 94−95.)
Muri
The third category of waste, muri, relates to overburdening a single step in a process.
Muri deals with non-value-added activities that derive from doing unnecessary work.
Overproduction, overprocessing and reprocessing all increase workload on process step, but creates no value. (Yankelevitch, Kuhl 2015, p. 36−37.)
It is typical that organizations focus on eliminating Muda type of wastes when applying Lean methods, but mura and muri are ignored. The reason for this may be that muda type of wastes are more easily understood. According to Jim Womack (2006) the inevitable result is that mura creates muri that undercuts the previous efforts to eliminate muda. Mura and muri are the root causes of muda in many organizations, and needs to be carefully identified to tackle muda. (Piirainen 2014.)
2.2.1 Value and waste in product development
When eliminating waste in product development, it must be ensured that the possibility of generating value is not jeopardized. For example, if team pursue ideas and abandon them afterwards, it is not waste. As long as the learning is captured, shared and used for better ideas. In manufacturing business failure is almost always waste. Failure in product development can be seen as valuable learning experience. (Radeka 2013.)
Value-creating activities are the tasks that must be done to the product to reach the customer. All other activities, including things that seem essential, are waste. For example defects, scrap, excess motion, transportation, storage inspection, and all management activities. In product development, all activities that build customer or technical knowledge, is value creation. Waste can be distinguished to unnecessary waste and necessary waste. Removing unnecessary waste, like excess motion, scrap and defects from the system will make the system better. Necessary waste is all the non- value-creating work to keep the system working. Most documentation, verification testing and status reports are necessary waste. Typical benefits from Lean Manucaturing arise from reducing the level of necessary waste: cutting inventory with pull system, reducing transportation with better layouts, shortening changeover times, and using better management methods that refocus managers’ efforts on supporting the people
who do value creating work rather than controlling them. In product development, necessary waste can be eliminated by reducing burden of documentation, project management overhead, and other necessary waste. Some times adding necessary waste to one part of the system can heal the overall process. In PD more frequent planning sessions earlier can be done to reduce the waste of design changes later in development. (Radeka 2013.)
2.4 Value Stream Mapping
People are familiar with traditional process maps, that are used to document the work done by a functional group. Process maps are useful for training new personnel to perform the required work tasks properly, for audits, and as a basis for continuous improvement efforts. When teams start to seek solutions to reduce process cycle times and balance workloads, common mistake is to try to automate the same process or just redistribute the existing work. What teams actually should do first is to recognise and eliminate non-value-added activities. When planning to use process map for lean improvement project, it is often recommended to use a value-stream map.
Value streams are sequences of value-creating activities, necessary waste and unnecessary waste. Value stream replaces term “process” to highlight the importance of understanding how value flows through the value-creating activities, removing unnecessary waste and make sure that all remaining necessary wastes truly supports the delivery of maximum value. (Radeka 2013.)
VSM enables analyzing the process with measured lead time and other process metrics.
Analyzing a process just once with Lean methods does not reveal all the possible improvements. The initial application of lean reveals gross inefficiencies, and only after resolving these major issues the minor inefficiencies can be noticed. Lean is data-driven methodology, and the effort begins by measuring the process. Improvements are not based on hunches about how the process should be executed. Rather, focus is in understanding the process, mapping it, and analyzing it. This enables high degree of confidence that improvements identified will be successful. Value stream mapping brings a great amount of awareness of the process, and how it is really executed. Without such a map, no person in a company is cognizant of how things are accomplished. Each person knows only what role she or he plays in the process, rather than the whole process or how the process steps interact. (Bradley 2015.)
Value stream mapping will suggest multiple actions to carry out to reduce lead time.
Therefore it is essential to time elapse between cycles of value stream mapping. Making improvements by using lean require an investment of time and resources. One of the most frequent barriers to implement lean and improving processes is the inability to devote such resources. (Bradley 2015.)
2.4.1 Value stream mapping process
Lean considers every step in the process in terms of the value added for the customer from the start to the finish. These steps are mapped to allow analysis, with the objective of identifying wastes. The map is visual representation identifying each process steps.
Value stream mapping process is visualized in figure 5. (Wright 2017, p. 56−57.)
Figure 5. Value stream mapping process (Wright 2017).
Step 1. Identify product family
The first step sets the scope for the mapping exercise, so it is needed to identify which products are to be included to the review. Generally it is based on products which pass through similar process steps. Process locations of the specified product family needs to be identified at this stage.
Step 2. Identify current flow
Initial map will be prepared on the ‘as is’ or current state. This can be prepared a numerous ways like; using existing process flows and swim lanes, walking through the process using the customer journey perspective, reviewing previous customer feedback to identify the most valuable steps, drawing and validating the process with key stakeholders, document each process steps with high-level notes and examples of transactions (showing for each the inputs, process and outputs, may even include the internal supplier and customer for the task), highlighting potential improvement areas, relevant key performance indicators (KPIs) (volume, frequency, quality failures, time to complete (in total and broken down by process steps), variations in customer demand, available production time) or using information flows.
Step 3. Observe and confirm process
The mapping begins with gemba walk (Japanese term meaning “the real place”). Gemba walk means a walkthrough the process in the right location. Location can be factory floor, warehouse or office. Waste identification is easiest when the process is in action.
Flowcharts and other documentation may not cover the current process in practice, or be applied consistently across different sites. The output from this step will be process documentation and other evidence to support the process documentation.
Step 4. Map the flow or stream
Process map is visualised in this step, and the current flow can be analyzed to identify steps which are neither value adding activities, non-value adding activities or value enabling activities.
Step 5. Creating the implementation plan
Future state map is identified with ideal value flow- which excludes areas of waste – and possibly reduces the time for processing. The future state map is the basis for a project plan with reduced waste/cost and more streamlining. Quality for the customer should also be increased.
Value-stream maps represent the customer’s view of the process, rather than its actual flow. Customers view the process from the perspectives of transaction or interaction.
Customers do not really care how the organization has chosen to deploy the activities of the functional transactions, therefore value-stream maps are usually cross-functional in nature. Keim (2019) points out that it is possible to combine the best of both of these
tools to depict the process. Many features of the process map can be installed into a traditional process map. Keim introduces 6 steps approach for applying this method:
1. Establish a cross-functional team.
2. Build a high-level process map.
3. Determine what process steps add value from the customer’s perspective.
4. Begin to add more detail to the process map. Approximately 5 more detailed process steps is proposed to be good level of details.
5. Conduct iterative cycles to improve the cross-functional process map.
6. Add process operational information, for example time required for each step.
(Keim 2019.)
Value stream mapping (VSM) can be a powerful tool, combining processing steps with information flow as well as other important related data.VSM offers a good tool to create a solid implementation plan to make the most of available resources. Understanding the scope under examination is an important factor to start te VSM task. Creating the visual maps can be enlightening experience for building improvements and efficiencies for any organization. Pictorial repsesentation of the value streams are easy to learn for anyone in organization, and that is one of the key-element when communicating with process maps. Cross-functional teams are the best and easiest way to start creating a VSM.
Cross-functional teams may have supervisory or managerial level repsesentatives from departments like sales, customer service, scheduling, purchasing, operations, inventory control, maintenance, quality and information technology. Manos also suggests that even external customers or suppliers may add unique perspectives. Good team size is usually between seven to 10 members. This number of people participating to team makes it easier to go through the flow, larger team may be more difficult to manage and fewer members may not be enough to provide well-rounded input. Manos highlights avoiding to create the map with team of one. The results are easily biased for one area, person or department. (Manos 2006.)
Team must select the process family it will concentrate on for the current state map.
Every organizational group may have different reasons for selecting one process family to draw first. Criterias to consider when choosing process family:
1. Biggest value for the money
2. Largest reduction in lead time or inventory 3. Biggets impact for the customer
4. Highest probability for success 5. Most visible for stakeholders 6. New product line
7. Volume or quantity (Manos 2006.)
2.4.2 Current state map
The current state map illustrates how organization’s processes perform in today’s work environment. To create a comprehensive current state map, it is good to collect the data and information by walking and interviewing the people who perform the task. It is much more beneficial to collect the information by walking the flow rather than staying seated alone at desk in front of the computer. The team will fave a good opportunity to see the entire process and look for waste, but also because the “value-adders” – the people who actually perform the task- can answer questions and clarify any misconceptions or preconceived notions on how the perform tasks. The ball-bark estimate is usually accurate enough to get started. For example, if operator says her machine breaks down about four hours every week, the team can mark down 90 % for reliability of equipment.
It is not necessary to wait for the perfect data, but wrong information needs to be clarified.
Key areas on the map are the customer, supplier, information flow, material flow, value added and non-value added time, cycle time versus the inventory time (in days) for material and information flow. Depending on the exact process and the author, every VSM will look slightly different. (Manos 2006.)
2.4.3 Future state map
After completing the first version of current state map, team can set its sights on creating the future state map. Team members should have some basic knowledge about lean principles to develop a realistic future state map.Team may consider issues like takt time of the process, bottlenecks, constraints, inventory reduction, and improvement of the
flow. Good time frame for the future state map is six or 12 months. Estimate the amount of queue times and inventory based on achievable improvements. The value added time vs. non-value added time should be then recalculated. The next step is execution of the plan, which is of course the most important step. Because if the improvement plan is not executed, just more muda has been created. (Manos 2006.)
2.4.4 Measuring and analyzing the process
The ultimate goal of lean is the reduction of process lead time, so the first step in lean is to measure the lead time of the current process. Determining total lead time is conceptually straightforward: lead time of each process step is measured and then added those times together. Lead time of one process step is the time from when particular work unit is delivered to the step until the work unit is moved to the next step in the process. In practice, in manufacturing environment but also in service and administrative processes, work occurs in batches. When people have multiple responsibilities, it is seems to be natural that people wait to switch from one task to another only after some amount of work has built up. An engineer, for example, might wait for some number of orders to accumulate before turning to that task. Perhaps it takes some time to start another computer application, so engineer do not want to do it for just one order. This kind of situation it is possible to employ Little’s law in determining the average lead time of a process. (Bradley 2015, p. 29−45.)
Little’s law is expressed through the following equation:
Equation 2. Little’s law (Bradley 2015).
Where
L = the average number of items in a queuing system (also called WIP, Work-In- Progress)
λ = the average number of items arriving at the system per unit of time
W = the average waiting time an item spends in a queuing system (also called lead time)
The foregoing discussion makes clear that the lead time of a process step is not necessarily the time it takes for the actual processing of one work unit. Actual processing time might be just one minute, but the work unit may spend two hours waiting at a work station. It is important to distinguish between waiting time and the actual processing time.
The terminology that describes the active working time is called cycle time.
Goal is to quantify all the time that work unit spends in a process, so waiting times must take accounted as well. In lead time process maps, transportation and storage operations between process steps are typically noted as triangles, like shown in figure 6.
Figure 6. Process map with lead times (Bradley 2015).
It can be noticed by studying figure 6, that most of the lead time is composed of waiting of unfinished parts in inventory. This observation is made in every case almost without exception. It is rude awakening when a manager finds that most of the time product is just idling in the process rather than worked actively. (Bradley 2015, p. 29−45.)
2.4.5 Value stream mapping tools
Value stream mapping tools can help researchers and practitioners to identify wastes in individual value streams and hence, find an appropriate route to reduce or even remove these wastes. Typology of tools for value stream mapping is represented by Hines and Rich (Hines 1997). This seven-map typology is based on different wastes inherenet in
value streams. These tools can be used singularly or in combination, driven by the types of waste to be removed, for effective application to conduct the value stream. Hines and Rich suggests that at least an outline understanding of the particular wastes to be reduced must be gained before any mapping activity takes place. In figure 7 is listed the correlation between the tool usefulness and different wastes. (Hines 1997.)
Figure 7. Correlation and usefulness of mapping tools and wastes (Hines 1997).
2.4.6 Drawing Value stream maps
Value stream maps can be constructed using variety of methods, each with its own advantages and disadvantages.
1. By hand. Easy way to visualize the map to flip carts or alternatively representing each step on its own piece of paper and pinning to the wall. This approach is convenient in the early phases of gathering information. Only thing missing is the possibility to presentate the VSM.
2. Excel. Widely available and offers the advantage of accumulating VA, NVA, and total lead time using simple formula.
3. PowerPoint. Good format for presentation, only disadvantage is that VA, NVA and lead time needs to be computed manually.
4. Visio. Best tool for creating aesthetic VSM. Later versions of Visio comes with a template with shapes needen for VSMs. Data can be specified for process steps, cycle times, changeover times, number of workers, percentage yield and so on.
Visio is not included in Microsoft Office suite, and therefore represents an extra investment.
5. Electronic value stream mapping (eVSM). This is an add-in to Visio and provides additional functionality not included to Visio. (Bradley 2015, p. 42−43.)
2.5 Lean Product Development
The focus of lean management implementation has been mainly on manufacturing environment, research on lean product development (LPD) began simultaneously in the late 1980’s with Clark et al. (Kim B. Clark 1987) , when he discovered that Japanese automotive manufacturers outperformed their Western competitors in terms of engineering hours and time to market. This difference was achieved by overlap of development activities, the strong involvement of suppliers, and cross-functional project management. Also Womack et al. (1990) mentioned the same application of lean principles to product development and lean design techniques including project managers, simultaneous development, teamwork and communication. Toyota was able to develop products faster by parallel design alternatives and delaying the final choice to the very end of the process. According to Belvedere et al. (2019), application of lean principles to product development offers at least three important advantages to companies:
1. Improvement of product development performance by reducing time to market and development costs.
2. Further boost of the efficiency in lean manufacturing.
3. A step forward towards the lean enterprise, which means exploiting the increased productivity from coupling LPD with lean manufacturing.
Despite all the advantages mentioned above, effective implementation of LPD is still controversial. It is suggested that many tools can be applied directly to PD without any
changes. For years this belief limited the exploitation of the real power behind LPD. One reason for this is that literature on LPD waste is not as detailed as literature on lean production, and especially what comes on complex projects and non-traditional sectors.
(Belvedere 2019.)
LPD is one of the leading approaches currently being adopted by organizations attempting to maximize value, increase quality, shorten lead times, and lower costs for product development processes. Product development is characterized as a network of interrelated activities that interact in order to transform a market opportunity into a product that meets the customer’s needs and the strategic goals of a company. (León 2015.)
LPD is viewed as the cross-functional design practices (techniques and tools) that are governed by the philosophical underpinnings of lean thinking – value, value stream, flow, pull, and perfection – and can be used to maximize value and eliminate waste in PD.
(León 2015.)
Globalisation increases international competition but also extensive opportunities for firms to expand their operations beyond current boundaries. Dealing effectively with this important change, makes the management of global new product development (NPD) a major concern. To ensure success, companies must rely on global NPD teams to leverage all talents and knowledge available in different parts of the global organization.
According to Sivasubramaniam et al (2012) team leadership, team ability, external communication, goal clarity and group cohesiveness are the critical determinants of NPD team performance. Their research shows that NPD teams with considerable experience and led by a transformational leader are more successful at developing new products.
Effective boundary spanning within and outside the organization and shared understanding of project objectives are paramount to success. Like any other organizational process, NPD process must be managed by people. The concepts of strategy, marketing and technology all have to be coordinated and managed effectively.
Issues in internal communication, procedures and systems need to be taken into account.
Variety of different functions and departments are involved in NPD process, and this makes it more difficult and and complicated to manage. Furthermore, frequently there will be different product characteristics, different markets and different technology factors to be addressed. Variety of personnel from across the organization needs to
participate to be successful. Group of people needs to be working as a team to develop an idea or project proposal into a final product suitable for sale. (Trott 2017.)
2.5.1 Product development process
A process is a sequence of steps performed for a given purpose. Process integrates people with different skills and motivations, tools, tasks and procedures. A product development process is comprised of several distinct phases. Every phase has an important objective toward an end goal of commercial success. The role of key players vary during the process including marketing, engineering, manufacturing, suppliers and management. The process can be sequential with clear gates for exiting one phase and starting new phase, or the process can be flexible and iterative with overlapping phases.
Wheelwright and Clark, Iansiti, and Christensen have discussed a “funnel” framework for product development. In the funnel framefork (in Figure 8) the market/competitor analysis, technology assessment and target customer needs establish the basis for concept development- the first phase of the process. The second step is the product/process design, followed by the product launch and commercialization phase.
The effort in product development process is guided by technology, market and product strategies at firm throughout the development cycle. (Rafinejad 2007.)
Figure 8 Framework for product development process (Rafinejad 2007).
Firm’s product portfolio strategy and aggregate project plan are in the middle of it’s business, market and technology strategies. The objective of product strategy is to define the target market segment, the breadth and depth of the product line, the market assets, and the value proposition. These strategies must be updated throughout the product development process to capture the new realities in market and competitive situations, but also advances in technology. (Rafinejad 2007.)
A product development project may be large or small depending on the project scope and complexity. If the initial product concept and technology are immature or the product platform is new, careful planning and execution of all phases are necessary. With continuous improvement projects of an existing product and its impact on market and firm’s resources is small, scaled-down product development and commercialization process is advisable. (Rafinejad 2007.)
Scaling Product development and commercialization process
Organizational structures and tools that facilitate fast decisionmaking and continuous improvement are included in an efficient PDCP. Practitioner should always customize the generic process to her/his specific product type and market environment by identifying and implementing the relevant value-added steps in each phase. In scaling the product development process these questions needs to be asked:
Are all the steps in the generic product development process necessary?
Should the phases of the product development be overlapped to accelerate the time to market and to accept the potential risk?
Should a structured “stage gate” approach be adopted in which the exit criteria of one phase is achieved before starting a subsequent phase? (Rafinejad 2007.) Waste in complex projects
Number of difficulties and related inefficiencies can result in complex projects which keep the company from achieving the satisfactory time and cost performance. Complexity of project cannot be completely specified in advance, even so leading to evident troubles in the definition of precise technical requirements, reliable schedule and precise financial budget. Uncertainty of resources and the output, coupled with the technical complexity of the systems to develop can cause several iterative loops in the development process.
In this kind of environments, redundancies are often considered necessary since they help to increase the level of certainty in the project and hence considered as value- adding activities. On this basis, it is sometimes hard to understand what waste actually is. Elimination of some activites in order to cut costs could result in considerable risk for the technical excellence of the project. (Belvedere 2019.)
Appropriate project planning and early controls on stakeholders’s needs and requirements can avoid cost overruns and delays, but also lead towards superior technical performance. To achieve project efficiency, specific approaches must be adopted in complex projects, to strengthen the ability to assimilate and apply new and relevant knowledge, learning from past experience so as to understand the behaviours driving to successful project performance. (Belvedere 2019.)
2.5.2 Value stream mapping in product development projects
Organizations needs to effectively improve the time-to-market (TtM) parameter to remain competitive. The greatest reduction in TtM occurs when an organization streamlines its processing stages, undertakes activities in parallel and proactively launches products in the market. (Tyagi 2015.)
A new product development (NPD) project is not just a series of predictable steps that can be planned in advance. For many product development projects the resulting capabilities of the product and the exact means to achieve the product are not known with certainty at the start of development project. Often there is no precise understanding of the detailed project tasks, task sequence, task interdependencies and task times in the beginning of project execution. In this context, it it not easy for a company to identify the critical success factors (CSF) for NPD projects. There are different approaches for studying success of NPD projects. Ciarapica, Bevilacqua and Mazzuto (2014) have investigated the role of product and project features at the start of the NPD in “added value time” of the project. The most effective project is achieved by performing the minimum number of added value steps and no non-added value steps. The method to maximize added value steps in lean practice is through value stream mapping (VSM).
VSM provides insights useful to develop proactive approaches to prevent project failures, including the creation of more effective information flow and methods to help the corporation to make the best choices at the beginning of a project. In the beginning of the project, the major technological approach had been chosen and project go-ahead
was given. Ciarapica et al. research question was “How do the product innovation aspects, information process, suppliers’ integration and project team aspects influence the success of new product development projects in terms of observed added value time?”. Their work analysed 13 companies and 40 NPD projects carried out by these companies. Added value time was used to asses project performance because accelerating the speed of bringing new products to market is a top objective for executives of the multinational corporation that accords with priorities in literature. The faster the firm can develop a new product, the greater the likelihood that they can be the first to market and reap pioneering advantages. The method to maximize added value steps in lean practice is through value stream mapping. (Ciarapica 2016.)
Some technical and management characteristics of a NPD (product innovation aspects, information process, supplier’s integration and project team aspects) may influence the success of NPD projects in terms of observed value-added time. Ciarapica et al.
research found connections between the practices and the performance indexes based on lean method: percentage waste time, waste type and number of wastes. By identification of sources of wastes in the current state can help managers to asses their current innovation practices. Value stream mapping can identify gaps between their current practice and best practice, and define action plans to close the gaps. Existing practises need to be reviewed and challenged in terms of wastes, otherwise there will be a continued acceptance that the process works fine. Recognizing wastes can be used on an individual basis to help improve personal time management. VSM is a powerful tool for optimizing the product development process, and it can help to visualize the entire system of product development. VSM can synchronize concurrent, cross- functional activities and hidden interdependencies. (Ciarapica 2016.)
2.5.3 Critical success factors for NPD projects
Success factors for new product development projects have been tried to identify from different aspects. The primary challenge of a NPD project is to achieve all of the project goals and objectives while adhering to project constraints. Lettice et al. (Lettice 2006) conducted a survey based on six dimensions of measuring NPD process. The performance measurement framework included reuse, invention, exploitation, stakeholder contribution, NPD performance and enabling context. Respondents of this survey considered the re-use the most important measuring overall performance. The
enabling context was rated the least important of the six dimensions, even though there is an increasing awareness of how soft factors (culture, human resources) impact performance. In terms of how respondents perceived their capability to measure performance, the highest scoring was for NPD performance. This is predominantly financially driven dimension, which is easiest to understood and most commonly addressed perspective for NPD performance. Their survey resulted that companies are still struggling with the capability to measure enabling context performance. The working environment is becoming more and more dynamic with increasing uncertainties in technology, budgets, and development processes. Highly educated experts must coordinate so that their technical inputs integrate well into the human system in which they are operating. (Lettice 2006.)
According to Pinto and Slevin ((Pinto 1987) the managers increasingly need tools for monitoring that enable a proactive response to troubled areas. Project management softwares have been developed to help manage the technical aspects of the projets (the critical paths, interdependencies, budgets, schedules). Additional progress is needed to measure more organizational and behavioural issues. Pinto and Slevin raises nine most common critical success factors appeared in previous studies, those are:
1. clearly defined goals 2. competent project manager 3. top management support
4. competent project team members 5. sufficient resource allocation 6. adequate communication channels
7. control mechanisms (planning, schedules, etc) 8. feedback capabilities
9. responsiveness to clients (Pinto 1987.)
2.6 Cross-functional teams
A global water treatment company announced that it had cut costs and aimed to speed up innovation and increase productivity by realigning its organization to adopt an integrated business management approach. Functional responsibilities were no longer
