Muda, Service

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Chapter 7

• Muda, Service Flow

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Taiichi Ohno (1912-1990)

• Father of the Toyota Production System
• Defined waste as any human activity which
  absorbs resources, but creates no value.
• An innovator who opposed every form of waste
• Muda - Japanese for waste, futility or
  purposelessness

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Examples of Muda

• Mistakes which require rectification
• Production of items nobody wants
• Processing steps which are not needed
• Movement of employees transport of goods
  without any purpose
• Downstream people standing around waiting because
  of delays upstream
• Goods service which do not meet the needs of
  the customer

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Antidote for Muda Lean Thinking

• Continuous flow of value
• Value as defined by the customer
• At the pull of the customer
• In search of perfection (or elimination of muda)
• Goal No stops, no delays, no backflows, no
  inventories, no expediting, no bottle-necks, no
  buffer stocks and no muda

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More Lean Thinking

• Simplification - save space , materials, energy,
  transportation time simultaneously
• Every tool machine, or process should be the
  right size for the job
• The right size depends on the rate and location
  of customer pull

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Even More Lean Thinking

• Dont study it just do it keep trying.
• If you fixed it, fix it again
• Waste will be reduced because only what is
  needed will actually be made
• Forget your competitors compete against
  perfection by identifying all muda activities and
  eliminating them

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The Hidden Benefit ofLean Thinking

• Workers are happier!
• They like to see waste eliminated
• They feel best when their activity involves
• a clear objective
• intense concentration
• no distractions
• immediate feedback on progress
• sense of challenge

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Service Flow A powerful new business logic

• Provide a service rather than a product
• Provide it at the rate and manner the customer
  desires
• Deliver it as efficiently as possible
• Share as much of the savings as necessary to
  compete
• Pocket the rest

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Service Flow Examples

• Carriers comfort lease
• Schindlers leasing of vertical transportation
  services
• Interfaces Evergreen Lease for carpet
• Pitney Bowes mail handling services

• Dow Chemical SafetyKleens dissolving
  services
• Ciba Pigment Divisions color services
• Xeroxs document distribution services

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Before long, prospective buyers will ask ...

• If your product is so great, why dont you want
  to keep the advantages to yourself?
• So, whats wrong with your product?

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Affects on the customer relationship

• The customer is always right taken to a new
  level
• Focus on customer solutions rather than the
  providers product
• Mutual confidence required

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Interface, Inc.

• Evergreen Lease allows customers former capital
  expense to be a lease expense to fully deduct
  from taxable business income
• Solenium - can be completely remanufactured back
  into itself
• Performs better highly stain-resistant, does not
  mildew, easily cleaned with water, 35 less
  material, 4 times more durable, acoustically and
  aesthetically improved

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Macroeconomic Implications of Service Flow

• Changes the volatile goods economy with its
  periodic booms and busts in capital investments
  and inventories, resulting in layoffs and anxiety
• The leasing of services dampens volatility with
  its continuous flow of solutions (monthly
  payments)