Thursday, October 13, 2005

Value Stream Management, Perfection

The fifth and final step in developing a lean system or agency is the pursuit of perfection. Most of the inefficiencies in our system are the cumulative effect of years of making habits out of responses. In a system or agency that has followed the four preceding steps, it is likely that over time, persistent new forms of waste will inevitably develop. The result would likely be a magnificent, transformative improvement eroded over time.

The alternative to this is to continuously address waste through a permanent team. Value Stream Management was pioneered in Japan and two Japanese words are used to describe change in this context. Kairetsu refers to radical change and the expected result of a VSM transformation. Kaizen refers to incremental change. Kaizen teams are a continuous presence bringing representatives from all along the value stream seeking waste, either waste that was not recognized during Kairetsu or new waste that finds its way into the system later. The lean agency commits itself to a permanent war with waste.

The result, in industry, has been a massive reduction in cost at the outset, but also small, incremental reductions in cost forever after. When we talk about cost reductions within this system, the assumption is a reduction in quality. Remember that part of this process is to have the client define quality. Eliminating waste improves quality while reducing costs.

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