6. Lean Supply Chains and Lean Production

Added value can be defined as products, services, processes, and activities, which generate a certain value to the organization and enterprise. Value-added must be regarded from the customer viewpoint and is everything for which the customer is willing to pay for. It is important that value-added is recognized and perceived as value by the client. Many studies have shown that we only add value to a product for less than five to fifteen percent of the time, the rest of the time is wasted (Helmold & Terry, 2016a, 2016b). The opposite is non-adding value or waste as shown in Fig. 6.1. Waste (Japanese: Muda, 無駄) is anything that adds cost or time without adding any value or any activity which does not satisfy any of the above conditions of value-added is a waste or a non-value-adding activity in a process. The focus in operations management must therefore be in eliminating activities such as waiting time or rework (Ohno 1990; Liker, 2004). Enterprise must target value-added process and eliminate or reduce waste, whereby waste can be visible (obvious) or invisible (hidden) as shown in Fig. 6.2.