Reducing non value adding activities in warehouses: DMAIC approach

What if I say that you are overspending about 20% on your warehouse operations on direct labor? Surprising! But it is true. In most of studies and project, I found that 20% of the activities in warehouse operations are Non-Value Adding activities (NVA) with some percent of Essential Non-Value Adding activities (ENVA). Going by the definition of NVA, it is something for which customer is not willing to pay. Effectively this becomes overspending, in this case, it is overspending in warehouse operations and direct labor. Certainly, eliminating the NVA and reducing the essential NVA will ultimately reduce the operations cost and time. This blog basically talks about the use of Define-Measure-Analyse-Improve-control (DMAIC) principles to reduce NVA.

Continuing to talk about NVA these comprise of seven+1 wastes of lean which are, non-value adding transportation, extra inventory, unnecessary man and machine motions, waiting time, over-production, over-processing, creating defects and one intangible waste which is the loss of creativity of the associates.

Moving ahead we will understand in general how DMAIC principles can be applied for some quick wins for reducing NVA in any activity and process.

D efining the problem statement, here we have to clearly define what are the problems being faced due to NVA. Example of this could be the throughput of the outbound process in XYZ warehouse has reduced by 15% over last 6 months. Or this can even be the observation-based definition of the problem with some null and alternate hypothesis. For example, the throughput of picking activity is decreased due to some NVA, here null hypothesis could be the NVA in picking are less than 10% whereas alternate hypothesis could be NVA are greater than 10%. Once the problem is defined clearly, we can move forward to measure the extent to which the problem is prevailing in the process.

Measuring starts with estimating the current throughput level of process, it can be observations based or by studying historical data. The observation-based measurement can be done by the means of video-based time and motion studies. Measuring the existing layout also helps in identifying the cause of NVA.

Analysing the measured things is the most critical part. The current throughputs measured are to be compared with the ideal situation which helps us to identify the causes of deviation of the process which are nothing but NVA. Video-based time and motion studies help to identify the NVA and document them for creating Do’s and Don’ts document, preparing SOPs. We also need to check if the current layout is the reason for any extra transportation or waiting time if the existing workstations are suitable for the work done on them? or are they causing and extra motions of man and machine?

Improving the process is the ultimate aim of this exercise. Once we narrow down to the reasons why there is an extra NVA time in the process. We should aim at eliminating the NVA and reducing essential NVA. This can be done by finding the alternate method, providing proper tools to associate and providing training for doing work. Existing layout can also be reshuffled based on observations and the workstations can be ergonomically redesigned to suit the activity being done on them

Control the new process, though it is the last step this needs the proactive involvement of the end users and management to maintain and keep the SOP and infrastructure intact to get continuous positive results.

Conclusion,

NVA and essential NVA are the inherent part of any activity/process. They increase with negligence and oversight which ultimately results in overspending on labor cost and increased cost of end product. The best way to get rid of them is to follow the DMAIC approach with proper measuring and analyzing technics and finding the root cause for the inclusion of NVA and essential NVA and take necessary actions to eliminate and reduce them.