Goal #1: Improve quality.

Quality is the ability of our products or services to conform to our customers’ wants and needs (also known as
expectations and requirements). Product and service quality is the primary way of IADFAC stays competitive in
the marketplace.

The credibility of a laboratory’s reputation is directly affected by its quality assurance program. The key to a
successful quality assurance program is the manuals, and associated documents define the program and its
various components. Therefore, by extension, a laboratory’s credibility is directly related to its operational and
technical methods manuals.

Goal #2: Eliminate waste.

Waste is any activity that takes up time, resources, or space but does not add value to our product or service.
An activity adds value when it transforms or shapes raw material or information to meet our customers’
requirements. Some activities, such as moving materials during process, are necessary but do not add value.
Our organization’s primary goal is to deliver quality products and services the first time and every time.

Goal #3: Reduce lead time.

Lead time is the total time it takes to complete a series of tasks within a process. Some examples are the period
between the receipt of a sales order and the time the customer’s payment is received, the time it takes to do
the analysis, and the time it takes to submit the report. By reducing lead time, we can quickly respond to
changes in customer demand while improving its return on investment, or ROI.

Goal #4: Reduce total costs.

Total costs are the direct and indirect costs associated with analysis or service. We continually balance our
products’ and services’ prices and its operating costs to succeed. When either its prices or its operating costs
are too high, we can lose market share or profits. To reduce its total costs, we eliminate waste and reduce lead
times.

How to improve quality

1. Begin your quality-improvement activities by understanding your customers’ expectations and

requirements. Tools such as quality function deployment are helpful ways to better understand what
your customers want and need.
2. Review the characteristics of your service or product design to see if they meet your customers’ wants
and needs.
3. Review your processes and process metrics to see if they are capable of producing products or services
that satisfy your customers.
4. Identify areas where errors can create defects in your products or services.
 5. Conduct problem-solving activities to identify the root cause(s) of errors.
6. Apply error-proofing techniques to a process to prevent defects from occurring. You might need to
change either your product/service or your production/business process to do this.
7. Establish performance metrics to evaluate your solution’s effectiveness.

How to eliminate waste

To eliminate waste, begin by imagining a perfect operation in which the following conditions exist:

 Products or services are produced only to fill a customer order—not to be added to inventory.
 There is immediate response to customer needs.
 There are zero product defects and inventory.
 Delivery to the customer is instantaneous.

By imagining a perfect operation like this, you will begin to see how much waste there is hidden in your
company. Using lean initiatives will enable you to eliminate waste and get closer to a perfect operation.

The seven types of waste

As you use the tools and techniques of lean production, you will work to eliminate seven types of waste, which
are defined below:

 Waiting - Also known as queuing, this term refers to the periods of inactivity in a downstream process
that occur because an upstream activity does not deliver on time. Idle downstream resources are then
often used in activities that either don’t add value or, worse, result in overproduction.
 Overproduction - The worst type of waste, overproduction occurs when operations continue after they
should have stopped. The results of overproduction are 1) products being produced in excess quantities
and 2) products being made before your customers need them.
 Rework (Defects) - These are products or aspects of your service that do not conform to specification or
to your customers’ expectations, thus causing customer dissatisfaction. Defects have hidden costs,
incurred by product returns, dispute resolution, and lost sales. Defects can occur in administrative
processes when incorrect information is listed on a form.
 Motion - This term refers to the extra steps taken by employees and equipment to accommodate
inefficient process layout, defects (see the section below), reprocessing, overproduction, and too little
or too much inventory. Like transport, motion takes time and adds no value to your product or service.
An example is an equipment operator’s having to walk back and forth to retrieve materials that are not
stored in the immediate work area.
 Extra Processing - This term refers to extra operations, such as rework, reprocessing, handling, and
storage, that occur because of defects, overproduction, and too much or too little inventory.
Another example of extra processing is when an inside salesperson must obtain customer information
that should have been obtained by the outside salesperson handling the account. It is more efficient to
complete a process correctly the first time instead of making time to do it over again to correct errors.
 Inventory - This refers to any excess inventory that is not directly required for your current customer
orders. It includes excess raw materials, WIP, and finished goods. Keeping an inventory requires a
 company to find space to store it until the company finds customers to buy it. Excess inventory also
includes marketing materials that are not mailed and repair parts that are never used.
 Transport - This is the unnecessary movement of materials, such as work-in-progress (WIP) materials
being transported from one operation to another. Ideally, transport should be minimized for two
reasons: 1) it adds time to the process during which no value-added activity is being performed, and 2)
goods can be damaged during transport.
 There is 8th waste which is most dangerous, and that is “Under Utilization of Talent”.

How to do it

Begin your team-based waste-reduction activities by identifying a product or operation that is inefficient.

1) Identify associated processes that perform poorly or need performance improvement. If appropriate,
select the operation in your organization with the lowest production output as a starting point for your
waste-reduction activities.
2) Begin by creating a value stream map for the operation you are reviewing.
3) Review the value stream map to identify the location, magnitude, and frequency of the seven types of
waste associated with this operation.
4) Establish metrics for identifying the magnitude and frequency of waste associated with this operation.
5) Begin your problem-solving efforts by using lean principles to reduce or eliminate the waste.
6) Periodically review the metrics you have identified to continue eliminating waste associated with this
operation.
7) Repeat this process with other inefficient operations in your organization.

How to Reduce lead time

Reducing lead time, the time needed to complete an activity from start to finish, is one of the most effective
ways to reduce waste and lower total costs. Lead time can be broken down into three basic components:

1) Cycle time - This is the time it takes to complete the tasks required for a single work process, such as
performing all test for all the samples registered for a single day.
2) Batch delay - This is the time a service operation or product unit waits while other operations or units
in the lot, or batch, are completed or processed. Examples are the time the first sales order of the day
must wait until all the sales orders for that day are completed and entered into the system.
3) Process delay - This is the time that batches must wait after one operation ends until the next one
begins. Examples are the analysis of samples of IC can be started once HPLC analysis completed, when
both are running from single computer. Another example is performing the Quality Control check for all
tests at the end of the day. As you think about places where you can reduce lead time in your sample
process or business process, consider the following areas:
 Engineering design and releases
 Order entry
 Process planning
 Purchasing
 Order fulfillment
 Receiving
 Process
 Inspection/rework
 Report generation
 Report dispatch
 Invoicing and payment collection

Below is a list of possible lead-time solutions to consider and their goals. They are divided into three
categories: test profile design, processing, and supply.

Test profile design

 Product rationalization - This involves simplifying your product line or range of services by reducing
the number of features or variations in your products or services to align more directly with your
customers’ wants and needs.

Processing

 Process simulations - These enable you to model your work processes to reveal waste and test the
effects of proposed changes. Example, random test booking for multiple sample for multiple test
delayed the sample entry. If different tests are added for different test profile, then during sample
entry, selecting the profile will automatically add the test.
 Delayed process configuration - This means waiting until you complete the work plan for the day.
 One-piece, or continuous, flow of products and information - This enables you to eliminate both
batch and process delays. Example is bar code scanning, sample entry, raw data entry, QC check
and reporting and invoice all in one software.
 Technology (i.e., hardware and software) solutions - These enable you to reduce cycle time and
eliminate errors. Example to use LIMS, autochemistry, autosampler, auto sample extraction units.
Etc.
 Quick changeover - This involves making product/service batch sizes as small as possible, enabling
you to build to customer order. For laboratory activities one example is to change the capillary
column with pre-set nuts and ferrules, slickbill software to convert the quotation to invoice and
bills.
 Work process standardization - This means identifying wasteful process steps and then
standardizing “best practices” to eliminate them. Example is to prepare reagents in small batches
periodically for standard strength every time, fixed place for sample in and sample out for
retention, etc.

Supply

Demand/supply-chain analysis - This reveals wasteful logistical practices both upstream and
downstream in your demand/supply chain. It often reveals excess inventories being held by your
customers, your organization, and/or your suppliers due to long processing lead times that result in
overproduction. Freight analysis sometimes reveals that overproduction occurs in an effort to obtain
 freight discounts. However, these discounts do not necessarily offset the costs of carrying excess
inventory. Example is to get 10% extra discount, you purchase excess reagents, which may lie for
years.

How to do it

The steps are as follows:

1) Begin team-based lead-time-reduction activities by creating a value stream map for the business
process you are targeting.
2) Calculate the time required for the value-added steps of the process.
3) Review the value stream map to identify where you can reduce lead time. Brainstorm ways to make the
total lead time equal the time required for the valueadded steps that you calculated in step 2.
4) Determine what constraints exist in the process and develop a plan to either eliminate them or manage
them more efficiently.
5) Establish metrics to identify the location, duration, and frequency of lead times within the process.
6) Once you have established a plan for improving the process, measure the improvement.
7) Repeat this process for other inefficient operations in your organization.

How to reduce total cost

For cost management to be successful, everyone in the organization must contribute to the effort. When you
implement a process to reduce total costs, your goal is to spend money wisely to produce your company’s
products or services. To minimize the cost of its operations, you must produce only to customer demand. It’s a
mistake to maximize the use of your process equipment only to create overproduction, which increases your
company’s storage needs and inventory costs.

Before you can identify opportunities to reduce costs, your team should have some understanding of the way
that your company tracks and allocates costs and then uses this information to make business decisions.

A company cost structure usually includes variable and fixed costs, which are explained below:

 Variable costs - These are the costs of doing business. These costs increase as your company makes
each additional product or delivers each additional service. In manufacturing operations, variable costs
include the cost of raw materials. Example is to go to the same route multiple times for multiple sample
collection on same day. Another example is to perform same analysis by HPLC at two different times in
a day, whereas it could be done in same batch. Analysis of elements by AAS increase the running cost
than doing the same by ICP-OES.
 Fixed costs - These are the costs of being in business. These costs include product design, advertising,
and overhead. They remain fairly constant, even when your company makes more products or delivers
more services. Example is salary, rent, electric bill, performing PT/ILC.

Cost-Reduction Methods
Use one or more of the methods listed below to identify places to reduce the costs related to your current
processes or products/services. These methods are useful for analyzing and allocating costs during the new-
product-design process (addition of new test).

Target Pricing - This involves considering your costs, customers, and competition when determining how much
to charge for your new product or service. It’s important to remember that pricing has an impact on your sales
volumes, and thus your production volumes. The rise and fall of production volumes impact both the variable
and fixed costs of the product—and ultimately how profitable it will be for your company.

 Target Costing - This involves determining the cost at which a future product or service must be
produced so that it can generate the desired profits. Target costing is broken down into three main
components, which enables designers to break down cost factors by product or service, components,
and internal and external operations.
 Value Engineering - This is a systematic examination of product cost factors, taking into account the
target quality and reliability standards, as well as the price. Value engineering studies assign cost
factors by taking into account what the product or service does to meet customer wants and needs.
These studies also estimate the relative value of each function over the product’s or service’s life cycle.

The following techniques are useful for analyzing and improving the cost of your organization’s operations.

Activity-based costing (ABC) - ABC systems allocate direct and indirect (i.e, support) expenses—first to activities
and processes, and then to products, services, and customers. For example, your company might want to know
what percentage of its engineering and procurement costs should be allocated to product families to
determine product-contribution margin. In addition, you can do indirect cost allocations for each customer
account, which enables you to do a customer-profitability analysis. Example, to decide the test procedure
shifting from wet chemistry to IC, need to consider the sample load per day. It is acceptable to shift if sample
per day is more than 10 with 5 different test which can be done by IC in single analysis. But if it is less than 10
and all 5 tests not needed for all samples, then wet chemistry is profitable, considering the cost of investment,
running cost and cost of maintenance.

 Kaizen (i.e., continuous improvement) costing - This focuses on cost-reduction activities (particularly
waste reduction and lead-time reduction) in the production process of your company’s existing
products or services. Example is to reduce the repeat analysis frequency due to unacceptable value
obtained. This can be reduced by analyzing one sample with known value and monitoring the trend
chart.
 Cost maintenance - This monitor how well your operations adhere to cost standards set by the
engineering, operations, finance, or accounting departments after they conduct target costing and
kaizen-costing activities. Example is to monitor the consumption record versus the test performed.

How to do it

1) Decide whether your cost-improvement efforts will begin with new or existing product lines.
2) If new products (test) or services are the focus of your improvement efforts, techniques to consider
using are target pricing, target costing, and value engineering.
 3) If existing products (test) or services are your focus, begin by reviewing your high-cost products and
processes. Apply ABC, Kaizen costing, and cost maintenance to assist your cost-improvement initiatives.

Value stream mapping

The term value stream refers to all the activities must do to design, order, produce, and deliver your products
or services to customers. Example is to add a new test in the laboratory offered test services. It has three main
parts:

 The flow of materials, from receipt from suppliers to delivery to customer. In laboratory test services,
the flow of order from the market and deliver the test report.
 The transformation of raw material into finished goods. In laboratory, analysis the sample and produce
raw data.
 The flow of information that supports and directs the flow of materials and the transformation of raw
materials into finished goods. In laboratory, it is “High Level Process Map”.

There are often several value streams operating within a company, also can involve more than one company.
Example is promotional activities, different test by different technologies – these are within company; and
procurement, service contracts are the involvement of multiple companies.

Value stream mapping helps each one of the company to understand how the separate activities combine to
create products or services.

This is the first step to take in creating an overall plan. It begins with agreement among all of the organization
on the current state. Developing a visual map of the value stream allows everyone to fully understand and
agree on how value is produced and where waste occurs. It provides also the following benefits:

 Highlighting the connections among activities and information and material flow that impact the lead
time of your value stream.
 Help all to understand the company’s entire stream rather than just a single function of it.
 Improving the design-making process of all work teams by helping team members to understand and
accept company’s current practices and future plans.
 Creating a common language and understanding among all through the use of standard symbols.
 Allow you to separate value-added activities from the non-value added activities and then measure
their lead time.
 Providing a way to easily identify and eliminate areas of waste.

To effectively create a value stream map, you should focus on the following areas:

 The flow of information – from the receipt of a sales order data or test all the way through the test
designing, marketing, processing, control, purchasing, reporting and accounting processes.
 Production/processing activities, which are the physical tasks must perform to produce a report or
deliver a service.
  Material flow, the physical movement of materials from receiving, processing, to the delivery of report
or services.
 Customer value, which is an aspect of a product or services for which a customer is willing to pay. This
is sometimes referred to as “value added”.
 A push system, where materials are automatically moved from one operation to the next, whether or
not they are needed. (Example is sample entry, physical verification, job sheet preparation, send
sample with job sheet to process. Using software to do sample registration, jobsheet to each section,
entering raw data, quality monitoring, report preparation and auto report forwarding through mail to
customer is the example of automated system.
 A pull system where materials are moved from one operation to the next based on a request from the
next operation. Example is purchase requisition, emergency service request.
 Any waste involved in business or processes.
 Takt time, which is total available work time per day (or shift) divided by customer-demand
requirements per day (or shift). Takt time sets the pace of process to match the rate of customer
demand.
 Lead time, which is the time it takes to complete an activity from start to finish.

How to create a value stream map

1. Each individual may the value stream themselves.

2. Compare each maps and work together to reach a consensus.
3. Assemble paper, pencils, erasers and a stopwatch for collecting data.
4. Select a product or service to map. Conduct a quick tour of the value stream to view the end-to-end
material and information flows, making sure that you have identified all the component flows. Don’t
work from memory. Observe the value stream in action. Interview each team member, if applicable.
Verify your observations against documented procedures, routing, job aids and memoranda.
Remember to record exactly what you see without making any judgments. Don’t waste time debating
the merits of an activity or its proper sequence; just record what is happening.
5. Identify a representative customer of the service or products under review. Gather data about typical
order quantities, delivery frequencies, and number of product or service variations. This information
will help you establish the takt time for the customer and the product.
6. Begin mapping the value stream, starting with customer requirements and going through the major
activities. The result is a current-state map of the value stream. During data collection, show whether
information is communicated in real time or in batches. If it is communicated with batches, how often
they are sent, and the process delay. Identify every location where material is stored, sits idle, or it
moved. Identify all non-value-added activities in all the production, material, and information flows.
7. Create a lead-time chart at the bottom of your value stream map, showing the value-added and non-
value-added process/production lead times.
8. Review the map with all who work in the value stream you have mapped to ensure you haven’t missed
any activities or materials.
9. Remember the below flow icons, and start to use:
 10.
11.
12.

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