The fundamental purpose of Lean is to improve organizational performance by better serving our customers. By reducing and eliminating waste and reducing cycle time, we can reduce errors and respond more quickly to the needs of our customers. In a previous module, we defined cycle time as the time from the beginning to the end of a process, including waiting time or other delays. If we can make our processes more predictable, reduce change over times, and reduce errors, we can drastically shorten cycle times. The elimination of waste is a key part of this improvement process. There are eight major categories of waste. The Japanese identified seven and Americans have added one more. The fundamental definition of waste is anything that does not add value to the product or service. Waste of transportation occurs when we move products around or move them farther than necessary without changing them in any way. When we put components into inventory in the warehouse and later draw them out for production, for example, the transportation involved is a waste. Any inventory beyond what is necessary is a waste. Inventory is often used to hide problems. When you reduce inventory, particularly work in process inventory, problems are exposed so that we can solve them. Wasted motion is a focus of traditional industrial engineering efforts. How much do people move? Can that be reduced? The waste of waiting includes both people or machines waiting but, perhaps more importantly, product waiting to be processed. Product waiting is a direct result of large batch size production. Overproduction means producing more than we need. It happens when we run product for inventory even though we have no orders. Overproduction can take many forms. It is any additional processing beyond what is needed to meet customer requirements. This includes rework or working to a standard that is higher than customers are willing to pay for. Defects are an obvious waste. Any time we make a defect or an error, it has to be done over or reworked. You may hear the mantra, do it right the first time. Finally, the last waste is the one that Americans added. This is the unused creativity and skill of all your people. This is a direct result of the ideas of scientific management that were first implemented over 100 years ago. Involve everyone is sort of an unwritten principle in Lean. Involving everyone helps to eliminate the eighth waste of unused skills and creativity. It's also a powerful tool to change organizational culture. It allows us to tap into existing organizational knowledge and expertise. And it helps to build commitment and ownership of the changes that are made. It's been estimated that 95 percent of the time that a product is in a manufacturing facility is due to non-value added activity. We're only adding value that is actually changing the inputs to outputs about five percent of the time. As we reduce or eliminate the eight wastes, this non-value added time will be dramatically reduced. So, how do we determine value added and non-value added steps? Earlier we learned how to map a process. Now, we will analyze a process map. We can ask ourselves two questions. First, does the customer care if we perform this step? That is, is it critical to quality? Is the customer willing to pay us for it? The second question is, will the process fail if we don't do this? If the customer doesn't care, the process step is non-value added. If the process will not fail if we remove that step, then we might be able to remove this step, but it's not automatic. There may be legal, regulatory, or other requirements that prevent you from removing a non-value added step. In addition to the eight wastes, look for redundant steps like multiple approvals and unnecessary inspections. It's often the case that we do not trust our internal and our external suppliers. The last step of their process is inspection. Then when we receive their work, we inspect it again. When we involve everyone in our improvement efforts, we can change the organizational culture in important ways. Employees begin to take ownership and become more engaged, working in teams becomes the norm, finger pointing and blaming are reduced as everyone learns to focus on facts and data rather than opinions. In the end, employees will change their mindset from one of trying to reach compliance to trying to be the best.