Muda Assessment Process

Issue

Even in profitable organisations annual waste in processes and procedures can be
between 35 and 50% of total operating cost. In most instances time spent reworking and
rectifying errors is greater than all first time working. Many organisations don't know how
to identify, quantify and eliminate this significant waste.

Solution

Setanta's Muda Assessment Process (MAP) is a rapid, rigorous and cost effective approach to finding, quantifying and agreeing priorities for process improvement. It is based on the concept of muda - every moment in a process where nothing of value is occurring. MAP can be completed within one working week and usually involves key participants in only a few hours work.

Working within each department it identifies and lists the key elements of muda and estimates their financial cost. It harnesses the understanding of internal process owners and the measurement expertise of the accounting function. Outputs of the assessment in each department are tabulated into a matrix database and presented to senior management. The matrix is used to define and organise the business's true priorities and develop a plan to address them.

How it works

MAP identifies muda in every department and process, building an overall database that identifies the waste, using common currencies:

Time that is spent doing things that add no value, i.e. muda
Cost of non value-adding time and activities quality - time or money spent in ways that provide no satisfaction to stakeholders (customers, staff, suppliers & shareholders)

MAP creates a prioritised plan for improvement in five stages:

Agree the approach. Initial work with senior management divides the business into a series of cross-functional areas in order to agree the allocation of resource and a timetable for MAP.
Facilitate MAP workshops. In each area one or more brainstorming sessions is conducted, each usually lasting about two hours. Sessions involve several experienced process owners representing each department or work section in the area. They are led by senior managers and facilitated by the organisation's senior accountant and a Setanta consultant. Each element is assessed for its muda content.
Consolidate outcomes. Setanta facilitators and the senior accountant finalise the spread sheet database, prepare exhibits and a PowerPoint definition of outcomes for review with the CEO.
Agree priorities with senior management. The CEO chairs the MAP review. All findings are probed and questioned. Once agreed, priorities and accountabilities for action are agreed.
Plan next steps. Setanta consultants work with internal process improvement teams, using the innovative ServiceChain BlitzSM methodology to initiate cascaded implementation actions.

How it is different

Setanta's MAP approach is different from traditional methods in a number of ways because it:

Is accomplished quickly - usually within a single working week. It does not tie up significant amounts of senior management time in seemingly endless meetings.
Identifies the total opportunity up front and gets early senior management commitment
Sets management priorities for quick wins and longer term strategy and then tracks the reality
Works in every department and process, using process owners and the accounting function to measure the muda in the organisation
Gives management understanding and ownership of the technology - Setanta consultants teach the organisation's people to use the underlying techniques.

Results

MAP has proved its worth in many different industries:

Staff in the custodial services department of a global bank were spending too much time on month-end closing with several dealer banks. It had been that way for many years. The MAP approach, allied to ServiceChain BlitzSM improvement techniques, identified and resolved the causes of the problem within a matter of weeks. Analysis showed that 45% of a bank's branch time was spent in non sales or service activities, e.g. packaging applications, answering e-mail or servicing the ATMs. Using MAP thinking and the ServiceChain BlitzSM to address this muda, it was quickly reduced to less than 25%, representing savings of two FTE per branch.
At a global oil-rig fabrication business MAP identified £49m of waste. Within 15 months the top 45 improvement projects alone reduced this by £16m, of which 53% of total savings were in contract definition and purchasing services - not manufacturing.

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