VCM Glossary

Browse terms specific to the Value-Centered Management business philosophy.
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3S Healthcard

A weekly value-centered tool used to measure 3 critical states of the business: the state of the customer, state of the value stream, and state of the company.

5 Whys

A simple method that allows you to discover the root cause of a problem by asking “why”. Ask “why” to a problem at least 5 times until the root cause is discovered. (You may have to ask more or less than 5 times.)

7 Commitments

Value-Centered Management teaches us that there are 7 key commitments that everyone in the organization must focus on at all times. These commitments cannot be compromised but must be promoted, celebrated, and adhered to under all circumstances:

Attitude Control: All team members must commit to controlling their attitude and demonstrate their ability to manage their own behavior.
Identifying and Strengthening Individual Weaknesses: The strength of the team members within an organization is in their ability to identify and strengthen their individual weaknesses and commit to constantly work on them.
Positive Thought Process: It is critical that team members commit to having a positive thought process no matter what the business circumstance. Before any team can act right they must first think right.
Effective Communication: All team members must commit to sending effective messages and being willing to receive messages from others through active listening to ensure effective communication.
High Tolerance Level: All team members must commit to having a high tolerance level for dealing with challenges that may come up within the course of the operations of the business.
Ability to Bounce Back: All team members must commit to learning how to recover when they are feeling down or upset. No matter what we do there are going to be things that happen that frustrate us, however we must commit to quickly bounce back.
Respect for Authority: All team members must commit to respecting the authority given to diverse individuals within the organization. Without an environment in which respect is promoted and honored amongst the team members, customers will not receive the proper respect they deserve.

7 Non-Value Added Activities

In the value-centered enterprise we focus on maximizing value added activity.Â This is also consistent with focusing on minimizing non-value added activity. There are 7 non-value added activities: Overproducing, Unnecessary Waiting, Unnecessary Quantities, Unnecessary Movement, Repeat Work, Irrelevant Work and Underutilized Ability. These activities should be continually, intensely focused on and eliminated.

Overproducing: Providing more product, work, time and /or serving than necessary to serve your customer.
Unnecessary Waiting: Any time customers or team members are waiting for something or someone there is no value being added.
Unnecessary Quantities: Having a higher quantity of items or information than necessary to do the job required in the operation.
Unnecessary Movement: The unnecessary movement of items, people, or a person within an operation or process
Repeat Work: Having to do something over again because it was not done right the 1^st time.
Irrelevant Work: Doing things within an operation that are irrelevant to the customer.
Underutilized Ability: A person or machine that is not being fully used to their potential to provide value to the client.

Accounting Service Team

Service team responsible for accounting for the money coming into the organization and the money going out of the organization on a day-to-day basis.

Batch

A batch consists of large quantities of items moving through the process, which causes queue times or waiting. It is better to have a one-piece flow versus a batch system.

Buffer

A type of safety stock sometimes necessary to ensure you consistently meet customer demand when customer ordering patterns or takt times vary.

Built-in Quality

Build quality into the process in such a way that prevents mistakes, defects, or breaking of standards. Equipment or processes that are set up to make it easy to discover that something is abnormal.

Business Health

The soundness and vitality of the enterprise that can be measured by keeping an accurate understanding of the state of the customer, state of the value stream, and the state of the company.

Business Support Cost

The cost associated with the activities that indirectly support the businessâ€™ ability to serve the customer.

Continuous Flow

Setting up your processes so that your product or service can flow through the operation in the proper sequence and without interruptions due to processes being unbalanced.

Cost Barriers

Any cost associated with business is considered a barrier that must be removed in the value-centered enterprise.

Cost of Goods To Be Sold

The cost associated with purchasing inventory that will be sold to earn revenue.

Cost Reduction

A key principle of value-centered management.Â This principle deals with the main four types of business related costs: f.u.l. cost, inventory and materials cost, business support cost, and cost of goods to be sold.Â The reduction of all these costs are essential to maximizing the profit of the value-centered enterprise.

Cost Reduction Principle

Sales price minus cost equals profit. Sales price is decided according to market conditions. Profit is increased only if costs are reduced, not by increasing the sales price.

Cultural Improvement Systems

A system that allows the company culture to be controlled by team members who have been trained how to see improvement

Cultural Ingredients

Key ingredients in a value-centered enterprise: cultural improvement systems, leadership development, team member development, and customer service.

Culture

An environment for the team members who serve our customer. Company culture is the heart of the value-centered enterprise.

Customer

Anyone who is in receipt of or desires to receive a service or product and is willing to pay for it.

Customer Demand

What we need to produce on a daily basis to satisfy the customer whom we serve.

Customer Pace Time

The pace the operation must move to ensure it meets the required demand of its customers.Â Customer demand divided by planned work time equals customer pace time.

Customer Service

In the value-centered enterprise, customer service must go deeper than a smile by understanding what your customers value and then taking the time to center all operations, policies, procedures, and behaviors within the organization around that value.

Customer Value Alignment Tool

A tool used to match value points from the customer value committee to specific processes within the operation.

Customer Value Committee

A committee of dedicated customers that are used to gather up to date information and feedback on the products and services currently and not currently offered.

Direct Service Team

The service teams directly associated with delivering the products and/or services for which the business was created

F.U.L. Cost

The cost associated with having the utilities, labor and facilities to run your business.

FIFO

First In, First out; a method for work-control so that older work (first in) is the first to be processed (first out)

Flow

A sequence of activities or processes necessary to deliver a product or service to the customer.

Genchi Genbutsu

A Japanese term meaning “go to the workplace” and see what is actually happening.

Heijunka

A Japanese term meaning â€œlevel schedulingâ€ or â€œsmoothingâ€ to ensure a balanced workload and balance production of goods, or providing of services to the customer. A physical device used to level work volume and variety over a specified period.

Human Resources Service Team

Service team responsible for overseeing the activities surrounding the companyâ€™s human resources.

Indirect Service Team

The service teams that indirectly serve the customer by providing support services to the direct service teams and company as a whole.Â There are 7 main indirect service teams in the value-centered enterprise: value management, partnership management, accounting, human resources, information & technology, planning & analysis, and the kaizen service team.

Information Technology Service Team

Service team responsible for managing the companyâ€™s ability to move, locate, and store the information necessary to ensure the company can fulfill itâ€™s mission of consistent creation and delivery of value.

Inventory

Materials, parts or information needed to provide a product or service to a customer.

Jidoka

Building intelligence into equipment or processes that allow problems to be visible so they can be detected and resolved on the spot (e.g.: an electronic form that can not be sent until all fields are completed).

Just In Time (JIT)

Only produce what is needed, just when it is needed, in the exact amount needed, and in the right quantity.

Kaizen

Continuous change for the better. Kai = change, Zen = for the better.

Kaizen Service Team

Service team responsible for managing cultural improvement systems throughout the company to ensure the kaizen spirit never dies and that successful kaizens are shared to the benefit of the entire enterprise.

Kanban

Inventory control card used to manage inventory in a lean environment, which focuses on minimizing inventory and only moving inventory at the pace of customer demand (pull system)

Lean

A common manufacturing method/system based around the goal of eliminating waste (or fat) to maximize value to the customer.

Lean Accounting

Financial accounting approach necessary in a lean environment to ensure the benefits of lean management is realized financially, while also eliminating many wastes that are present in traditional financial accounting.

Leveling

Distribute work evenly to enhance and create a productive work flow that ensures all work within an operation is balanced so that no process or person is overworked or strained.

Line Balancing

The process by which you can evenly distribute the work elements within a value stream in order to meet takt time and ensure a proper workload balance for your team members.

Muda

A Japanese term meaning “waste” or “non-value added.”

Non-Value Added Demand

The abnormal demands from the client due to inefficiencies or failures within the value stream.

Pitch

A multiple of takt time that will allow you to customize your takt time requirement into a manageable goal for a particular work flow, process, or value stream.

Pitch Board

A visual control method that will assist in controlling the flow of work throughout the workday by displaying visually how the process is flowing with respect to takt time.

Planned Work Time

Actual time allotted for actual work to be done.Â You must subtract out lunches, breaks, etc. to get this time.

Planning & Analysis Service Team

Service team responsible for the coordination and fulfillment of the appropriate planning and analysis necessary to ensure the organization is prepared for short-term and long-term success.

Point-to-Point (PTP) Time

The total time it takes to get between two points within an operation or from the beginning to the end of an operation or sequence of activities.

Principles of Lean

Key lean principles include: cost reduction principle, lead time reduction, customer service, respect for team members, eight deadly wastes, just-in-time, built-in quality, three phases of lean application, the visual office, and a kaizen environment.

Principles of Value-Centered Management

The key principles are: VCM Fundamentals, Understanding Value, Understanding Culture, Understanding Flow, and Value-Centered Management.

Process Time

Time it takes to perform or operate a process one time.

Process Time Percentage

The percent of the PTP time spent actually working. Process time divided by the point to point time.

Pull System

Only produce what is requested by the next process (or downstream process) or customer (internal or external); thus, minimizing inventory since everything is done based on a response to an actual need expressed by the customer.

Push System

Production with no regard for what is needed by your customer or by the next process. Work piles up in batches and is pushed from process to process normally creating excessive amounts of inventory.

Relative Wait Time Percentage

The relationship between the process and wait time.

Revenue Streams

Every product or service that can be sold to produce revenue for a value-centered enterprise

S.A.F.E-T

S.A.F.E.T. is a unique acronym coined by Value-Centered Management. A S.A.F.E.T. certified environment is a safe, clean, and orderly environment.

Separate means that you separate what is needed from those items not needed for your current operation (bare essentials).
Arrange means that all needed items are given a â€œpermanent homeâ€ in your environment with strategic consideration of interior design, ergonomics, and frequency of use.
Finish means that we keep everything swept and clean.Â It emphasizes the removal of dirt, grime, and dust from all items in the environment.
Everyone means creating a consistent way that tasks and procedures are carried out through the use of pictures, labels, and other visual controls.
Test means making a habit of properly maintaining correct procedures through daily/weekly checklists and auditing systems.

Safety Stock

Extra inventory used as a means of meeting customer demand when internal constraints or inefficiencies disrupt process flow.

Scorecard

A lean tool used to measure productivity and performance of a value stream on a regular basis.

Service Team

A team member or group of team members that are responsible for a process(es) to support the value stream. There are two types of service teams: direct and indirect service teams.

Stream

The flow of activities and processes that moves the products and/or services from the company to the client.

Supermarket

A system used to store a set level of completed work units or partially completed work units (WIP) to ensure the demands of the next process or customer can be properly met. The supermarket is only replenished based on a â€œpullâ€ from the next process or customer.

Takt Time

The pace of customer demand calculated by dividing the net available operating time by the total daily quantity required to meet customer demand.

Time Management

A key principle of value-centered management. Time management refers to understanding the different time elements associated with servicing the customer such as: process time, wait time, and point to point time.Â There are also three important time management percentages: process time %, wait time %, and relative wait time %. Lastly, one of the most important elements of time management is understanding the customer pace time.

Toyota Production System

The original name for lean management, which is Toyota’s management and production philosophy developed in the mid 1900’s.

Value

The innermost driving force that would cause a person to spend their money to buy a product or service.

Value Added

All activities that are essential to producing value for the customer.

Value Added Demand

The normal demand associated with the customer request to be serviced by the value stream.

Value Focus Groups

A focus group used to gather information about specific needs of your customers

Value Management Service Team

Service team within the value-centered enterprise that focuses on continually identifying and maintaining what the customer values and ensures these values are being properly incorporated into all service teams within the value stream.

Value Stream

The stream of activities and or processes grouped within service teams to deliver the products and/or services that the customer values.

Value Stream Mapping

Visual mapping tool developed to understand the workplace and to identify value and non-value added activities within the operation or value stream.

Value-Centered Enterprise

Any enterprise that has mastered the ability to center all of its operations around what the customer values consistently over time while maintaining the necessary culture to sustain the smooth, productive flow of value to their customers.

Value-Centered Management

A management approach that completely centers itself around what the customer values by focusing on consistent value creation and flow in a focused and team member friendly culture.

Value-Centered Management Fundamentals

The foundation of the Value-Centered Enterprise.Â The keyÂ fundamentals are a visual workplace, time management, cost reduction, reduction of non-value added activities, and resource re-allocation.

Visual Control

Visual management techniques that express information in a way that can be understood quickly by everyone and assist in controlling the flow of work and communicating workplace standards.

Visual Workplace

A key principle of value-centered management.Â A workplace that is equipped with visual management tools such as pictures, labels, posters, and checklists to remind everyone of the rules for the operation and to see job progress.

Wait Time

The amount of time a product or customer waits to be processed or serviced.

Wait Time Percentage

The percent of the PTP time spent waiting between processes.Â Wait time divided by the point to point time.

Waste

A lean manufacturing term used to describe anything that adds time or cost without adding value.

Work Balance Chart

A visual display of the work elements, times, and workers at each location used for the purpose of ensuring a proper work balance for an operation.

Work Cell

A group of team members that have commonalities in terms of equipment and processing systems causing them to work in a specific location as a team to fulfill a particular function or process within a value stream.

Work In Progress

Work that was not completed in a given day and is still being processed somewhere within the operation or value stream

Workplace Management

A management system used to implement and sustain a lean, orderly, and safe environment in all workplaces throughout the value stream.