7 Deadly Wastes!
Processes either add 'value' or 'waste' to the production of an item or service. Waste can account for up to 30% of the operating costs of an organisation. Unfortunately it has become accepted by many that this is normal. To combat the impact of this waste, most businesses will devote more and more energy to increasing sales, however pushing more business through an inefficient system makes no sense.
Toyota, the Japanese automobile manufacturer, after years of work to remove waste from their business, identified seven common areas of waste.
1. Overproduction: Overproduction exists when a business produces more than needed or before the product is required. It is the result of producing 'Just in Case' rather than "Just in Time'.
2. Waiting: Waiting occurs whenever time is not being used efficiently. It includes the lead time of each step within a process. This usually is because the material flow may be poor, the production run too long or the distances between work centres are too great. It is not unusual for a product/service to spend 99% of it's time waiting.
3. Transporting: Customers do not want to pay for the cost of transport between steps in the production process (e.g. transporting a car to a different factory for painting). This is a clear source of non-valued cost. More than this, every transport event is an opportunity for damage or loss to occur and quality to deteriorate.
4. Inappropriate Processing: This type of waste can be easily explained with the analogy 'using a sledge hammer to crack a nut'. Are you using the right tool/process for the job? Are you using big expensive high precision equipment when simpler tools would suffice? Are you using the right person for the job?
5. Unnecessary Inventory: Work in Progress (WIP) is unnecessary inventory and is a direct result of overproduction and/or waiting. Reducing WIP allows the real problems within a process to surface. Think of the analogy 'a ship sailing along on a sea of WIP hides the rocks below the water'. By lowering the water level of the sea of WIP, slowly the problems will surface and can be addressed.
6. Unnecessary Motions: Unnecessary motion relates predominately to ergonomics and is seen in all instances of bending stretching and reaching. For example, how much time could be saved if staff had a printer on their desk and didn't need to walk to a printer? What is the possible increase in efficiency worth to your business?
7. Defects: Defects will cost money either now or later and their costs come direct from the bottom line. They can be internal defects found before sale such as the costs of scrap, rework and delays. They can also be defects identified once the product or service has been delivered and include warranty claims, onsite repairs and potential loss of a customer. As a rule of thumb, the cost of a defect increases tenfold for each step in a production or supply chain.
Need some help to identify and reduce the waste in your business? Please do not hesitate to contact us.