Waste

 

Many times when I begin working with an organization I ask individuals, "How much of your time and resources are wasted on an average daily basis?"  The normal responses range from 10 to 80 percent. The average is usually 30%.

 

This happens to correspond to many years of observation and study by quality guru, Joe Juran, who concurs that 30 percent is about the right number. That in itself is an amazing number. In gross terms if a company has revenue of $1,000,000 and we could get rid of the 30 percent waste, we could have an extra $300,000 profit. Of course we think that is ridiculous. We could never accomplish that.

 

Then along come the Japanese with the Toyota Production Method who look at waste in an even more intense way. They have a wonderful word for waste. They call it muda. It means any activity for which the customer is not willing to pay. The customer wants value and muda is the opposite of value. By this definition, it is generally acknowledged that only 5 percent of our daily work activity in an organization is value adding. The other 95 percent is muda or waste. So there is a tremendous opportunity for improvement. Pascal Dennis, in his new book, Lean Production Simplified, suggests that we think of waste as a bank account full of money, and all we need to learn is how to make withdrawals.

 

Dennis identifies eight categories of muda.

 

Excess Motion

Wasted human motion has much to do with ergonomics -- unnecessary reaching, twisting, bending, and walking. In addition to the time lost, poor ergonomics lead to injuries and accidents which are an extreme waste.

 

There are also wastes associated with machine motion. Location and speed of machines should be investigated.

 

Delay or Waiting

This waste occurs when workers or machines wait for work. Delays can occur for various reasons such as waiting for materials, waiting for a machine to finish a part, waiting for a problem to be cleared up. I am reminded of what a friend of mine said after working on an assembly line in a Toyota plant in Japan. He said, “You can be a very big hero if you can save one second in an operation in the assembly line.”

 

Conveyance or Transportation

This waste is related to moving parts, sub assemblies and finished goods. It occurs because of poor workplace layout, poor workflow, location of suppliers and the factory’s location in relation to the customers. Obviously items must be moved, but the goal is to reduce this necessary muda.

 

Correction or Defects

All the cost associated with making and correcting defective products or services is a waste. This includes the material, time, energy, and distraction associated with dealing with the problem. Defects are often related to the waste generated by not having standardized work processes or underutilizing the skills of the workers.

 

Overprocessing

This is a subtle form of waste that relates to over design or giving the customer more than he/she values.

 

Inventory

This waste relates to keeping unnecessary raw materials, parts and work in progress in the organization. We are often guilty of having materials just in case a big order comes in, or a machine breaks down, or supplies become hard to get, or we get a great deal on a larger quantity from our supplier.

 

Overproduction

This waste deals with producing products that don’t sell. Taiichi Ohno, the father of the Toyota Production System, said that overproduction was the root of all manufacturing evil. It is the worst waste because it includes all the other wastes.

 

Knowledge Disconnection

Dennis defines this type of waste as, “when there are disconnects within the company, or between the company and its customers and suppliers.” Disconnects within the company can be horizontal, vertical, or temporal. These inhibit the flow of knowledge, ideas, and creativity, creating frustration and missed opportunities.

 

In the “good old days,” the equation was Cost + Profit Margin = Price. In today’s global over-producing economy, the new equation is: Fixed or Declining Price - Cost = Profit. So any decrease in cost will go straight to the bottom line. Put another way the key to profitability is cost reduction. Reducing waste is where the action is!

 

And if you are not driven by profit, think about it this way. We live on a planet with finite resources. Isn’t it the morally and ethically right thing to do?