Is your company wasting its potential profits? Chances are, you’ll say “No!” but it might be time to take a step back and look for the hidden wastes that could be eating into your bottom line. The Lean Manufacturing philosophy identifies 7 wastes, but lately, experts have suggested that we consider an 8th one too.
What are the 7 Wastes?
A lot of people recommend using the acronym “TIMWOOD” to remember what the seven wastes consist of. Let’s tackle them in that order before moving on to some real lie examples.
Transportation isn’t always a waste – but it can be. Think of a production process. The product moves from one process to another. The less transportation there is from one area to the next, the more efficient the process will be. Any movement that doesn’t directly add value to materials is really just dead weight.
Overproduction also leads to transportation waste, because finished products must move to storage locations before the manufacturers can distribute them to clients. Look at the physical layout of your value-adding operations, and see whether you can reduce waste by improving layouts or by altering the batch sizes you produce.
Inventory, be it excess materials that your company must store, or completed products that need to be warehoused prior to dispatch, costs your business money. Capital that could be earning interest is tied up in inventory. You need to have storage facilities. Stock taking becomes longer and more complex than necessary, and goods can get damaged during storage.
Lean manufacturing employs the JIT (Just in Time) inventory management system. It aims to reduce inventory waste by ensuring that you have just enough materials to keep processes going, and just enough finished products to satisfy market demand.
While “transport” refers to wasted materials movement, “motion” refers to the movements personnel must undertake in the process of doing their jobs. For instance, if a technician has to walk from one workstation to another during the course of a workday, the total time he or she spends moving back and forth adds no value to the product. It is therefore wasted.
Another typical example occurs in many offices. The printer is situated across the office from the workers’ desk, or even in another office altogether. Every time he or she stands up and walks to the printer, you have wasted motion.
Even people operating from a single workstation could be forced to waste time through motion. Time and motion studies look at workstation design and consultants attempt to find ways to eliminate unnecessary movements.
Interestingly, the pedal bins and fitted kitchens we are familiar with today were developed in an attempt to improve household efficiency through eliminating wasted motion.
This is probably one of the easiest wastes to spot. If one process has to grind to a halt because a bottleneck has developed in another process, you’re wasting time, and time is money. Monitor your process flows from inputs to outputs closely. Use the data to develop ways to overcome bottlenecks that result in idle time for people or capital equipment.
Many businesses use software and computer modeling to identify and overcome this problem. For example, Tallyfy allows for the design, modeling, testing, and real-time monitoring of process flows.
We’ve already touched on overproduction as a source of transport waste, and we have looked at the wastes that excess inventory causes. But why do companies overproduce? There are many possible reasons.
If your suppliers or processes are unreliable, you may feel the need to keep more safety-net stock so that you can continue to meet demand when suppliers or internal processes fail. Perhaps you just forecast demand incorrectly, or have fallen into a “more is better” mindset. Try to overcome this type of waste by balancing what you supply with market demand.
What processes do you need to undertake to generate value in the eyes of your customers? Anything you do over and above that may feel good to you, but it’s a waste. Find out what matters to your customers when they buy your product.
If those extra finishing touches make a meaningful difference your clients are willing to pay for, that’s great. If not, you need to focus your resources and attention on what they do value.
Every manufacturing defect results in waste. If your company detects defects, you end up having to scrap materials or rework components. If it fails to detect problems, the resulting cost can be even higher as you deal with requests for replacement, product recalls, and even lawsuits. That’s without taking the damage defects deal to your company’s reputation.
Try to identify the causes of defects to reduce this type of waste. Are your employees sufficiently well-trained? Are the processes your firm follows at fault? Are materials from your suppliers up to standard? Are products getting damaged during shipping or transportation?
The 8th Waste: Creativity
Have you asked your employees how you can improve the design of their workspace for better productivity? Are you giving them opportunities to learn, grow and perform beyond basic expectations? There could be a lot of talent and creativity going to waste without you even knowing it. Tap into the creativity of ordinary employees – you may be surprised by the results.
Real-Life Examples of the Seven Wastes
Morgan: Accepting Wastes to Maintain its Traditions
One of the most famous case-studies on the seven wastes resulted in the production of a documentary and is widely cited. Morgan, a British car manufacturer that hand-makes a very small volume of highly exclusive cars for connoisseurs asked for help in improving efficiency. Unfortunately, the company didn’t feel that the suggested changes to eliminate wastes matched its traditions, and most recommendations were never implemented.
Over-processing takes on a slightly unusual form at Morgan. In this instance, it’s the company’s insistence on doing everything with hand tools that presented an area its consultants felt could improve. Would Morgan’s customers really mind if an artisan made use of hand-held power tools? Probably not. However, the company balked at altering its production methods.
Transport also posed a problem. The layout of the facility meant that vehicles under production were moved from one end of the facility to the other and then back again.
Waiting also occurred at Morgan as production processes ground to a halt awaiting the completion of earlier ones.
Inventory management was still undertaken using an old-fashioned card-based system, and unnecessary volumes of materials were stored. Meanwhile, finished cars were stored in a gravel lot where they were at risk of damage.
Defects in the manufacture of Morgan cars are very rare indeed. However, consultants noted that all inspections were manual and visual and were concerned that the hidden defects modern technology can uncover were going unnoticed.
However, as has previously been noted, Morgan prizes its heritage, and even the introduction of computerized inventory monitoring systems proved to be controversial for the manufacturers. Whether such dedication to the old ways of doing absolutely everything adds value to its clients is debatable, but the company is steadfast in maintaining its traditions.
Toyota: Eliminating Wastes to Take the World by Storm
To find a real-world example of how reducing or eliminating the 7 wastes can build a company up, we need to look no further than the firm that first developed the concept and put it to work: Toyota.
Toyota didn’t continually strive to produce more cars and then try to stimulate market demand. Instead, it worked to eliminate overproduction. Although this step took courage, the company has reduced storage costs and says that it’s easier to detect defects. It gauges market demand and only produces what it can immediately sell or ship.
In addition, the company streamlined process flows, and production flows so that they would flow seamlessly into one another, thereby reducing the waste of waiting. In the same way, it designs its production facilities to minimize the amount of transport between processes.
Many companies boast of their cutting-edge automation and equipment. To Toyota, what matters most is that its equipment does the job. Toyota has become a byword for low-cost automation coupled with a maintenance schedule that ensures all equipment is working perfectly. In this way, it reduces over-processing that doesn’t add value to consumers or the company.
As for inventory management, we have already seen that Toyota implements Just in Time (JIT) inventory levels. As an important element in Lean Manufacturing, Toyota is also the source of the concept.
But this wasn’t enough for Toyota. It also worked on improved workplace ergonomics and workstation layout that would reduce wasted motion. If that sounds like splitting hairs, do the math. If a motion takes 5 seconds longer than necessary to complete, each employee engaged in that task loses 40 minutes of potentially productive time in an eight-hour shift.
Reducing the number of defective products that get passed on to consumers through final inspections is possible, but it doesn’t address the cause of the defects. Toyota reduced defects by tracking them down to source and addressing the problem there.
The results? We can’t say that Toyota has zero inventory or zero defects, or that it never loses a minute in waiting time. But it is a highly successful automaker that is respected the world over for the quality and reliability of its reasonably-priced vehicles.
Addressing the 7 Wastes: Beyond Car Manufacture
Companies all over the world today are building efficiency and increase profits through reducing the seven wastes. And it’s not just the manufacturing industries that are implementing the idea. McDonald’s, for example, uses JIT inventory management to reduce food waste. You could argue that making burgers is manufacturing in a different form, but even purely service-based industries are implementing the concept.
In this context, you could interpret duplication as being an example of over-processing, for example. You could experience waiting times but also delays in service delivery. We could be moving our customers around from pillar to post, causing customer experience problems, or we may have laid out our offices so that our staff needs to move around more than necessary.
With a little thought, we can see how the 7 wastes affect just about any type of industry. Boosting our bottom line could be a matter of analyzing our businesses in a 7 wastes context. Identify bottlenecks, move processes along, and try never to have too much or too little of anything. If attempting this sounds like a challenging task, remember that you can rely on technology. Simply automate data collection and analysis and make continuous improvement a reality.