A few years ago, trying to emulate the Japanese style of business was all the rage. A lot of what was brought over from corporate folks going on trips to Japan has faded in and out, and not really taken hold. One thing that has taken hold, and is a recommended idea for any business that involves manufacturing, is the idea of waste identification. It is a process that can be adapted for nearly every business, from materials handling to offices.
What Types of Waste Can You Identify?
Looking around your facility, you can likely identify at least two or three different types of waste. The Japanese – specifically, Toyota – developed 7 different categories for waste.
- Transportation – The movement of a product has no added value, so extra movement is waste that doesn’t increase return.
- Inventory – Raw materials, works-in-progress, and finished goods sitting around represent a capital outlay that has not yet produced an income either by the producer or for the consumer.
- Motion – This refers to the damage that the production process inflicts on the entity that creates the product, either over time or during discrete events. It can include accidents and wear and tear.
- Waiting – Whenever goods are not in transport or being processed, they are waiting. This wastes time and money – in manufacturing, one of the best ways to cut waste is to cut waiting time in inventory.
- Over-processing – Over-processing occurs any time more work is done on a piece than is required by the customer. This also includes using components that are more precise, complex, higher quality or expensive than absolutely required. This may result in higher per-unit costs and greater labor costs that the client will be unwilling to pay for.
- Over-production – Over-production occurs when more product is produced than is required at that time by your customers. Over-production leads to excess inventory, which then requires spending money to store the product.
- Defects – Fairly self-explanatory, these are errors in the product or processes that may require reworking the part or rescheduling production. This can result in increased labor costs and the need for more raw materials than originally specified. Defects can increase the cost of producing a product exponentially.
What is Value-Added?
The key to evaluating waste overall is determining what adds value, and what doesn’t. For instance, some of the points of waste identified in the Japanese theory could in fact be value-added, depending on your situation. Some customers may be willing to pay the premium for goods sitting around and taking up space in your warehouse instead of their – in which case, inventory may not be as much of a waste issue as it might appear. If you or your customers can place a beneficial monetary value on something, it is a value added feature.
Finding the Waste
Actually finding the waste in your process can be a large task, but it is something that can involve the entire company. There are two very good ways to go about unearthing waste – observation, and surveying.
Surveying will get the input of the members of your team. They can log actions that they deem wasteful, and can supply an evaluation of processes that management may not be entirely aware of. There may be some conflict though, as some members of the team may exaggerate waste. You may need to pick out a representative, trusted group instead of doing a blanket survey.
Observation with minor input from your employees may be the better route. This will allow management to tour through the plant and interact with the process and the employees. They can see exactly where the waste is occurring, instead of reading a second-hand account. They may even be able to come up with a temporary solution to reduce waste until a permanent solution can be developed.
It should be the goal of all companies to reduce waste in as many processes as possible. Aside from cutting waste and saving money in the present, waste reduction can lay the groundwork for efficient expansion at a later point. Consider trying to discover and remedy waste in your production as soon as possible.