Waste exists in every system. From manufacturing and assembly to hospitality, healthcare, transportation, and social services, there’s no escaping it—but there’s plenty we can do about it.
Waste is a problem for businesses. Waste can cost companies millions of dollars at a time in some industries, and can wreak havoc on your bottom line in any field if you don’t monitor it and take steps to minimize it. Especially for organizations that use Lean processes, eliminating waste is often one of the key elements of a continuous improvement program for this reason.
In specific terms, what waste does is increase costs to the “supplier,” or your company while adding no value to the end consumer. In short, waste is not just a loss, but avoidable loss, needless loss that provides zero benefit. You knew that—but now you see why it’s so good to be rid of it!
Wastes also extend the period of Return on Investment (ROI), which means that the company’s income (and capacity to continuously improve itself) is watered down. The engine cannot reach its full horsepower because someone put water in the gas. Like a deprived engine, wasteful companies’ employees are frequently less engaged, and in some cases their energy for work can be skunked by wasteful processes—thus making the problem worse!
Wastes fall into six basic categories:
♦ Overproduction
♦ Defects & Rework
♦ Motion
♦ Inventory
♦ Over-Processing
♦ Waiting
These are also called hidden wastes. If you’ll notice, you can’t precisely measure “waste” in any of the above categories—and in some cases, you wouldn’t even notice the wastes if they weren’t pointed out to you. That’s why they’re called “hidden wastes.”
It’s no accident that lean, waste-free companies seem sharp and “vigilant” on the inside.
Overproduction
Overproduction waste occurs when a company manufactures, assembles, or builds more than what is needed. We make something just-in-case instead of Just-In-Time (JIT). Inaccurate scheduling, long lead times, long changeovers, and not being close enough to our customers to understand their changing needs leads us to longer production runs. We worry that our customer might need more while we have to suffer with the associated cost of unsold goods and services.
What To Look For: Processes producing more than what’s being “pulled” by the customer. Red flag if storage is also required during or between processes.
How to Reduce: Improve changeover and set-up times and balancing production times. More on this later.
Defects & Rework
Defect/rework waste occurs when a company does not have robust preventative systems that include Poka-Yoke and Mistake Proofing techniques. When we cause an error or defect and pass it on to the next operation—or worse, we pass it on to the customer—we are accepting rework as part of that process. We lose money when something is manufactured, assembled, or serviced twice when our customer only paid once.
What to Look For: Defective, partial, or uncompleted products or services and completed units that are reworked or thrown away.
How to Reduce: Improve Visual Controls and initiating more complete Standard Operation Procedures. Implement Mistake Proofing or Poka-Yokes at the source or the place errors occur. (Again, more details will follow in the future as we “zoom in” on a lot of these techniques and tools.)
Motion
Motion waste is the unnecessary movement of people, product, or equipment that adds no value to a process. Workers walk back and forth from the work area to supply, around unneeded equipment, or otherwise perform redundant motions that can be eliminated to speed up a process—and believe me, the time you’d save adds up much quicker than you’d think in many of these cases!
This can be one of the most frustrating wastes for workers and management. The lost time and production rob most processes of opportunities to function efficiently and make the employees work harder. While most processes are not designed to have motion waste in them, it is one of the first wastes to “creep in” and cause disruption.
What to Look For: Excessive walking, moving, or handling. Prepare a complex (spaghetti) diagram of the actual process flow. How could it be simpler?
How to Reduce: Developing and then examining a Value Stream Map and/or Physical Flow Map of every process and reducing operator, equipment, or material movement. Minimize the physical distance between materials and their users.
Excessive Inventory
Inventory waste hides many unwanted conditions. Excessive inventory may cover up quality problems like rework and defects, manpower and/or production scheduling problems, excessive lead times, and supplier or vendor problems. It is very expensive to carry excessive inventory that requires capital to be tied up in interest payments (not to mention the original cost of the unneeded materiel). Again, excessive inventory depresses your ROI in a big way.
What to Look For: Excessive service capability and/or excessive inventory of raw materials or finished goods with less than 10 turnovers per year.
How to Reduce: Implement Just-in-Time (JIT) movement of materials and Kanbans.
Overprocessing
Overprocessing waste occurs when a company makes a product (or performs a service) better than a customer needs or is willing to pay for. Features that do not add value in the eye of the customer do not improve a product or process; in fact, they harm the process. Not closely monitoring how customers use our products or services leads us to build in or provide features that we think they want or needing, but without knowing for sure.
What to Look For: Products being returned as broken or defective on portions that show little or no use before breaking. Review customer surveys and field reports on damage.
How to Reduce: Determine if the feature, service, or product is needed or costs more than customers will pay, given an extensive understanding of how customers actually use the service or product.
Waiting
Waiting waste comes from people, processes, or partially finished goods sitting idle while waiting for instructions, information, or raw materials. Poor scheduling, poor vendor support or communications, and inaccurate inventories (causing you to fall short of items you need) cause processes and people to come to a halt and cost us valuable time (and thereby profit).
What to Look For: Idle people or machines waiting on preceding operations, materials, schedules, or information.
How to Reduce: Balancing scheduled workloads and using a Cycle Time/Takt Time Bar Chart for process synchronization.