Do you know where waste is occurring in your business?
Do you understand that waste can account for up to 30% of the operating costs of an organization?
Processes either add “value” or “waste” to the production of an item or service. Waste elimination is one of the most effective ways to increase profitability in your business. To eliminate waste it is therefore important to fully understand exactly what waste is and where it can be found. Toyota after many years of work to remove waste identified the following seven wastes as the most prominent ones.
1. Overproduction is to produce more than needed or to produce it before it is required. It is the result of producing to the “just in case” scenario instead of “just in time”.
2. Waiting occurs whenever time is not being used efficiently. Much of a product/service lead time is tied up in waiting for the next operation. This time spent waiting could be used to add value by simply improving proccesses.
3. Transporting. Customers do not want to have to pay for transportation between processes, so this is a clear source of non-valued cost. More than this, every transport event is an opportunity for damage to occur and quality to deteriorate.
4. Inappropriate Processing Can be easily explained by using the analogy “using a sledge hammer to crack a nut”. Are you using the right tool/process for the job? Are you using the right person for the job?
5. Unnecessary Inventory is work in progress and is a direct result of overproduction and waiting. At an even broader level ask yourself, where am i storing value? Look in the piles of raw materials, finished goods, bank accounts and debtors!
6. Unnecessary Motions is related to ergonomics and is seen in all instances of bending, stretching and reaching or simply not having things in the right place.
7. Defects cost money either now or later and their costs come direct from the bottom line. They can be internal defects found before sale and incur the costs of scrap, rework or delays added to them. They can be external defects which have been delivered to customers and incur costs from warranty claims, onsite repairs and potential loss of customer.
If you would like to know more, visit our Online Courses page and download our Seven Wastes Audit Tool. It’s free for you to use! Otherwise, contact me directly and let me show you how to start identifying and eliminating the cost of waste in your business.
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