The difference between a lean and a fat organization is waste. Lean + Waste = Fat, if you will. Hence, for an organization to transform into a lean state it should trim as much waste as possible. But, what is Waste anyways? and what variant shapes could waste take?
In my previous post “The State of Being Lean or Fat Is a Matter of your Own Choice” I discussed the Waste Elimination Process which comprises six steps to transform into a lean state. In the second step (Recognize the Wastes), different types of waste are to be identified in the process under study. In particular, the lean transformation practitioner is hunting anything that is characterized by two related attributes which are value and pay.
Waste, muda in Japanese, is anything that does not add value to the product or service, and hence the customer is not willing to pay for. Are you willing to pay an extra USD 20 for a shirt that is priced at USD 50 just because it is packed in a fancy, carton box rather than being wrapped in a plastic cover? Considering identical fabric quality of shirts in both cases, I am confident you won’t. From a different perspective, will moving some raw material from a warehouse to a production line- that is 50 meters far- add any value to the quality of its product? Absolutely not, and the customer will not accept paying for this extra transportation.
In addition to the clear definition of waste, there are eight agreed on types of waste in Lean philosophy that make it even easier to recognize wastes in any setting. Luckily, these eight types can be combined in one word, that is DOWNTIME. Each letter in DOWNTIME represents the first letter of one type of waste.
Below is a breakdown of DOWNTIME into the eight types of waste along with their definitions:
Defect is a product or information that does not meet customer expectations. It could be a damaged or improperly-functioning computer screen. In service industry, it could be delivery of a courier shipment to the wrong address or late delivery of a shipment to the consignee. Overproduction is producing material or information more than required or before being required by the downstream customer. For example, the production of 20 tons of a product for a customer order of 18 tons- maybe to make up for some prospect defected quantity- is a form of overproduction. Make-to-stock, rather than make-to-sell, is another shape of overproduction. Waiting is for a person or a machine to remain idle due to lack of information or material required to continue operation. Halting production on a machine due to being out of stock of one required raw material is a common form of Waiting waste. Neglected Resources is neglecting, ignoring, or misusing the best resources available for the application at the time. This represents the underutilization of talents, state-of-the-art equipment, and advanced technology. In my early career days as Improvement Specialist, I developed dozens of Microsoft Office Access and Excel VBA-enabled macros that converted manual accounting processes that had consumed hours to finish into automatic steps finishing in seconds. Failure to leverage existing resources is a prevalent waste in most workplaces. Transportation is the unnecessary movement of material or information that does not add value to meet the customer’s requirements. For instance, the frequent movement of raw materials from storage areas to the point of production is a widespread, unfavorable practice in the manufacturing industry. Inventory represents material (raw or finished) or initial information in a queue. Inventory is usually depicted in piles of finished goods in a warehouse made without customers’ orders. And in the shop floor, inventory takes the shape of work-in-progress (WIP) of partially finished goods awaiting processing by a downstream process step. Motion is unnecessary movement by people in a process. Excessive bending, walking, reaching, or any form of human body movement is considered a wasteful effort in a production process or a service delivery. For that, meticulous facility and workplace planning should be practiced when setting up the layout and sequence of process steps such that motion is minimized. Extra-processing is committed if more features, information, or work are provided than what is required by the customer. This form of waste is usually exhibited in excessive, unnecessary packaging of products. It can also be incurred when additional, unplanned process steps are performed to meet the requirements. For instance, re-packing old products stored in a warehouse to remove dirt or replace worn out packaging is extra-processing that was unneeded in the first place.
Recognizing the eight types of waste is one critical step in the Lean transformation endeavor. Trimming the fat in any process requires lean professionals to identify each waste type then to measure it as a baseline for improvement. Although critical, recognizing wastes without eliminating their root causes dooms the improvement efforts to failure. Hence, the next critical step in the Waste Elimination Process is identifying and eliminating the root causes of waste. And that will be the subject of one of my future posts.