Waste is defined as anything within the process, people or structure that is wasteful, including space, time, parts, people’s potential and more. Management needs to observe what’s happening on the workshop floor, shop floor, office, hospital, surgery, etc, to get a full understanding of the potential for waste reduction. There’s no use worrying about tomorrow when you cannot identify today’s waste. Businesses need to monitor the way the business is operating so the entire team develops the ability to observe waste in the workplace. Customers ultimately won’t pay for waste. The business strategy should be to eliminate waste, improve customer satisfaction and improve profitability. It’s generally accepted that there are seven major waste areas. These are:
Over production is caused by producing goods over and above the amount required by the market. Getting ahead of demand results in extra raw materials, labour and storage being utilised. There’s a greater chance of damage, deterioration or obsolescence.
- Operator waiting for components or materials;
- waiting for instructions; and
- waiting for set-ups or changovers of production flow;
- parts queuing, waiting to be processed;
- waiting for breakdowns to be fixed.
Management should ensure that when allocating where a job is to be set up, consideration has been given to the next job at that location, particularly if the location allocation is going to involve excessive movement around the workshop.
Inappropriate or excessive processing, which does not add value to the customers. Performing work that provides no additional value to the customer.
Excess inventory increases costs. For example, cost of capital tied up in materials, extra handling, consumes materials that could be used for customers’ orders.
Any movement that is not adding value includes the movement of parts and operators walking from one station to another to find materials or tools and equipment.
Costs involved in rejects or reworks, downgraded products and refurbished items. Can the work process be changed to reduce defects to nil? Management should be closely examining the quantity of defects each day and mentoring the team members on how to reduce the quantity of defects being produced.