Seven Wastes of operations
Value can be defined as any activity that is performed in the value stream that the customer is prepared to pay for. Everything else, therefore, can be considered waste.
Toyota identified the Seven Wastes in their processes and these have been widely adopted in other industries and stood the test of time. They are not exclusive to manufacturing either and can be found lurking in any process, from paying a bill at the bank, in a patient’s flow through hospital, to mining a product out of the ground. All these wastes come with a cost to the business and in some way will impact upon your brand. Our job is to find them in the value stream and eliminate them.
The Seven Wastes can be categorised as:
Transportation – All forms of transportation are a waste. They consume energy and resources. With every act of transportation there is an added risk of damage to the product.
Inventory – Holding inventory in our processes ties up our cash. It might look great on the balance sheet as a current asset but does not help add value.
Motion – Chasing tools and parts, moving between equipment, looking for signatures, all take our time away from adding value. Poorly designed processes build in cost.
Waiting – Any form of waiting whether it is a person or a piece of equipment can be considered a waste.
Over-Production – Making more than the customer wants means that we end up holding finished product of work in process that we may not be able to sell. This means we spend money unnecessarily to make product that we could have kept as cash in the bank. Stopping over-production means that we limit our risks in making product we cannot sell and we stop the process from generating the other wastes too. Stopping over-production also helps us identify where our bottlenecks are in the process enabling us to balance our resources more effectively and zone in with our continuous improvement activities.
Over-Processing – Over-processing can be found in many different places. Take the office, for example. How many signatures does a form really need?
Sometimes we over maintain equipment, or wash our products more than necessary, or over-design our equipment using twelve bolts to hold something in place when it may just need four.
Defects – Making defects or causing rework throws money down the drain. We can hurt our reputation with customers by delivering defective product.
Of the Seven Wastes we consider Over-Production to be the worst. Over-Production will hide the waste of Waiting in the value stream as processes can run independent of each other with no consequence of making more than required and, in so doing, will drive the other wastes. We will have to store more inventory, transport more parts and so on. The first action leaders should take is to limit Over-Production and the other wastes will become obvious in the value stream.
These Operational Excellence pages talk about fundamental lean principles and associated tools. Understanding how to apply these principles and tools to the individual circumstance of discrete organisations is where expertise and experience is paramount. The GENEO team has many decades of experience in doing exactly this.