Waste elimination is one of the most effective ways to increase the profitability of any business. Processes either add value or waste to the production of a good or service. The seven wastes originated in Japan, where waste is known as “muda." "The seven wastes" is a tool to further categorize “muda” and was originally developed by Toyota’s Chief Engineer Taiichi Ohno as the core of the Toyota Production System, also known as Lean Manufacturing. To eliminate waste, it is important to understand exactly what waste is and where it exists. While products significantly differ between factories, the typical wastes found in manufacturing environments are quite similar. For each waste, there is a strategy to reduce or eliminate its effect on a company, thereby improving overall performance and quality.
The seven wastes consist of:
Simply put, overproduction is to manufacture an item before it is actually required. Overproduction is highly costly to a manufacturing plant because it prohibits the smooth flow of materials and actually degrades quality and productivity. The Toyota Production System is also referred to as “Just in Time” (JIT) because every item is made just as it is needed. Overproduction manufacturing is referred to as “Just in Case.” This creates excessive lead times, results in high storage costs, and makes it difficult to detect defects. The simple solution to overproduction is turning off the tap; this requires a lot of courage because the problems that overproduction is hiding will be revealed. The concept is to schedule and produce only what can be immediately sold/shipped and improve machine changeover/set-up capability.
Whenever goods are not moving or being processed, the waste of waiting occurs. Typically more than 99% of a product's life in traditional batch-and-queue manufacture will be spent waiting to be processed. Much of a product’s lead time is tied up in waiting for the next operation; this is usually because material flow is poor, production runs are too long, and distances between work centers are too great. Goldratt (Theory of Constraints) has stated many times that one hour lost in a bottleneck process is one hour lost to the entire factory’s output, which can never be recovered. Linking processes together so that one feeds directly into the next can dramatically reduce waiting.
Transporting product between processes is a cost incursion which adds no value to the product. Excessive movement and handling cause damage and are an opportunity for quality to deteriorate. Material handlers must be used to transport the materials, resulting in another organizational cost that adds no customer value. Transportation can be difficult to reduce due to the perceived costs of moving equipment and processes closer together. Furthermore, it is often hard to determine which processes should be next to each other. Mapping product flows can make this easier to visualize.
4. Inappropriate Processing
Often termed as “using a sledgehammer to crack a nut,” many organizations use expensive high precision equipment where simpler tools would be sufficient. This often results in poor plant layout because preceding or subsequent operations are located far apart. In addition they encourage high asset utilization (over-production with minimal changeovers) in order to recover the high cost of this equipment. Toyota is famous for their use of low-cost automation, combined with immaculately maintained, often older machines. Investing in smaller, more flexible equipment where possible; creating manufacturing cells; and combining steps will greatly reduce the waste of inappropriate processing.
5. Unnecessary Inventory
Work in Progress (WIP) is a direct result of overproduction and waiting. Excess inventory tends to hide problems on the plant floor, which must be identified and resolved in order to improve operating performance. Excess inventory increases lead times, consumes productive floor space, delays the identification of problems, and inhibits communication. By achieving a seamless flow between work centers, many manufacturers have been able to improve customer service and slash inventories and their associated costs.
6. Unnecessary / Excess Motion
This waste is related to ergonomics and is seen in all instances of bending, stretching, walking, lifting, and reaching. These are also health and safety issues, which in today’s litigious society are becoming more of a problem for organizations. Jobs with excessive motion should be analyzed and redesigned for improvement with the involvement of plant personnel.
Having a direct impact to the bottom line, quality defects resulting in rework or scrap are a tremendous cost to organizations. Associated costs include quarantining inventory, re-inspecting, rescheduling, and capacity loss. In many organizations the total cost of defects is often a significant percentage of total manufacturing cost. Through employee involvement and Continuous Process Improvement (CPI), there is a huge opportunity to reduce defects at many facilities.
In the latest edition of the Lean Manufacturing classic Lean Thinking, Underutilization of Employees has been added as an eighth waste to Ohno’s original seven wastes. Organizations employ their staff for their nimble fingers and strong muscles but forget they come to work everyday with a free brain. It is only by capitalizing on employees' creativity that organizations can eliminate the other seven wastes and continuously improve their performance.
Many changes over recent years have driven organizations to become world class organizations or Lean Enterprises. The first step in achieving that goal is to identify and attack the seven wastes. As Toyota and other world-class organizations have come to realize, customers will pay for value added work, but never for waste.