Following on from the last couple of posts regarding Lean Manufacturing and the basic building blocks of a Lean Manufacturing transformation, today I want to discuss the myopia the descends over people when they are in an operations environment. Since I have been writing this blog I have started using clichés. I have tried to stop myself using these, but then I have thought about them. What are clichés? They are well used expressions, so well used we actually now miss the meaning of them, so on reflection I am going to keep using them because they put over the message and work!
“Can’t see the wood for the trees” is the cliché that I am using to point out the wastes that occur every day in operations, but they are wastes that are accepted, they have become a “comfort” and almost necessary. I will give the “comfort” and necessary terms some explanation. When I first started in operations I was working in the steel industry, on the cold side, taking raw materials, hot rolled products and turning them into semi-finished products. Steel, while being a commodity, is still an expensive commodity. The operators felt comfort in knowing that they had at least four days worth of input material in front of their machines, it was necessary for them to know they had plenty of work ahead of them.
What they did not see was the waste in having four days worth of input material in front of them. The coils were quite large three to five tonnes in weight, which translates to large volumes when we are talking about twenty processes. Not only were there large sums of money tied up in the material, which adversely affects the cash flow cycle, there was the waste of having to store this material, the space was not adding value and actually costing in rates and maintenance. There was the waste of transportation, with the coils having to be moved and restored to get the coil that was required. Also the waste production idle time, in having to find the correct coil along with the excess movement of people away from their process to retrieve the coils. To be efficient, the larger the coil the better, less downtime due to chageovers, less waste! Actually overproduction and more waste when there were finished offcuts due to customer specifications that needed to be stored and because the processing time was longer it put back other orders that could have been produced and paid for, not to mention the cost of the raw material. If there was a problem the problem would be exacerbated because of the size of the coils.
So let me introduce the Lean manufacturing tool the 7 Wastes – The Second Building Block of Continuous Improvement. The 7 wastes are not a tool in themselves to tackle the problems within an organisation; they do play a valuable role in identifying the inefficiency and therefore the ability to find and eradicate the root causes of the problems. Lest put on our “Waste Goggles and start seeing the wastes around us”.
The main causes of overproduction are unbalanced processes in the value stream and the paradigm of the business to maximise utilisation. The focus is on sweating the assets not maximising value!
Often caused by quality problems; a company knows that it will lose a number of units along the production process so it produces extra to make sure that the customer order is satisfied. These kinds of issues can be tackled using mistake proofing methods (Poke Yoke) and by understanding the machine process capabilities of the production equipment. Statistical process control (SPC) will also help monitor production outputs and give warning of problems before they occur.
If the reason a company is overproducing is because of small orders and economic batch sizes then setup reduction techniques such as Single Minute Exchange Dies (SMED), can help. Reducing changeover times means it is then able to produce smaller batches economically.
Overproduction is the worst of the 7 Wastes as it encompasses all of the rest of them, often it is the main driving force in Lean Manufacturing transformations for creating process flow. It is the worst waste because on average sixty percent of the manufacturing cost is made up from the material content and as such is the largest company waste.
Products or processes waiting around either as finished goods; work in progress (WIP) or downtime is another major cause of waste. WIP is commonly caused by producing large batch sizes where again SMED techniques can help to reduce these batch sizes. Concentrating on keeping bottle neck processes working and solving the problems to balance all of the processes in the value stream will result in reducing idle time. Waiting is a symptom of overproduction; on the basis that if it was produced as it was needed it would not be waiting for the next process or final customer.
Do not confuse unplanned idle time with planned idle time. Although if there is an amount planned idle time, this is also a waste and the company needs to respond by increasing demand on the operation through increased sales.
Factory layouts are the fundamental cause of excess transportation. When appropriate, re-laying out the machines within a factory; so that all of the processes are next to each other will not only reduce transportation waste but also reduce WIP and waiting. Excess inventory levels can also lead to wasted handling as described earlier.
A very misunderstood waste, that of performing work on a product of service that the customer does not see as value and which is a cost to the business. Performing unnecessary or incorrect processing. Inspections or rectifications are required because there is excess variation in the process compared to product specification, either through the design of the process or subsequent lack of maintenance, producing poor quality or there are too many steps in the process route that are producing an over engineered product or service for the customer. Remember to specify value – from the customers point of view, give them what they want; not what you think they want! Total Preventative Maintenance and Six Sigma projects are the remedy for this waste.
Many companies order over and above what is required to fulfil the order, this may be due to quality problems along the process or the often mistaken belief that is saves money by ordering larger quantities. The true cost of excess inventory levels should be carefully analysed before ordering excess raw materials simply because the purchase price is less. Tackling the root causes of the quality problems should be a priority.
Operators making movements that are straining or unnecessary; such as looking for materials; tools or documents etc. are a waste! In a well-designed workstation the operator will not need to move further than one pace or over reach with their arms to complete their task. The 5S tool helps to design the work areas and reduce this excess motion.
Variation in the process produces products or services that require inspection and rework or scrap being produced. Even worse product at the customer that is outside specification. The root causes need to be identified and eliminated using Six Sigma techniques. Bad quality is endemic in excess inventory, which as described earlier is very wasteful!
So how do we address all of these wastes? Now that the wood has been identified from the trees, the myopia has been reduced with the 7 Wastes tool, put on your waste goggles and go on a “Waste walk” and record all of the non-value added activities carried out in a your company. Start a waste register and systematically reduce all of the company wastes.
Do not be surprised to find out that 95% of all activities carried out are non-value adding, that means the customer is only paying for 5% of your operation. The elimination of waste is vital to increasing the competitiveness and therefore longevity of your company.
If you want to make a bigger impact within the company with regard to reducing waste. Just replace the word waste with the word COST!