Getting lean and eliminating waste is a process that Maco Electrics been endeavouring to deliver.
The amount of materials and time wasted in the construction industry is astounding.
The benefits of being lean contribute to to high efficiency work flow, lower overheads and the ability to pass on discounted rates.
- 20% - 60% Reduction in Process Cycle Times
- >50% Improvement in Resource Utilization
- 10% - 50% Increase in Gross Margins
- 30% Gain in Process Capacity
- Dramatic Improvement in Schedule Predictability
In Lean, waste is anything other than the minimum amount of equipment, materials, parts, space or time which are absolutely essential to add value to a product or service. This definition comes from the president of Toyota, a recognized worldwide leader in Lean.
Historically, companies are organized based on functional silos and poorly defined processes. They are loaded down with non value-added waste.
Based on the successes of Toyota and other highly efficient firms in eliminating waste, the authors of “The Machine That Changed the World” and “Lean Thinking” have defined an idealized model for operational efficiency, and a means to pursue that ideal.
Lean, also known as the Toyota Production System, demands an organizational culture that is intolerant of waste in all forms.
In any work process, there is a number of activity steps. Eliminating waste means that this list of steps should be reduced down to the minimum essential things that are required to provide the product or service. Everything else should be eliminated. Everything else is waste.
Many people believe that every activity has some intrinsic value. In Lean, you take a much more rigorous approach. You want to reduce the amount of work to things that are essential in providing value to the customer.
Identifying and eliminating waste requires that you ask some tough questions.
These are three questions that serve as a test that are used in Lean to determine if something is value-add. An activity or task step must answer “yes” to all three of these questions to be considered value added.
First, “Is the customer willing to pay for the activity?”
The most important thing to understand about value is that it’s determined from the customer's perspective. It's the voice of the customer you're looking for here. Customers are looking for the right product, at the right price, at the right time.
There are a lot of things that customers are not willing to pay for; damaged, wrong or incomplete products, or maybe even the internal inspection that's required to ensure quality.
Customers don't care. They only expect the right products at the right price at the right time!
Second, “Does the activity transform the good or service?”
As an example, looking for a customer service representative to transport a heavy product to the sales register doesn't transform the good or provide the service. The only thing that really transforms the good or service is the actual selection, movement and checkout of the product at the register.
And, third, “Is the activity being done for the first time?”
Sometimes this can be the most difficult question to answer. For example, if you're trying to put in an order often you are asked to give the same information many different times. The second, third, and forth times that you provide the same information are non value-add.
If the activity is not done right the first time, all subsequent activities done to correct it are waste. Eliminating waste here means completing the activity right the first time.
All process activities can be classified as either:
- Non value-added,
- Business non value-added (These are activities that must be completed but are non value-add. These are activities that are required for the business to run properly. Although they don't provide value, you can't get around them. Checking a customers credit and verifying shipping information are examples of business non value-add).
In most business processes, about 85% of the activities are non value-add. Approximately 3 to 5% of business activities are generally value-add, and another 10 to 15% are business non value-add. See how hard it is to successfully pass the three questions.
Great opportunities for improvement exist by identifying and eliminating waste from your processes.
Three Rules of Waste
- Waste exists at all levels of an organization. It doesn't matter what level or function of the business you look into; waste has invaded all areas. There's no process that is exempt from waste. And, as I mentioned, only 3% to 5% of a process is typically value-add.
- Waste must be identified and eliminated, more below...
- All employees must be trained to recognize waste. If you're going to be successful in a transformation to lean, everyone must be trained to identify and recognize waste.
There's no denying the existence of waste at all levels of an organization. Eliminating waste requires that you train your team. As you begin to train your employees, you can improve with not ten employees but a hundred employees or a thousand employees.
Here are some company solutions that you can use to get your team started eliminating waste.
All of your team working together eliminating waste, and that's a great way to predict your future, by creating it through high involvement, and high engagement of the all employees in the organization.
The Eight Types of Waste
Rule 2 states that waste must be identified and eliminated. Lean classifies waste into eight categories, here they are...
Waste of Waiting
The definition of waiting is any idle time between operations or events, or idle time spent waiting for work to come. Some of the characteristics could be waiting for others to sign-off on documentation or to meet compliance standards. Or, it could be waiting for information in order to complete a process.
Whenever you have to send an e-mail to prompt for information, you are waiting. Any unplanned equipment down time can result in waiting. Your goal is to eliminate this waiting time.
Some of the causes of waiting include lack of training and appropriate metrics or inconsistent work methods and poor machine effectiveness. These are typically the root causes of why things slow down and how the waste of waiting is created.
Waste of Overproduction
Overproduction is producing more than the customer requires or producing faster than the customer requires it. Some of the characteristics of overproduction are working ahead of deadlines, unbalanced material flow or additional information to cover a lack of communication.
Some of the causes of overproduction include incapable (not consistent) processes, lack of consistent schedules, poor communication, and maybe even bonuses that reward production which allow a lot of imbalances in the system to occur.
Waste of Rework
The definition of rework means not meeting customer requirements the first time, requiring inspection or rework to fulfill those requirements. Generally speaking, customers are not willing to pay for the work twice; they expect it to be done right the first time.
Characteristics are missing information, missed shipments or deliveries, or reliance on inspection to achieve quality. In a lot of businesses, inspections are assumed to be value-add.
As you become more of a Lean enterprise, you're going to want to eliminate those inspections and get the job done right the first time.
Some causes of rework include incapable processes, insufficient training, inadequate tools, and high inventory levels.
Waste of Motion
Any movement of people or machines which does not add value to the product or service is defined as the waste of motion.
Some characteristics include looking to find information or looking for supplies. How much time do you spend on your PC looking for information? How much time do you spend looking for supplies at your office?
Waste of Processing
The fifth area of waste is over-processing. This waste can be defined as enhancements that are transparent to customers or work which could be combined with other work. Some of the characteristics of the waste of processing are endless refinement.
Take a PowerPoint presentations as an example. Many times, the person giving the presentation will polish it continuously until it’s time to present. This is endless refinement that we would call waste of processing.
Redundant approvals are also a form of processing waste. Many business processes require signoffs from multiple levels of the organization, rather than one signatory. Reports that are never used or not needed are also considered waste of processing. This is information that is produced but never used.
Some of the causes of waste of processing include, Using new technology inappropriately with more access to information via technology, we tend to provide more than what is needed.
Other causes for waste of processing include ineffective policies and procedures, and performing any steps that are not needed to provide the good or service.
Waste of Inventory
Any supply in excess of customer requirements that is necessary to produce goods or services “just in time” is considered a waste of inventory. Idle "Work in Process" becomes inventory.
Some of the characteristics of this waste category include slow responses to changes in customer demands, low inventory turns, or material with outdated shelf life.
Inventory ties up money that can be used for other things.
Causes for waste of inventory include: Local optimization, incapable processes, and long changeover times.
Inventory is the number one cause of long lead times. Little's Law that states that lead time equals work in process, or WIP, divided by the completion rate.
Thus, in Lean we eagerly seek to identify inventory, or WIP, in the system because generally it is driving our overall lead times. Increasing the WIP will increase the lead time. Little's Law shows us that there are two ways to reduce Lead time. You can reduce WIP or increase completion rate.
Waste of Intellect
Any failure to utilize the time and talents of employees is the waste of intellect. There are two types of waste of intellect: not getting employee involvement, and micromanaging.
Lack of employee involvement includes people who aren't interested and aren’t helping solve problems. This is a lot of intellect not being tapped.
In micromanagement, employees' intellect is not being used because management wants to make all decisions. Years of accumulated process knowledge held by the employees are being wasted. This is the most difficult waste to tap into.
Causes for Waste of Intellect include: Status quo, having roles that don’t challenge employees, and lack of accountability are all causes of the waste of intellect.
Waste of Transportation
Transportation is the last of the eight types of waste. This is a wasted movement in the process. This can affect products, materials, documents, or even information.
Receiving the wrong information requires you to go back and forth more than you would, if you had received the right information the first time. Unnecessary or additional pallet movement in a manufacturing environment is also a waste of transportation.
Transportation accompanies inventory. Reducing transportation generally also reduces inventory.