Seven types of waste in Manufacturing and Business
Definition of Waste in Manufacturing and Business
Waste in manufacturing and business processes is referred to the misuse of resources, production not fit for sale or resources that tie up cash and inventory- while providing little or no benefit to the organization or its customers. These resources could be better used elsewhere in the organization invested in value creating operations, products, or opportunities. These losses reduce your manufacturing business profitability or affect the customer experience (product, delivery, and service).
When we say “resources” when defining waste in manufacturing, these include everything used to produce an output or finish product which not only includes raw materials, but also other inputs such as energy (electricity and thermal energy), labor hours, water, consumables (such as worker ppe, packaging and containers), production capacity or lost opportunity cost.
Seven types of waste
The aim of the lean enterprise should be about identifying and eliminating waste from their systems and operations and extracting as much outputs as they can from minimal inputs.
In lean manufacturing there are seven main classifications of waste in manufacturing, or the so called seven wastes. These are:
1) Waiting time in which people, plant equipment or goods are idle and are not adding value to the finished good or service. The costs of waiting time can include overhead costs incurred in making these resources available for production such as warehousing and office space for example.
Common causes of waiting item include unplanned plant equipment breakdowns (mechanical and electrical), tools or equipment unavailability or far from reach, bottlenecks, incorrect communication, longer product changeover times and mistakes in production planning.
2) Transportation or movement this includes unnecessary movement of raw materials, labor, work in process (WIP) or goods from one part of the production plant or process to another. This could include movement of resources between manufacturing sites where the production process is split among different sites.
Common causes of transportation waste include a poorly designed supply chain (raw material sourcing, production plant and distribution network), poorly designed factory layout, limitations on factory floor space or real estate, incorrect machine location and/or orientation relative to other steps in the manufacturing process. In some cases production lot or batch sizes too small or too large to meet demand from customers.
3) Re-work refers to the process of correcting or repairing a product, component or service that does not meet quality standards or specifications. This can happen for various reasons such as defects in raw materials, errors in production, miscommunication, or failures to meet customer specifications or requirements.
Re-work is very wasteful as it consumes time, movement and resources to identify the issue, determine the necessary corrective actions, and implementing those actions to bring the product back into compliance or to customer’s expectations. This could include tasks such as repairing damaged parts, reconfiguring components, or even completely replacing, disassembling, and reassembling the product.
4) Over production producing finish goods in excess of customer orders or market requirements. This type of waste is common in factories operating a build to stock inventory system or where market demand is unpredictable.
Over production can lead to buildup of work in progress (WIP) at different stages of the production process as each workstation or step is held up due to full inventory at the next step of the production process. This ties up cash and inventory unnecessarily.
In some cases businesses need to rent warehouse to keep excess finished goods, this ads more overheads to the business affecting profitability. At times, this may be necessary like in preparation for a factory overhaul or long shutdown period to perform maintenance work.
5) Motion/Movement this refers to the unnecessary movement or extra steps in a process due to inefficient plant layouts, wrong machine and tools location and other barriers to a continuous work flow. This type of waste also includes excess physical motion such as reaching, walking, lifting, and bending to perform a task or move raw materials and wip.
6) Inventory Inventory refers to excess or unnecessary stock of raw materials, WIP or finish goods that are not yet required by the downstream process or customer. This excess inventory ties up capital, occupies storage space, and can lead to various inefficiencies in the manufacturing process.
Inventory can also be obsolete inventory that can neither be used as a raw material for production or as a finished good which can no longer be sold. Examples can include expired chemicals for production and obsolete stock made for a certain time event which has already passed in time.
7) Rejects refers to the goods and services produced which do not meet customer standards, specifications and are not saleable. The goal of a lean production process is to eliminate the production of reject products or services and ensure all are of good quality which customer specifications. In some factories they may refer to this waste in manufacturing as scrap or NR/NG product.
How to reduce waste in manufacturing processes? Where to look
Every manufacturing process is a collection of sub tasks or steps that produce finish goods and services for customers. Ideally in a perfect world every process would have one step and done, but this is not possible. Therefore, most processes have multiple steps, so the question to ask of every process step is does it add value to the customer? Or would the customer pay for it?
As a simple example, let’s use a simple sign made by a small signage factory. The sign to be made is a stop sign with white background and stop painted in red.
Does the transportation of the paint from the factory warehouse to the production area add value? One could say if there is no paint there is no sign, but what if the warehouse is far away or on another floor of the building? Is this value adding?
Does the process of storing the cut sheet metal painted in white in the production area for 3 days before final painting of the sign add value? Will the customer happily pay for the inventory costs associated with this?
By looking at every process step and referring to the lists of 7 wastes above to check if any of these “wastes” are present you can start to identify opportunities small or large that can improve the cost position of your factory or serve the customer better. Remember to have a holistic look at every input into the process of making your finish goods including indirect costs such as overheads.
How to reduce waste in a service process?
A service process is different from a manufacturing process and wastes may be not as easily noticeable, but reducing waste in a service process is crucial for improving efficiency, enhancing customer satisfaction, and increasing profitability.
Lets take as an example, an interpreter from English language to Japanese language who translates a letter.
The following are some tasks or areas that could be analyzed to find opportunities.
Streamline the Processes of delivering the service, Analyze the entire service delivery process from start to finish to identify areas of inefficiency, redundancy, or unnecessary steps. Streamline processes by eliminating non-value-added activities that the customer would not be willing to pay for.
In the example above would the steps of receiving the hard copy or printing the letter and storing it on a “to-do” pile of work add value to the customer? This has waiting time, printing costs (resources) and potential for re-work if the letter was lost and needed to be delivered again to the interpreter.
Standardize Procedures, Develop standardized procedures and protocols for delivering services to ensure consistency and minimize variation. Standardization helps reduce errors, rework, and wasted time.
In the example above would having a standard template to present the translation add value to the customer? What about a standardized process to receive the original document (via different methods), translate it and deliver it back with an invoice make the process efficient and improve the customer experience?
Digitize Operations and use of technology, Embrace digital technologies to automate manual tasks, streamline communication, reduce lead times and eliminate paperwork. This can also reduce the errors and re-work rate improving customer service. Implementing digital tools such as customer relationship management (CRM) systems, project management software, and online booking platforms can improve efficiency and reduce waste.
In the example of the interpreter, he/she may offer the customer several convenient ways to submit the document for translation. Some of these methods may include email, a website with a form which also collects customer data and payment, or submission of the document via a messaging app accessible on a mobile device or PC.
For the translation using simple technology like a computer with a specialized translation software may speed up the process of translating the document only leaving a final check by the interpreter for any errors and correct syntax and grammar.
As we have seen in this article both manufacturing and service processes in many organizations around the world have some form of waste, some more than others. The key to identifying these is to break the process down into steps, with the use of tools such a value stream map and analyze the need for the step/task and what resources it consumes and are these used efficiently.
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