The seven deadly wastes

Waste elimination is essential to increasing profitability in manufacturing and distribution businesses. The endless pursuit of waste elimination is the essence of lean manufacturing. Eliminate waste by understanding the seven deadly wastes and identifying where they exist. Use that understanding to evaluate your material handling systems and determine if there’s justification for improvements, particularly because direct labor may be a minor component of the eliminated waste.

What is waste?

Waste is anything that adds cost, but not value, to a product. While products differ in each factory, typical wastes found in manufacturing environments are quite similar. After years of working to eliminate waste, Toyota, the Japanese automobile manufacturer, identified these seven wastes as the most deadly to profitability:

• Overproduction
• Wait time
• Transportation
• Processing methods
• Inventory
• Motion
• Defects

Identify the waste

Each of the seven deadly wastes must be clearly understood to recognize where it exists in your operations. Some wastes are noticeable, and some are more subtle. After you understand each and consider how it relates to your business, you’ll think of many ways to reduce or eliminate each one. In fact, the best ideas usually come from production and maintenance workers. These groups should be encouraged and rewarded for their ideas and initiatives to improve operations. Most companies waste 70% to 90% of their resources, and even the very best companies probably have as much as 30% waste. Every plant should develop continuous improvement systems that reduce cost and improve operational effectiveness by endlessly pursuing elimination of these wastes.

Overproduction

Overproduction is the result of producing more product than the market requires and represents one of the greatest wastes in manufacturing operations. When the market is strong, this waste might not be noticeable, but, when demand drops, overproduction produces serious problems with unsold inventory and wasted by-products. Wasted by-products include material handling, storage space, inventory interest charges, machinery and equipment, defects, overhead, workers and paperwork.

Overproduction generates difficulties that often obscure more fundamental problems. A key element for eliminating overproduction lies in the understanding that machines and operators don’t have to be fully utilized to be cost efficient, as long as customer demands are met. This concept is difficult for many plant professionals to grasp. It’s helpful for any worker to think of the next downstream operation as the "customer" and produce only the quantity of product the customer actually requires.
Extra inventory results when more raw materials are consumed and more wages than necessary are paid. Extra inventory leads to additional material handling, storage space and interest paid on money used to carry the extra inventory. Additional staff, computers and equipment might be needed to monitor the extraneous goods. As serious as these problems are, even more critical is the confusion about what the priorities are, or should be. When people get distracted, they can’t focus on meeting the customer’s requirements of high quality, lowest cost and correct timing.

Overproduction waste can be reduced significantly or completely eliminated by a material handling system that controls material flow through production to match material supply to customer demand. One effective control is to use the material handling system as a tollgate that won’t let anything move until it’s pulled by a customer order.

Wait time

Unlike overproduction, waste from waiting usually is readily identifiable. Idle workers (who have already completed the required amount of work) or employees who spend much time watching machines but are powerless to prevent problems are two examples of the waste of waiting. A material handling system that regulates the work flow at an efficient pace (small buffer queues may be necessary) minimizes or eliminates wait time waste. Weak links in the material handling system that cause wait time include engineering drawings, gauging and equipment/tooling defects.

Evaluate each of these work elements during design of the material handling system with a process failure mode and effect analysis to identify and eliminate these problems. Ideally, use only the machinery and personnel for the time required by the pace of work that meets the production demand.

Transportation

Transportation, including double or triple handling of raw and finished goods, is another commonly observed waste. Often the root cause of this waste is a poor layout of the factory floor and storage facilities, which can mean long-distance transportation and over-handling materials. Temporary storage and frequent changes of storage locations aggravate the situation. Transportation waste can be eliminated by minimizing the distances materials must travel, better process coordination, better transportation methods and general organization of the operation.

A material handling system focused on optimum product movement minimizes transportation waste. To achieve optimum product movement, use computer simulation on the plant layout to determine which configuration is most effective. Using the material handling system as a Band-Aid to cover over other problems only adds cost with no value and perpetuates the underlying problems.

Processing methods

Maintenance and manufacturability are keys to eliminating waste from process methods. Well-maintained fixtures and machinery require less operator labor to produce a quality product. Regular preventive maintenance, including total preventive maintenance, also reduces defective pieces produced. Using the principles of design for manufacturing and taking into account manufacturability during product design reduces or eliminates processing waste before production even begins.