RSM Resources

Waste is essentially anything that adds cost, but not value, to a product. Eliminating waste is vital to increasing profitability in manufacturing and distribution businesses - and its pursuit is the essence of lean manufacturing.

After years of grapplingwith this issue, Toyotaidentified seven wastes that have direct impact on profitability. Understandingand identifying each of these within your operation is the first step toeradicating them.

 
1. Overproduction
When the market is strong,overproduction might not be noticeable. But when demand drops, it can result inunsold inventory and waste byproducts — including material handling, storagespace, inventory interest charges, overhead and paperwork that don’t add value.

At the heart of this issuelies a key concept that many plant professionals don’t fully understand:Machines and operators don’t have to be fully utilized to be cost-efficient, aslong as customer demands are met.

Overproduction waste can besignificantly reduced by supervision training and a material handling systemthat controls material flow, matching supply to customer demand. This systemcan be a tollgate that lets nothing move until pulled by a customer order.

2. Wait time
Waste from waiting isusually readily identifiable, often taking the form of idle workers andemployees who watch machines but are powerless to prevent problems.

A production work cell thatregulates work flow at an efficient pace can minimize or eliminate wait timewaste. To avoid weak links in your operations, evaluate engineering drawings,gauging, and equipment and tooling during the design phase. Use a failure modeand effect analysis to identify and remove problems.

Ideally, schedule machineryand personnel based on projected time required to meet production demand.

3. Transportation
Poor layout of the factoryfloor and storage facilities can mean long-distance transportation andover-handling of materials. Frequent changes of storage locations aggravate thesituation. Transportation waste can be eradicated by minimizing distancesmaterials must travel, improving process coordination and transportationmethods, and optimizing organization of the operation.

You may wish to use computersimulation of the plant layout to determine which configuration is mosteffective.

4. Processing methods
Maintenance andmanufacturability can eliminate waste from process methods. Well-maintainedfixtures and machinery require less operator labor to produce a qualityproduct. And taking manufacturability into account during product designreduces or eliminates processing waste before production even begins.

Production and materialhandling systems that control material and orientation, while identifying partsusing RFID and barcodes, accommodate automated processes and allow forwaste-reducing improvements.

Avoid installing a systemfor an inherently faulty process. Evaluate work processes first and takecorrective action before moving forward.

5. Inventory
Excess inventory requiresextra handling, storage space, interest charges, people and paperwork —resulting in substantial costs.

To reduce inventory, disposeof obsolete materials and produce only the number of items the next process requires.Purchase required amounts of materials and weigh any savings achieved throughvolume discounts against inventory and storage costs. Manufacture products inoptimum lot sizes.

Inventory can hide a myriadof other problems. As inventory levels drop, you may need to address poorscheduling, machine breakdowns, line imbalance, absenteeism and communicationproblems. 

6. Motion
Movement doesn’t equal work.Motion waste is often revealed in the actions of workers as they search fortools and parts and walk among machines.

Layout planning and fixtureselection can help remove motion waste. Material handling system changes thatimprove material flow through value-added operations can also be valuable. Alsoconsider implementing
5S when you change or install new material handling systems.

7. Defects
There’s no advantage tousing highly automated machinery to make defective parts.

Product defect waste causesother types of waste throughout the manufacturing process, including wait timeand additional labor. But these consequences are insignificant compared with acustomer discovering defects for you. Extra warranty and delivery costs couldresult, as well as loss of future business and market share.

Eliminate defect waste atthe source by establishing a system to identify defects (or the conditions thatcause defects) as they occur. Authorize anyone on the plant floor to takecorrective action.

Faulty setup and operatingprocedures can lead to defects. Performing process Failure Mode and Effect Analysiscan identify procedures required to reduce or dispose of these defects. 

Next steps
After considering how thesewastes relate to your business, you may think of many ways to decrease oreliminate them. As you develop a waste reduction strategy, don’t forget to talkwith production and maintenance workers, who often generate the best ideas.Reward these groups for insights and initiatives to increase operationalefficiency.

Improvements can range frominexpensive corrections to a single workstation to a new factory floor layoutand more efficient machinery. But, appropriate solutions always require carefulstudy of the operation, clearly defined objectives and thorough investigationof the benefits to be gained by each change.

Wendell Leimbach is directorand John Farrell is senior consultant at RSM McGladrey. Contact them atwendell.leimbach@rsmi.com and john.farrell@rsmi.com, respectively.