(And How to Tame Them)

Waste elimination is one of the most effective ways to increase profitability in manufacturing and distribution businesses. In order to eliminate waste, it is important to understand exactly what waste is and where it exists in the factory or warehouse. While products differ in each factory, the typical wastes found in manufacturing environments are quite similar. After years of work to eliminate waste Toyota, the Japanese automobile manufacturer, identified the following seven types of waste as the most prominent ones:

1.      Waste from overproduction

2.      Waste of waiting time

3.      Transportation waste

4.      Processing waste

5.      Inventory waste

6.      Waste of motion

7.      Waste from product defect

In the following sections, we go into greater detail about each waste and will use case studies of how MLE Consulting has helped clients to control or eliminate these wastes.

1. Overproduction

Waste from overproduction is one of the greatest wastes commonly found in manufacturing operations. It is created by producing more products than are required by the market. When the market is strong, this waste may not be very noticeable. However, when demand slackens, the overproduction creates a very serious problem with unsold inventory and all the by-products associated with it:

·  Extra inventory 

·  Extra handling 

·  Extra space 

·  Extra interest charges 

·  Extra machinery and equipment 

·  Extra defects 

·  Extra overhead 

·  Extra people 

·  Extra paperwork 

Overproduction usually begins by getting ahead of the work required. More raw materials are consumed and wages paid than necessary, resulting in extra inventory. This situation requires additional material handling, storage space and interest paid on money used to carry the inventory. Additional staff, computers, and equipment may be needed to monitor the extra goods. But as serious as these problems are, even more critical is the confusion about what the priorities are (or should be). People are distracted and unable to focus on immediate goals, which results in additional production control staff. Since the overproduction causes the machinery and operators to seem busy, additional equipment may be purchased and labor hired, under the assumption that they are necessary.

Since overproduction creates difficulties that often obscure more fundamental problems, it is considered one of the most serious types of waste and should be eliminated as promptly as possible. The elimination lies in the understanding that machines and operators do NOT have to be fully utilized to be cost efficient, as long as market demands are met. Unfortunately this concept is difficult for many people to grasp. It is helpful for the operator at each stage of production to think of the next stage of the process as his or her "customer". Only the amount required by this customer should be produced, meeting the requirements of high quality, lowest cost and correct timing. 

Case Study:  Overproduction

Our client was a mid-Atlantic sand and gravel company with a need to optimize the flow of raw materials between their mines and their processing facilities.  Analysis revealed that transport trucks were being scheduled inefficiently with little coordination between the production of the mine and the demand of the processing facility.  The mines would swing between extremes of overproduction and waiting simply to fill the available trucks, often producing excess materials which wasted labor, fuel and other resources by requiring redundant handling steps.

We designed and helped our client implement an improved scheduling process to coordinate mine production, truck transport and processing.  Our client recognized significant savings of labor, storage and fuel resources while realizing a more orderly, predictable and flexible flow of materials and products.

2. Waiting

Unlike waste from overproduction, waste from waiting is usually readily identifiable. Idle workers who have 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 and are easy to spot. By completing only the amount of work required, the capacity - both speed and volume - of each work station can be monitored. This will result in using only the machinery and personnel required for the minimum amount of time to meet production demands, thereby reducing waiting time.

Case Study:  Waiting

Our client was a Big 3 automobile manufacturer which sought to improve assembly line flow in one of its Midwest plants.  Its work cell for making connecting rods suffered frequent delays caused by adjustments and maintenance operations on its tooling and machinery.  Our analysis revealed that the buffer queue was inadequate causing small production variations in one manufacturing step to cascade down to delays for subsequent operations. 

Our solution was to design a FILO (first in, last out) style queuing tower to buffer small variations in the production flow, thus minimizing wait time for subsequent operations.  In designing the queuing tower we ran simulations to determine the optimal size and capacity to ensure a smooth workflow.  Thus, each worker had the right piece at the right time to keep productivity efficient and well managed.

3. Transportation

The transportation and double or triple handling of raw and finished goods are commonly observed wastes in many factories. Often the culprit of this type of waste is a poorly conceived layout of the factory floor and storage facilities, which can mean long distance transportation and over-handling of materials. This situation is aggravated by such factors as temporary storage, or frequent changes of storage locations. In order to eliminate transportation waste, improvements must be made in the areas of layout, process coordination, methods of transportation, housekeeping and general organization or the operation.

Case Study:  Transportation

Our client was a southeastern manufacturer of injection molded parts for the automobile industry.  After acquiring a competitor our client found itself with expanded production capacity, but that it was wasting resources by transporting parts back and forth between the two plants for successive finishing operations.  In addition to the costs of fuel and truck maintenance, each transfer required time and labor to package, inventory and receive parts.  This excessive focus on internal logistics had the potential to distract the client from improving the service and quality it could deliver to its customers, and thus endangered its competitive advantage.

We worked closely with our client to design and implement a plan for combining the two plants into one.  By applying principles of efficient work cell design we helped our client improve productivity, reduce costs, eliminate most of the work in progress inventory, and accelerate the manufacturing process to produce a better product in less time at a lower cost.  By eliminating the unnecessary transport of parts between two plants our client saved one to two weeks in producing each batch of parts.

4. Processing

The processing method may be another source of waste. In observing this type of waste, one often finds that maintenance and manufacturability are keys to eliminating it. If fixtures and machinery are well-maintained, they may require less labor on the part of the operator to produce a quality product. Regular preventative maintenance may also reduce defective pieces produced. When the principles of design for manufacture (DFM) are employed and manufacturability is taken into consideration in product design, processing waste can be reduced or eliminated before production even begins.

Case Study:  Processing

Our client was a Midwest manufacturer of stepper motors (used for computer controlled operation such as for printers or plotters).  Though the manufacturer had a good basic design concept, their product required excessive time and skill in assembly due to its complexity.

We applied our skill and experience in design for manufacture and assembly (DFMA) to the challenge of making our client’s product better while reducing the time and expense needed to make it.  By eliminating parts not adding value to the end user and reducing the machining operations we helped our client streamline manufacture, reducing twelve assembly steps to two.  The redesigned motor thus cost significantly less plus it was more durable and reliable.

5. Inventory

Inventory waste is closely connected with waste from overproduction. That is, the overproduction creates excess inventory which requires a list of extras including handling, space, interest charges, people, and paperwork. Because of the often substantial cost associated with extra inventory, rigorous measures should be taken to reduce inventory levels.

·        Disposal of obsolete materials 

·        Production only of the number of items required by the subsequent process 

·        Purchase of required amounts of materials -- savings achieved through volume discounts must be carefully weighed against inventory and storage costs 

·        Manufacture of products in required size lots -- measure set up and changeover costs against inventory carrying costs to achieve the most appropriate size 

It is important to understand that in many operations, inventory covers a myriad of other problems. As levels are reduced, these problems will surface and they must be corrected before inventory levels can be reduced to their optimum levels:

·        Poor scheduling 

·        Machine breakdown 

·        Quality problems 

·        Long transportation time of raw materials and/or finished goods 

·        Vendor delivery times 

·        Line imbalance 

·        Lengthy set up time 

·        Absenteeism 

·        Lack of housekeeping or factory organization 

·        Communication problems within the organization, with suppliers and with customers 

Case Study:  Inventory

Our client was a northeastern manufacturer of industrial valves such as might be used in chemical plants or swimming pools.  Its basic problem was that it had no mechanism for planning production because it had no mechanism for predicting sales accurately.  This lack of responsiveness to market conditions meant that it could use neither its manufacturing nor its financial resources to their fullest extent.

Our solution was to develop a sales forecasting economic model for the client’s specific market segments.  This statistical software model uses leading economic indicators to predict future sales.  It takes into account the patterns of discretionary buying among other businesses and consumers and helps our client determine what to produce, when to produce, and how best to bring their products to market.  By relating market conditions to inventory levels our client is better able to manage their cash flow and improve their profitability.

6. Motion

Waste of motion can be defined as whatever time is spent NOT adding value to the product or process:

Movement ≠ Work

This type of waste is most often revealed in the actions of the factory workers. It is clearly evident in searching for tools, pick and place of tools and parts kept out of immediate reach of the work station, and especially by the walking done by one operator responsible for several machines. All of these can be eliminated by carefully planned layout and fixture selection. 

Case Study:  Motion

Our client was a Mid-Atlantic manufacturer of hand tools which wanted to improve the efficiency of its production line.  We worked closely with management and workers to identify which operations contributed to the value and quality of their product, and which operations were wasted motion of little value. 

Our solution was to design work cells and a manufacturing line flow so that parts were presented to each worker in an oriented fashion;   that is, each part would be presented to the worker in the right direction, with the right placement at the right time.  We eliminated unnecessary operations of turning parts over, placing them in or out of bins unnecessarily, etc., and thus helped introduce an improved rhythm and flow to the manufacturing process. 

In addition to reducing worker fatigue and frustration, this solution greatly improved the fortunes of our client company by improving its cost-effectiveness, and thus its cost-competitiveness.

7. Product Defects

Waste from product defects is not simply those items rejected by quality control before shipment, but actually causes other types of waste throughout the entire manufacturing process.

·  Waiting time is increased in subsequent processes, increasing costs and lead times 

·  Rework may be required to make the part usable, increasing labor costs 

·  Additional labor may be required for disassembly and reassembly 

·  Additional materials may be needed for replacement parts 

·  Sorting the defective from acceptable parts requires additional labor 

·  Scrapping the defective pieces wastes both the materials and the work already added 

All of the above are serious, but pale in comparison to the results when customers discover defects. Not only are extra warranty and delivery costs incurred, but customer dissatisfaction may result in loss of future business and market share.

To eliminate product defect waste, a system must be developed to identify the defects (or the conditions that cause the defects) so that anyone present may take corrective action. Without this preventive system in place, other time-saving efforts are futile. 

There is no advantage in using a highly automated
machine to make defective parts faster.

Case Study:  Product Defects

Our client was a Canadian manufacturer of sensors for anti-lock brakes.  The failure rate of their product was small, but in this industry any failure rate is a matter of critical importance.

We did an analysis of the part design and manufacturing process to identify elements which could be improved.  We helped our client redesign the part to make it more robust by minimizing the significance of manufacturing variations.  This increased robustness meant greater reliability for the end user, with less waste for the manufacturer.

While our focus was first and foremost on improving the quality of the product, our improvements also resulted in an improved and more cost-effective manufacturing process.

The first step to eliminating the seven deadly wastes is to identify each one within the operation. After that, measures can be taken to correct the situation and eliminate the problems. Such action may require simple, inexpensive solutions to a single work station or may involve changes as massive as a new layout of the factory floor with more efficient machinery. The appropriate solutions require careful study of the operation, clearly defined objectives, and thorough investigation of the benefits to be gained by each change.

ABOUT THE AUTHOR 

Wendell B. Leimbach is Managing Director of the MLE Consulting Group at American Express Tax and Business Services Inc.

Cited from www.isixsigma.com