Where Are The 8 Hidden Wastes?
Lean methodologies deal with methods and techniques to reduce eight wastes or non-value-added activities in order to be more efficient in serving the end customer. Wasteful activities are process steps that either the customer is not willing to pay for or are not critical to the creation of value for the customer. Elimination or reduction of these activities will result in tremendous savings for the business. It has been estimated that between 15% and 50% of typical companies’ resources are devoted to rework and non-value added tasks that could be avoided but usually they are not even uncovered: they become hidden costs.
For example, a customer orders a Coke with no ice. If the vendor gives him a Coke with ice, he will be creating waste, dumping out the Coke and preparing again another one with NO ice. Time and resources have been wasted. And this is without even considering customer satisfaction and the time of the rest of the customer still waiting in the line.
The first step towards cutting company costs is to uncover these hidden wastes and prepare an action plan to get rid of them as soon as possible.
- Defects and scrap: Creating and manufacturing defective products that have to be reworked, repaired, or scrapped. Defective products may also take the form of information systems that do not transmit information and result in a loss of communication, for instance. Not only there is wasted material in the scrap, but time and human energy is also wastefully expended, resulting in customer complaints, returns, and reworks.
- Overproduction: Producing more than is necessary. This is an issue that generally slips under the radar, and is not considered to be a problem –however, overproduction is unique in that it creates more of the other wastes. It is due to lack of resources and production planning, volume of sales not estimated correctly, a desperate intent to avoid late deliveries or to have enough inventory while changeover is too long.
- Waiting: Idle time before the next processing step. Examples of this waste are waiting for a meeting to start or for a prior step to be completed in a production line. It can be caused by a lack of raw materials or by an unbalanced workload among employees and shifts.
- Non-value added processing: Performing activities that add no value to the product or service from the customer’s perspective. It refers to manipulating and changing final products/services above and beyond what the customer expects and is willing to pay for. While sometimes we can try to make products even better than the customer expects, we need to first check if the customer will pay for the extra effort. A simple example of over-processing is when Ticket counter reps put printed tickets on game-day into an envelope before handing it to the buyer, who then trashes the envelope (wasted process step and material).
- Transportation: Movement of material or data from one place to another. Transportation involves the touching, moving, relocating of raw materials, tools, finished goods, etc. for use at different stages of a process. It is one of the activities that the customer doesn’t care about but are necessary to the production of their finished product, so this waste needs to be minimized in order to save time and reduce potential risks.
- Inventory: supply in excess. It is developed when more supplies than are needed are ordered, and the inventory is tracked poorly. Anything collecting dust or stored in obscure, infrequently utilized corners is probably inventory in excess that soon will be obsolete or spoiled -and what’s making it worse is you are spending money to store it!
- Motion waste: Movement of employees and equipment that does not add value to a product or service such as walking to and from the copier, excessive effort or process steps like an operator reaching far above his head to complete a task, and where something is reversed or undone, like putting down components and reversing a fixture each time a process is completed.
- Employee unutilized skills: Not using people’s abilities, skills, and experience to the fullest extent. Having employees with good ideas and experience is valuable, and the worst thing to do is to ignore it completely. Employees are in the best position to tell you what’s wrong with the process of process-step and how you can improve upon them. Sharing ideas is good not only for the company, but also for the employees, since they would feel valued by their peers, motivated, fulfilled, and will be more engaged with the company.
If these are one too many wastes for you to remember, use this handy mnemonic to remember them all: DOWNTIME. And to put into practice what you’ve learnt, consider organizing a brainstorming session with your team to together find the 8 wastes in your own business.
If you're interested in Quality Management, you can check out our course on Lean Six Sigma to get trained.