Types of wastes and their causes

Wastes

The key principle of Lean is that waste is the underlying driver of operational inefficiency. To become more efficient, companies should identify waste from the customer perspective and then determine how to eliminate it. Waste is defined in general terms as activities that do not add value to the product or service and that the customer would not want to pay for.

Toyota has identified seven major types of non value-adding waste in business or manufacturing processes. These can be applied to product development, order taking, and the office, not just a production line.

First, Overproduction. Overproduction is the worst of the seven wastes of lean manufacturing. Overproduction is making extra products or making them before they are actually needed. That type of waste may lead to excessive inventory. Overproduction obscures all of the other problems within our processes. The principles of Lean Manufacturing require us to make what the customer wants when they want it, pulling only what is ordered through our work flow.

Overproducing causes companies to tie up their capital in stock, raw materials, work in progress and finished goods. Business should rely on cash to metegate so we either leave ourselves short or we end up paying charges to our bank. Many businesses have failed because they cannot buy raw materials to service a customer because they have already put their cash into materials that are not required. Another cost associated with Overproduction is the space that we must create for storage and movement of the inventory that company has created. It also needs people and equipment to move it around and it needs containers for storage. All of this is a cost to us, if we could eliminate it the savings would be straight back on our bottom line improving the profit.

Why do companies overproduce? The most frequent answer is that they have always done it. There are companies that run huge batches of material creating enormous amounts of stock where they could easily reduce the batches and improve their flow reducing lead times and improving customer service. Companies produce large batches because of long setups on some of our machines, so we try to maximize our throughput of these machines and use “economical batch quantities” to dictate how much material is processed rather than what the customer wants. They also distrust their suppliers ability to supply what they need by ordering more than they really need. This additional stress that they place on suppliers often causes them to fail becoming a self-fulfilling prophecy.
Companies often scheduling a few days or even weeks between successive operations just in case of issues or the need to change the production plan. They plan delays and inventory by using ERP [1]and MRP[2] systems to solve this problem.
We make forecasts in order to foresee what the customer will want in the future and invariably make mistakes and thus build product that is unwanted and don’t respond to customers’ needs.

Second, Waiting. Waiting is the act of doing nothing or working slowly whilst waiting for a previous step in the process. There is a widespread problem in business sphere when operators stood waiting for a previous operation, a delivery of products to arrive or just slowly working that leads to the lack of materials. The companies shouldn’t pay for the extra time. Waiting is not something that the customer is going to want to pay for, the cost of the time spent waiting will come direct from companies’profit.
Often the time spent waiting is made up later during overtime at a premium rate, good for the employees but not so good for the profit. Unbalanced processes are a cause of waiting in companies’ flow, if one process takes longer than the next then the operators will either be stood there idle waiting or they will be performing their tasks at a speed that makes it appear that they have work to complete.
Unreliable processes also cause waiting, the next process either waiting for the previous due to breakdowns, quality issues, information, or for an overlong changeover to be completed.
The waste of Overproduction and waste of Inventory also cause the waste of waiting, this is due to the fact that this material has to be transported from one location to the next usually as a large batch. The material handling is often a limited resource and the processes are left waiting for the forklift truck to appear or for a neighbor to finish using the pump truck and so on.
Information or lack of it can also cause waiting, either through unclear or missing information to conduct an operation or even through waiting to know which product is required to be run next.

The third type is Transport. Transport is the movement of products from one location to another. This could be from the machining shop to the welding shop, or from the production facility in China to the assembly line in America. This transportation adds no value to the product, it does not transform it and the customer would not be happy in paying for it.
If we look at Toyota where the tools and techniques behind Lean Manufacturing have been refined as part of the Toyota Production System we will see that many of their suppliers are located close to their plants. Products are not shipped huge distances at great cost with the potential for delay and damage. The waste of transport is a disease that causes the company to hemorrhage money at an alarming rate; we have to pay for material handling equipment, staff to operate it, training, safety precautions, extra space for the movement of material and so forth.
Transportation often leads to operations having to wait for product to be delivered due to delays, thus costing us more money as well as extending our lead times and creating delivery problems.
Excessive transport also gives many opportunities for handling damage and losses, including generator sets that are the size of a 40 foot container and whole shipments of BMW cars that have gone down with the ship. There are many causes that contribute to the waste of transport, the main one being the waste of overproduction which in turn leads to the waste of inventory; inventory that then has to be transported throughout our facility or between factories and even continents. The causes of this overproduction can be everything from excessive setup times and the need for economic batch sizes to the fact that “that is the way we have always done it”.
In addition to overproduction, organizations layouts often lead to the need to transport product. The company often organize areas for specific functions such as welding, pressing, molding. This leads to the need to transport product from each of these areas to the next and at times back again after each function is completed.
Even within each functional area there is a need to leave excessive gaps between operations connected with using things like pump trucks to move product about.

The next point is Overprocessing. Overprocessing is adding more value to a product than the customer actually requires such as painting areas that will never be seen or be exposed to corrosion.

By adding work that is not required, Overprocessing costs companies money with regards to the time of their staff, the materials used and the wear on the equipment. These costs can amount to a considerable sum over a period of time, they will also reduce companies’ efficiencies as the operators that are overprocessing could be performing other value adding tasks that the customer is willing to pay for.

Overprocessing as one of the seven wastes is caused by having unclear standards and specifications. Many operators will try to do the best job possible and will not always be aware of what truly adds value to the product or even the end use. They will therefore often expend time polishing and finishing components that do not require it.
Another issue is the one of non-standardized working practices, unless companies have standardized working then they will have differences in methods between different shifts and different people.
The most common issue is to do with design, often designers specify tolerances that require precision machining when in reality looser tolerances that could be produced by significantly less expensive methods could be employed.

Another one is Inventory. Inventory is the raw materials, work in progress and finished goods stock that is held. The companies often held far more than is required to produce goods and services. The customer wants them using Just in Time principles.

Every piece of inventory has a physical cost associated with it, that cost is shouldered from companies’ cash or from borrowings for which the interest will be charged. We should remember that for any business “cash is king”, if we tie it up in inventory it is not available for us to use elsewhere in our business.
In addition to the physical costs of the inventory, companies also have a host of less obvious costs that are cut directly from the profit, these are areas such as the transportation and movement of this inventory, the space required to store it, the containers to store it in, the administration of keeping track of it, the damage and losses that occur during transportation, the cost of writing off materials that become obsolete, even the costs of insuring it.
There are many costs associated with this inventory, some not as obvious as others, it causes the increase in time process and in costs. Moreover, the customers will be dissatisfied with that changes and will take their business elsewhere.

The main cause of the waste of inventory is the waste of overproduction. When the company produce more than the customer wants or in advance of customer demand, these two wastes are heavily interconnected and we should read up on the waste of overproduction.
It can also be caused by poor layout and lack of balance in companies’ workflow causing inventory to build up before or after different processes. This is a good indication of poor flow within our processes and one that a good lean practitioner will look for when observing our organization.

One more type is Motion. Moving not always means working. Moving product does not transform it any way is a waste. Only a process step that transforms the product in some manner that the customer explicitly wants is a value adding step. Motion as a waste has a long history. That term was highlighted by Frank Gilbreth within his “motion studies” at the start of the twentieth century; he observed bricklayers bending to lift heavy bricks from floor level and showed that delivering the bricks to the workers at the level they were required made a huge increase in the working efficiency as well as reducing strain induced injuries.
Whilst we may not be able to eliminate all motion within a work cell we can work to minimize it and make each movement as stress free as possible.

The main causes of the waste of motion are with regards to cell layout, placing product at floor level on pallets, poorly arranged space, tools that are disorganized, lack of space and organization for component parts and so on.
Another problem can be the design of the working method.

Finally, Defects. Defects appear with the deviation of products or service(or specification) from what the customer requires. When we talk about waste most people think of defects rather than the other wastes such as waiting and transportation.

There has been much written regarding the cost of defectives, the reason being that the cost is not always what we perceive it to be. The cost of rejects and rework are often compared to an iceberg; only a small fraction of the true cost being visible above the water level.
In addition to the obvious cost of the initial scrap item, companies have a number of other costs that are not always obvious or considered although frequently far in excess of this initial cost. The general rule of thumb is to multiply the cost of the scrap by a factor of ten to arrive at the true cost to our business. There are costs associated with problem solving, materials, rework, rescheduling materials, setups, transport, paperwork, increased lead times, delivery failures and potentially lost customers who will take their custom elsewhere.

Defects can be caused by many different problems. Most of these problems should be avoidable with a little thought when designing products, processes and equipment.
Many defects are caused by incorrect method due to non-standard operations, differences in the way that processes are undertaken by different operators on different shifts.
The companies should also build the opportunity for errors into the products by failing to think about how items can be assembled when they are being designed, we have components that can be assembled incorrectly if the operators do not align them correctly and so on. The companies fail to maintain their equipment, machines and fixtures allowing defects to occur. They don’t have a culture that empowers and makes operators confident enough to highlight problems and allow them to be solved, they often continue and make the best of a poorly fitting component rather than stopping to have either the fixtures or the components corrected. These companies don’t provide training to their people; they throw them straight in at the deep end and tell them to do the same as the guy stood beside them, often the one that was thrown in there the week before. The managers of the companies also reward the wrong behaviors, paying for quantity rather than quality, encouraging employees to work as fast as possible and even penalizing them if they do not make the numbers with little thought to the consequences on the quality of products or services.

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