Cutting waste is easier than you think…and the rewards are significant. How does your business measure up?
Many entrepreneurs, after first starting their businesses, find themselves with a pile of work that is completely unproductive. No matter how much time they put into their work, they find themselves failing to accomplish what they had aimed to achieve. The disconnect between being “busy” and true productivity is a common problem. It causes new entrepreneurs to stay late at the office and spend too much time away from family. The hardest workers experience a diminished social life and low financial returns in exchange for their efforts.
Kaizen is a Japanese productivity improvement method that means “good change.” It has been widely applied in many industries and sectors. Kaizen refers to activities that continually improve all functions and involve all employees.
The best approach for any startup or established business is to adapt and implement one of kaizen’s early-stage strategies to help with fast, small changes, reduction of cost outlay, and elimination of wasted time and resources.
The Seven Forms of Waste
Overproduction is defined as producing more than demand requires, or producing before the product is needed. The most obvious result of overproduction can be found in increased inventory levels. Over the short term, companies can implement tighter controls on scheduling and forecasting to reduce variance and overproduction. A shift from make-to-stock to make-to-order will result in a major decrease in overproduction.
Movement of workers, machines, and transport represents a typical form of waste. Added motion slows processes, increases wear and tear on equipment, and increases work fatigue. The ideal solution requires machines and work cells to minimize movement. This often requires layout changes to assure that all machinery, tools, and equipment are available where they are needed. The result is a work cell that is more productive with less wasted movement.
Transportation does not usually add value to a product. The majority of transportation costs are generated by moving raw materials to the workplace and moving finished goods to the customer. Transportation activity costs money in equipment, fuel, and labor. In a perfect world, there would be no transportation. Limited transportation can be facilitated by locating the company near suppliers and customers. Even transportation to meetings can be reduced by employing existing technologies. Instead of traveling to a customer, a video conference could suffice in a cost-effective manner. Reducing transportation substantially reduces wasted time and cost.
Wait time represents a basic cause of an unbalanced process: when one part of a process runs faster than the previous one. Wait time is pure waste, a resource that goes unused. Eliminating wait time is usually a straightforward process, once the problem has been identified. Eliminating bottlenecks works to allow for a more balanced process and reduced wait time.
Processing is often assumed to be value added—which, on the other hand, can also manifest as failure to recognize processing steps as waste. As with other forms of waste, processing adds cost through expenditure of materials and labor to complete additional steps. Identification of wasteful processing is critical for the success of lean implementation. The elimination of the non-value-added processes can result in reduction of significant cost—and an increase in the profit margin of the product.
Defects usually arise from poorly-controlled and ill-designed processes. Defects cause both direct and indirect costs in lost material and labor, and can also cripple any business. Improving quality and reducing defects eases an essential part of production. I suggest introducing quality control methods, such as sample selection testing or quality-control points between processes in order to ensure that the end product is of high quality and meets expected standards. Reducing defects saves costs in the early stages of production and results in heightened customer satisfaction.
Inventory is viewed by many as insurance, but it comes at the expense of the high capital required to carry it. The cost and space required for inventory is significant, and it generates no kind of return. Inventory is exactly like cash frozen in a bank account—with interest being charged. It is essential to streamline processes, reduce lead time, and implement better forecasting, which will lead to reduction of inventory held.
The Seven Forms of Waste strategy has been proven in many businesses, whether large, medium, or small. Identifying the forms of waste common to all businesses—and effectively implementing small changes within them—definitely reduces non-value-added work and increases productivity in all areas. With kaizen as a first step, all entrepreneurs can access more time to focus upon strategic issues and enjoy quality time with family and friends.
