Addressing 7 Wastes Hurting Your Business Efficiency – As Defined by Lean

The 7 wastes of lean were devised by Taiichi Ohnos as part of the Toyota production system. They are now used by lean manufacturers around the world in an effort to continuously improve. Waste refers to production elements that do not perform a value-adding role. They aren’t things that the customer would appreciate or be willing to pay more for. In short, the seven wastes can be summarized as:

1. Defects
2. Overproduction
3. Waiting
4. Transportation
5. Inventory
6. Movement
7. Processing

Let’s look at each of these wastes of lean in more detail so that you can work to eliminate them from your business.

1 – Defects

A lean manager understands the waste that a defective product can lead to. The entire Six Sigma process revolves around the concept of operational excellence and quality production, through the reduction of defects. But this idea is one that can benefit every type of business, large or small. Any kind of lean enterprise should be concerned with eliminating defects, even those that aren’t related to manufacturing. The negative effect of small issues is multiplied when it’s repeated and scaled across a business. Likewise, the advantages of rectifying them can also have a large, compound effect.

A defective product causes waste in several ways. It’s a lost use of processing efforts and raw materials that were involved in creating it in the first place. Then there’s the additional wasted time and effort to repair or replace a defective item. It’s commonly caused by inadequate production systems, poor quality elements, or unclear process mapping documentation.

The good news is, these issues can all be resolved with a lean management approach. Creating standardized systems and processes will help to control quality. Training employees can also improve procedures and streamline output. Gaining feedback from frontline staff can also lead to solutions being suggested by the people who are closest to a problem. Lean manufacturers that seek to continuously improve will gradually remedy defects and eventually remove them altogether.

2 – Overproduction

Overproduction is something that many companies do unknowingly. They view it as an asset instead of a source of waste. Most businesses like to have extra stock on hand in order to deliver at short notice. They think it’s good to have a ‘buffer’ in case customers place a last-minute request. But in reality, this overproduction is causing a large amount of waste.

There are costs associated with running machinery for longer than needed. Then storing these excess units can lead to extra money being spent on warehousing. If the items aren’t sold, then they are usually discounted or simply written off as a loss. It’s easy to see how overproduction can quickly lead to significant wastage.

Overproduction can take several forms. It can refer to producing more of a product than is actually needed. It can also mean manufacturing it at a faster rate than is required by the customer. Or it can refer to storing unnecessary inventory. The root causes are commonly associated with a lack of production planning or poor scheduling. Having equipment that operates at a higher capacity than required is also another source. Some companies create overproduction by incentivizing their workers on the wrong tasks. But all these sources can be remedied with the right approach.

Implementing a ‘just in time’ production method will ensure that products are manufactured at the optimal rate. Introducing pull systems helps to create an environment where production happens based on known demand rather than forecasts. A lean thinking approach to incentivization will also encourage sales managers to submit more accurate estimates instead of overly ambitious, target-based numbers.

3 – Waiting

Waiting is one of the most wasteful activities that lean manufacturers can do. It causes delays and downtime in the supply chain which are both unnecessary forms of waste. This can relate to times when the workers aren’t doing anything, equipment is idle, or just dead time that incurs costs.

Like many of the seven wastes of lean, waiting can be caused by poor communication. If processes or departments aren’t synchronized, then one may not be ready when the other wants to hand over. Issues with staffing numbers or resource allocations can also be a factor. Sometimes, it can be an unpredictable element like machinery breaking down.

One solution to this type of waste is business process management (BPM). When used in combination with process mapping, it enables management teams to have an overview of the workflows. This form of process management helps to synchronize departments, avoiding both bottlenecks and downtime.

4 – Transportation

When most people hear ‘transportation’, they think of lorries, vans, and conveyor belts. But when it comes to the wastes of lean manufacturing, it’s not just about travel. This type of waste can also refer to the movement of people, documents, or information. It encompasses anything that is moved between manufacturing and the point of sale, including materials, tools, and the finished products themselves.

Transportation waste can be caused by a lack of planning in terms of delivery routes. It may also be due to flows or production systems that are unnecessarily complicated. Any kind of excess transport that the customer wouldn’t be willing to pay for can be considered a waste. Localizing production and process improvement can both reduce wasted transportation. Using artificial intelligence can optimize route planning and fuel efficiency too. To eliminate waste around document and information transportation, businesses can implement digitized solutions such as knowledge bases and online learning.

5 – Inventory

Inventory waste is caused by holding excessive amounts of stock, raw materials, or equipment. This is one of the most common of all the seven wastes of lean because it’s assumed to be positive. But where is the value added to the customer by holding stock? There are other, leaner ways of achieving short turnaround times than storing stock.

Excess inventory is often caused by one of the other lean wastes – overproduction. It may also be due to underperforming sales and overestimated forecasts. Tackling the second waste of lean will help to improve this one, as will realigning production targets and taking a lean product approach to future research and development.

6 – Movement

This is often confused with transportation but it actually refers to the wasteful motion of people. It could be walking a few steps to get raw materials or stretching to reach a tool. In either case, moving the item to a closer location would reduce this excess motion. They may seem like small changes, but any lean coach will tell you that these can add up to significant savings over time.

Real-life examples of excess movement are usually due to facilities that aren’t optimally designed. It may also be caused by following processes that either aren’t standardized or are unclear. This is one reason that assembly lines are so popular since they reduce the movement that an employee needs to make. Ensuring adequate training and creating standard operating procedures can also reduce this type of waste.

7 – Processing

The search to continuously improve can sometimes lead to unnecessary innovation. Unless a company understands what the value-adding elements of a product are, they may end up over-engineering it. This can lead to excess or inappropriate processing which wastes labor and machinery resources.

Over-processing can be caused by poor project management during product development. Not understanding customer needs or putting too much emphasis on excessive details can both contribute. In software development, this is often addressed by using the minimum viable product approach. Value stream analysis is also an important tool in identifying exactly what matters to the customer.

In order to eliminate wasteful activities, it’s helpful to undertake a root cause analysis. This will allow you to identify which of these seven wastes apply in your business. Where are the non-value adding elements in your organization? Is there an added process that can be bypassed or removed completely? By focusing on the 7 wastes of lean, you can streamline your efforts and become a more efficient and productive operation.

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