Business Profitability – Start By Identifying Waste

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Learning to see waste is probably one of the biggest challenges we face when starting to implement any improvement programme.

If you take a minute during your work day and look at what is going on around you; everyone is busy working hard, moving around, working at computers, busy in meetings. But how much of that activity is adding value for the company?

Value added tasks must satisfy 3 tests:-

1. Adds value for the customer

2. Physically changes the item being worked on

3. Is done right first time

Everything that does not add value is waste.

Piles of coins

 

When you apply this test to all the activities you see going on around you, it soon becomes obvious that people are working very hard but not necessarily getting the right things done. This is a hard principle to grasp but it is also vital to remember that you are looking at processes not people. It is because of the current process that value is not being added, not the person doing the task. How often do you perform a task and wonder why am I doing this? Chances are you have identified a waste. Did you know that around 95% of any activity is waste, it is not adding value to the product and is therefore a cost to the business? Before you can begin to improve you need to see the waste that is going on around you, then you can begin to see the improvement effort required. To help see waste we can categorise the waste in to 7 types:

  1. Defects – Not right first time
  2. Overproduction – Producing more than is required by the customer
  3. Transportation – Moving parts around the factory
  4. Waiting – Parts waiting in inventory, forms waiting for decisions
  5. Inventory – Requires cost for storage, cost of parts tied up, extra paperwork required
  6. Motion – People movement; walking to collect things, movement of hands when performing tasks
  7. Processing – When a process step is added but is not appreciated by the customer for example product finish, does a filter housing need to be highly polished if it is going to sit inside a large industrial machine?

And I would add a final waste – that of talent. Do you know what your staff are really capable of? Are all of their skills being utilised for the benefit of the business?

Now that you can start to see the waste, you can start to address it.

One of my favourite activities is to imagine myself as the object that is being worked on; a file, product or a customer on the end of the phone. I then document each step I go through on a post-it note. I am form 36BT. I am waiting to be completed. Now I am travelling to the customer. Now I am being completed. I am travelling again. I am waiting to be processed. (etc) I do this until there is a clean picture of the process.  Then you can ask yourself: ‘Which steps are waste and can be eliminated or changed?’

It is very insightful when you start to see waste in your business. The more waste you can eliminate, the more time becomes available to add value to your business.

Have ago now, take a minute and eliminate some waste today.

 

Image credits: £10 Notes TaxRebate.org.uk, Coins jDevaun via Compfight cc

 

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