TQM CONCEPTS

The Seven Wastes

Waste elimination is one of the most effective ways to increase profitability in manufacturing and distribution businesses. In order to eliminate waste, it is important to understand exactly what waste is and where it exists in the factory or warehouse. While products differ in each factory, the typical wastes found in manufacturing environments are quite similar.

After years of work to eliminate waste, Toyota, the Japanese automobile manufacturer, identified the following seven types of waste as the most prominent ones:

Overproduction
Waiting time
Transportation
Process
Inventory
Motion
Product defect

1. Overproduction

Waste from overproduction is one of the greatest wastes commonly found in manufacturing operations. It is created by producing more products than are required by the market. When the market is strong, this waste may not be very noticeable. However, when demand slackens, the overproduction creates a very serious problem with unsold inventory and all the by-products associated with it:

Extra inventory
Extra handling
Extra space
Extra interest charges
Extra machinery and equipment
Extra defects
Extra overhead
Extra people
Extra paperwork

Overproduction is a result of producing more than what the market can absorb. Alternatively in an assembly process if in an assembly one part is more easy to produce than others, there is a tendency to produce more of this part. The situation is further aggravated by traditional productivity measures and incentives which reward such excess production. Such excess production results in excess inventory either in process or finished product. High in process inventory also leads to increase in the total through put time. This situation requires additional material handling, storage space and interest paid on money used to carry the inventory. Additional staff, computers, and equipment may be needed to monitor the extra goods. Since the overproduction causes the machinery and operators to seem busy, additional equipment may be purchased and labor hired, under the assumption that they are necessary.

Since overproduction creates difficulties that often obscure more fundamental problems, it is considered one of the most serious types of waste and should be eliminated as promptly as possible. The elimination lies in the understanding that machines and operators do NOT have to be fully utilized to be cost efficient, as long as market demands are met. Unfortunately this concept is difficult for many people to grasp. It is helpful for the operator at each stage of production to think of the next stage of the process as his or her "customer". Only the amount required by this customer should be produced, meeting the requirements of high quality, lowest cost and correct timing.

2. Waiting

Waste due to waiting of machines and men for work is the second type of waste. There can be several factors for this. If it is due to the required work being already completed, it should not be considered a waste. Instead, the ways and means to better utilize the capacity should be considered. However if the machines and men are waiting for availability of raw material, in process material, dies, plans, etc., it is to be considered a problem and investigated. Usually, such a situation will arise in organizations in which there is large in process inventory as inventory slows down the movement of material in the plant. JIT manufacturing is a very good example of production with low inventory, fast flow and low waiting time. Several strategies such as cell manufacturing, redesigning of plant layouts, etc. are used to reduce the waiting time of Men and machines.

3. Transportation

Unnecessary or long movement of raw material, in process material and finished goods are commonly observed wastes in many factories. In the case of service organizations this translates into elaborate routing of files, circulars, documents, etc. Often the culprit of this type of waste is a poorly conceived layout of the factory floor, work flow design and storage facilities, which can mean long distance transportation and over-handling of materials. This situation is aggravated by such factors as temporary storage, or frequent changes of storage locations.

In order to eliminate transportation waste, improvements must be made in the areas of layout, process coordination, process flow, methods of transportation, housekeeping and general organization or the operation.

4. Process

The processing method or ineffective methods may be another source of waste. Wrong or outdated methods should be eliminated for more efficient methods. Some times this waste creeps in due to historical factors and the reluctance of the organization to improve the methods of working. In observing this type of waste, one often finds that maintenance and manufacturability are keys to eliminating it. If fixtures and machinery are well-maintained, they may require less labor on the part of the operator to produce a quality product. Regular preventative maintenance may also reduce defective pieces produced. When the principles of design for manufacture (DFM) are employed and manufacturability is taken into consideration in product design, processing waste can be reduced or eliminated before production even begins.

5. Inventory

Inventory waste is closely connected with waste from overproduction. That is, the overproduction creates excess inventory, which requires a list of extras including handling, space, interest charges, people, and paperwork. Because of the often, substantial cost associated with extra inventory, rigorous measures should be taken to reduce inventory levels.

Disposal of obsolete materials
Production only of the number of items required by the subsequent process
Purchase of required amounts of materials -- savings achieved through volume discounts must be carefully weighed against inventory and storage costs
Manufacture of products in required size lots -- measure set up and changeover costs against inventory carrying costs to achieve the most appropriate size

It is important to understand that in many operations, inventory covers a myriad of other problems. As levels are reduced, these problems will surface and they must be corrected before inventory levels can be reduced to their optimum levels:

Poor scheduling
Machine breakdown
Quality problems
Long transportation time of raw materials and/or finished goods
Vendor delivery times
Line imbalance
Lengthy set up time
Absenteeism
Lack of housekeeping or factory organization
Communication problems within the organization, with suppliers and with customers

6. Motion

Unnecessary motion at the work spot such as searching for tools, due to improper design of the work area, improper placement of tools, etc lead to fatigue and also slow down the work.

This type of waste is most often revealed in the actions of the workers. It is clearly evident in searching for tools, pick and place of tools and parts kept out of immediate reach of the work station, and especially by the walking done by one operator responsible for several machines. All of these can be eliminated by carefully planned layout and fixture selection.

7. Product Defects

Waste from product defects is not simply those items rejected by quality control before shipment, but actually causes other types of waste throughout the entire manufacturing process.

Waiting time is increased in subsequent processes, increasing costs and lead times
Rework may be required to make the part usable, increasing labor costs
Additional labour may be required for disassembly and reassembly
Additional materials may be needed for replacement parts
Sorting the defective from acceptable parts requires additional labor
Scrapping the defective pieces wastes both the materials and the work already added

All of the above are serious, but pale in comparison to the results when customers discover defects. Not only are extra warranty and delivery costs incurred, but customer dissatisfaction may result in loss of future business and market share.

To eliminate product defect waste, a system must be developed to identify the defects (or the conditions that cause the defects) so that anyone present may take corrective action. Without this preventive system in place, other time-saving efforts are futile.