Today, increased productivity is often cited as a major reason for the slow recovery of the job market. I believe it is true that businesses are more productive, but in many cases the improvements have been achieved simply by dumping more work on fewer people. Where that has been the case, the improvements will not be sustainable.
Businesses that improve productivity the right way get more output from fewer people by eliminating waste of all kinds. When waste is eliminated, it can be amazing how much human capacity can be released and put to better use.
To eliminate waste in a business, it is important to understand what waste is. The Japanese call waste “muda” and define it as activity that uses resources but adds no value. Use of resources over and above what is actually needed to produce a product or service, and which customers would be unwilling to pay for, is muda.
There are some activities we are required to do that add no value to customers but do add value to the business. Customers would not pay for the accounting department, but keeping accurate books and keeping the owners out of trouble certainly adds value. However, if the accounting department produces excessive or unneeded reports and analysis, that is muda.
I will define and describe eight types of waste. It doesn’t take much searching in almost any organization to find muda.
Transportation
Moving materials, work-in-process or documents from one place to another is muda. It may be essential to give another department access to information, but it is not essential to do that by moving a document from one place to another. In a factory, it may be essential to move a product from its final operation to the shipping dock, but if the shipping dock is on the other side of the factory instead of near the final operation, the trip is muda.
Inventory
Excessive inventory is often the result of other ills. Unreliable suppliers, inflexible manufacturing systems, overly complex products, poor quality and poor planning can all result in over-investments in inventory. Instead of “just in time,” the philosophy is “just in case.” Businesses that reduce inventory by fixing these problems can be more profitable and more competitive and sometimes can repurpose large amounts of floor space to value-adding activities.
Motion
People who are moving but not adding value create muda. Searching for files, looking for supplies, walking around a factory looking for a tool that has not been properly stored are all muda. One client recently invested in a large-format printer for a key employee whose department was a bottleneck, so he could stop walking between buildings several times a day to get prints. In that case, the muda eliminated was both motion and transportation.
Waiting
When work or people are sent from place to place and then wait for the next process to start, that is muda. In many processes, the majority of total process time is waiting. If you need a visual, picture how much of the time consumed by your average visit to the doctor adds value that you are willing to pay for. Think about how much productivity is squandered in our health care providers’ waiting rooms.
Overproduction
It is never good to produce more than is needed. Sometimes it is done because processes have a high defect rate, or because it costs so much to set up a machine that the cost must be spread across more items. Rather than solving a tough quality or setup problem, the path of least resistance is to produce more than is needed. Resources that should be spent on other products are wasted and if, by luck, the entire lot of items is good, the excess goes into inventory — another doubling of muda.
Overprocessing
Putting more work into something than is required is muda. I once had responsibility for a product that had polished metal surfaces. When we took objective measurements of the finish, we found that our people were overpolishing. They were spending up to 50 percent more time than was needed and were producing a finish much better than required by customers. That was lots of muda.
Defects and rework
We tend to think of this as a factory problem, but people entering data incorrectly can cause customer problems, foul up inventory records and be the root cause of enormous amounts of muda.
Skills
I have frequently addressed the failure to listen to people, to solicit ideas and to build problem-solving teams of those who know best how the job is being done.
I challenge you to take this list and look around your place of business. Finding and eliminating muda is the sustainable way to increase productivity.
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Richard Randall is founder and president of management-consulting firm New Level Advisors in Springettsbury Township, York County. Email him at [email protected].
