Take a little bit of time thinking about how you do the standard day to day stuff? Are you efficient, stream-lined? Lean?
If you run a business of a reasonable size, then there is a good possibility that there is waste somewhere in your business. In fact, there is often more than 90% of waste in many standard operating processes.
Sounds hard to believe, doesn’t it? So, consider the following.
Work that is carried out can be classified into two categories: Value Added and Non-Value Added.
Value Added activities are all those activities that strangely enough add value to your customer. These are the things that your customer wants and expects to pay for or things that change the function or form of your product or service.
Non-Value Add activities are all those things that do not.
Some Non-Value Add activities are essential and may be a necessity in order to do the job, but some are inefficient and can be defined as waste.
That considered lets look at how to spot waste.
There is a chap called Tim Woods who exists in every business, and you as business owners need to reduce and eliminate his more negative effects.
T – Transport
I – Inventory
M – Movement
W – Waiting and Delays
O – Over Production
O – Over Processing
D – Defects
S – Skills Misuse
This is about when you move the materials around more than necessary. It could be down to poor layout or planning. When was the last time you reviewed your transport costs?
Producing something to sit around and wait for the next process, which doesn’t start straight away is not adding any value to your business. The more inventory the worse it is. Inventory waste can be in the form of work in progress, raw material or finished goods.
In any of these three forms of inventory, if it hasn’t been sold, it is cash that has been tied up into the material, which the customer hasn’t bought yet– These result in a massive drain on the cash flow!
So, minimise Inventory in all its form as much as possible.
Movement differs from transportation because it refers to the movement of workers and equipment. Think of your team moving around, searching to find things – this cannot be adding value.
In addition, think of your worker’s time lumping equipment around, you cannot be using it to add value and make money, plus the chances of damage increases.
Waiting and Delays
When work in progress and goods are not being worked on, they sit there waiting – waiting for the next process. Waiting means that product is costing the company money and not adding value.
In addition, think about your worker’s time, waiting for information or a piece of equipment to complete their next task.
Think of this as a bottleneck.
Overproduction is making more than your customer needs or wants. Making too many items or parts which in turn feeds into the other wastes.
Valuable time and energy has gone into producing parts that are sitting around consuming space in stores.
Time is wasted processing this stock and the customer hasn’t even bought them yet. Those extra parts need to be stock counted and moved around. All at a cost to the company!
Over processing is about completing more work for the customer than the customer really wants. Such as producing a Rolls Royce when your customer only wants a Volvo or producing a ten-page report when your customer only wants 3 figures.
This can be really hard to spot as so often we do things that we think are necessary, failing to ask the customer about their needs.
Fixing problems costs money and time – Money for the resource to pay staff, lighting, etc to do it again, but also means that you have to push another planned job back in the queue in order to get the rework out! It’s all cost and less cash for the business.
Defects are wasteful and cost money.
This is where you have someone under skilled completing a task, which will lead to defects, or someone over skilled completing a task when their time could have been spent better elsewhere.
I know of a Director that had to empty a cess pit recently, not money well spent!
Take a long hard look – Go on a “Waste Walk” to spot waste in your business and see if you can reduce any of the TIM WOODS that you see.