Removing what’s wasted
Firms which wish to flex with market conditions know that cost control is key in their growth and survival. Revenue growth is important, but it is profit maximisation that ensures business longevity. Firms which achieve above average profits see uncovering inefficiency and irrelevance (waste control) as an ongoing priority, not a one off event to be attacked when profits drop.
“Few people realise that luck is created”
By focused attention on removing the 7 types of wastes noted below, Toyota created its “Toyota Production System” which took it from nothing to becoming the largest motor vehicle manufacturer in the world 1. Its overriding goal is to make operations simple, better quality, faster and lowest cost. The Toyota system requires its leaders to be coaches who guide less senior staff to understand the insidious nature of waste and then root it out.
The seven wastes model
These wastes apply to all organisations, not just manufacturing.
Over production. It is created through a “just in case” mindset. Manufacturing companies may stockpile raw materials and outputs so as to have enough in stock for that high buying customer, amassing holding costs like floorspace, cash, store workers and deterioration. Toyota addressed this by working closely with suppliers so that its parts could be delivered within hours where needed. You may know this as Just in time manufacturing. For service companies this is less straightforward. It’s seen in extra finishing touches the client does not value, marketing events for masses of people at which only a small portion are decision makers with budgets…Steps that are taken ‘just in case’.
Waiting. Occurs whenever time is not being used effectively. Products wait in line to be added to the machine. Reports wait for review. Strategies stay in ‘draft’ until they are perfect. This is time that is consuming physical space, heads and other resources. Again its easier to see in manufacturing operations, but it’s there in service too: When the report is returned to the originator 1 week later (not the same day), she will have to reacquaint herself with the material before making any adjustments. This is time that adds no value to the consumer.
Transporting. Customers do not want to pay for movement of products (who may be people) to get processing done. Transport rarely adds value in their eyes. Locally sourced and rarely moved items have less chance of damage.
Inappropriate processing. The wrong tool or person is used to do the job. Are you using a high precision piece of equipment that a modest tool or machine could do? Are your people failing to delegate, doing tasks that could easily be done by others, and not doing the tasks that can only be done by them?
Unnecessary inventory. Work in Process (WIP) is produced too early, and is a direct result of over production and waiting.
Unnecessary motions … of people and equipment, such as when an engineer is pulled from another division on another floor to do the final check off; where photocopiers are located at the other end of the building and so on; products passing through the same bit of equipment twice.
Defects. These directly hit the bottom line and so can be the easiest to find. Checklists, warranty claims and complaints are ready sources of information.
The model is applied through the process of:
Audit —-> Prioritise—-> Assign to Team —-> Measure results —> Repeat.
The Waste Audit.
The seven wastes give it structure. Cost shows the size of the problem, Ease of removal enables team allocations and helps the change process by selecting projects to ensure early wins. The noted activities fail the objectives (simple, better quality, fast, lowest sustainable cost).
It’s worth remembering:
“Victory awaits him who has everything in order – luck people call it. Defeat is certain for him who has neglected to take the necessary precautions in time; this is called bad luck.”
Roald Amundsen, The South Pole ,2
- Attention to pre planning does make a difference. Every strategic initiative is a test of your leadership. Failure to get what you call for infers you have not set your people up to the task.
- Support and involvement is needed from the top . Your people will mirror those who they report to, so get all of management on board before any programme commences. Removal of waste is a cultural change not a one time project.
- Ensure capacity and capability exists. Asking already burdened workers to take on more risks morale as well as the initiative being ignoring or only partly employed. The ongoing success of any strategic effort is to have people who have the time and capability to put 100% effort into making this work.
- We all want to know we matter No one likes to have the work they have been doing, possibly for years, removed because it’s inefficient. This infers that they were a burden not an asset to the company. How this is managed can make and break a leader’s career.
- Respect is crucial. Everyone has a brain that is full of experience and knowledge, much of it different to yours. Use this difference to make the results better. Listen courteously to everyone and take on board what is said for further investigation or just noting. Different ideas are to be supported and cherished. Leaders like this become known for their deep broad knowledge, the respect they get from the team. We all work harder for someone who sees us as a human being and not a cog in a wheel.
Working out how to manage these at the beginning, is time well spent.
Making it the norm
Helping a firm become focused on continuous waste reduction / improvement is a sensible act. Few people dislike working in environments which are well cared for, and this model ensures that. For cultural change it needs to be made into a normal part of operations, like the monthly payroll or board reports.
- Appoint change champions to be responsible for keeping the process going. Like the accountant who is also responsible for property, IT and company secretarial duties, change champions may have other responsibilities on top of this task but that does not reduce this task as a priority.
- Remain high profile. Along with growth and profit, include waste reduction targets when strategic planning reinforce its cultural standing AND link it back to the strategic priorities in a way that makes the whole strategy make sense.
- Report often. Report regularly and publicly on improvement efforts. Make improvement one of the essential measures in every planning session.
- Make sure authority levels are clear and response is fast. If you find matters are being thrown back and forth you know this has not been achieved. It looks poor when the authorities are wasteful in their own actions, so make authority easy to navigate.
- Have a few simple tools that are known by all. Fishbone, 5 whys, PDCA, and 5S are a good start.
- Create measures. Remember the adage “What gets measured gets done”? This applies here too. Note: These measures should be open to scrutiny just like any other part of this process. The wider impacts of measures are not known until they are employed, hence regular review is needed.
- Lower expectations and set standards high. Accept that people will make mistakes, especially when they first start to do this, and allow for it, all the while exalting them to high standards. People like to rise up, when they are allowed and enabled to do so.
Some concluding comments:
That a lot of effort is unproductive is shown by the low levels of staff engagement (Gallup 3 reported staff engagement levels of 14% Australia), studies by Mindshop4 covering businesses in Australia, United Kingdom and USA found as much as 30% of expenditure is wasted. In 2014, Deloitte5 found Australian companies self imposed $1.55B of red tape (costs that clients do not consider value producing).
It seems humans are dab hands at creating unneeded effort.
Your firm could be one which goes against the trend. Will it rise?
(1) Wikipedia, Lean Manufacturing, Accessed March 15, 2019,
(2) Collins J, Hansen MT 2011, Great by Choice, Random House
(3) Gallup 2019, State of the Global Workplace, Accessed September 16th, 2019
(4) Mindshop 2014, Waste Workbook Manual
(5) Deloitte 2014, Get out of your own way: Unleashing productivity, Accessed September 16th, 2019