Lean Manufacturing was pioneered by Toyota during the 1950s and since then the lean system has grown heavily popular. It has been adopted by a large number of companies and a vast amount of literature has accumulated over time that describes the mindblowing benefits of lean manufacturing or lean control. Lean manufacturing has five core principles but the main motive or the soul of lean is waste elimination. Apart from that, the focus of lean management is also on synchronizing things according to the customer to accomplish higher sales and better service. However, lit works to grow the efficiency and profits of businesses through the elimination of wasteful activities throughout the business operations.
In Japanese, there is a term for wasteful activities called Muda. In lean manufacturing, Muda includes seven deadly wastes. In the lean system, any activity that consumes resources and produces no value is considered waste. The seven types of waste that must be eliminated according to the lean system are as follows:
Seven Wastes in Lean Manufacturing
Defects are the first type of waste in the lean system. Customers will not accept defective products. All the efforts and resources that go into the production of defective products are wasted. So, in order to derive value from such defective products, companies must add new waste management processes which will help reclaim some of the value from the products which would otherwise land in scrap. Apple, for example, sells refurbished smartphones, laptops, and other products at lower prices. It helps the company obtain some of the value from the products which would have otherwise landed in scrap and generated no financial value. These are the defective products that customers have rejected or returned. These products are then taken to the workshops to identify the defective parts and replace them. Refurbished products are however not marked as new but sold with the label of refurbished. However, that does not mean that refurbished products are defective products. Sometimes the refurbished products can be as good as new.
One of the core principles of lean manufacturing is producing in accordance with customer demand. According to the fourth core principle of lean manufacturing, companies must produce at the pace of actual customer demand and not anticipate or produce in advance since it can lead to overproduction. The traditional batch and queue model had one major disadvantage which was that the companies experienced higher lead times. However, lead times fall dramatically when companies adopt lean manufacturing or the continuous flow model. Overproduction can lead to wastage. It refers to the production of goods before they are actually required. It is considered one of the most dangerous waste problems since it hides the production-related problems of the company. Moreover, when there is an overproduction or a company is making more than it can sell, the company must store, manage, and protect the overproduced items. While on the one hand, it adds extra layers of costs related to warehousing, on the other, if the products are perishable goods, the company will experience losses.
Transportation is also related to wastage in the lean manufacturing system. Transportation does not directly add value to the product. The value chain model by Michael E Porter considers inbound and outbound logistics primary activities in the value chain. However, in the lean manufacturing method, transportation is considered an activity that adds extra costs but produces no value. Whenever goods are being moved around, there is the risk of their loss, damage, or shipment delay. Moreover, transportation is not related to production or it does not transform the product in any manner that the consumer would be willing to pay for. In this way, companies must try to shift production closer to the customer and suppliers so they do not have to move products around too much. It will save time as well as minimize transportation-related costs. Companies must also select their distribution channel mix in a manner to reduce the costs of transportation.
Waiting has also been related to wastage in lean management. In lean manufacturing, waiting is related to various types of processes and activities. When workers are waiting for resources to arrive, it is a waste of time and labor resources. Similarly, other types of waiting include the queue for products to get off the shelves as well as the capital invested in goods or services that have not yet been delivered to the customer. However, many companies adopt processes to manage or reduce this waiting.
Inventory is also related to wastage in lean manufacturing. Inventory may arise in the form of raw materials, work in progress, or finished goods. However, in each form, it represents a type of cost outlay that has not yet produced an income by either the producer or for the consumer. So, if the above described three forms of inventory are not actively processed in order to add value, then it will lead to wastage. Managing inventory is important not just for retailers but for businesses in other industries as well. In electronics, fashion, and other industries too, companies need to adopt excellent inventory management practices to bring inventory costs lower.
Motion is also one of the seven wastes of lean manufacturing. It refers to the actions performed by the producer, worker or equipment. Motion constitutes waste in several cases. For example, a poorly designed production process will require a lot of repetitive and unnecessary action which will add no real value to the product and instead only cause wastage of labor and resources. Sometimes, work design can also cause wastage. Tasks that are poorly designed and require a lot of running around should be redesigned to reduce the amount of motion involved. This will eliminate the wastage of time and labor from the task. It is why companies should focus on how tasks and workspace, as well as manufacturing processes, are organized so that there is no unnecessary motion on the floor. Apart from that motion has significance in terms of wear, safety, and damage. It also includes fixed assets and the expenses incurred during the production process.
Overprocessing refers to the processing of products beyond what is demanded by the customer. It also leads to wastage of capital, resources, and time. Many times companies end up investing capital in equipment that is more expensive than the ones required for production in general or they end up adding many more unnecessary features to the product than the customer needs. While these things may be done in order to make the product more attractive in the eyes of the customer, these things may not really translate into real benefits since the customer will not require those extra features. Spending on a high precision machine when a low-precision-equipment is required also does not serve any extra purpose or generate any extra benefits. It is because that fails to produce anything that increases efficiency or product value. Another major problem with overprocessing is related to people since the people may be required to perform tasks of lower quality than the ones they are qualified for. However, companies must create plans to overcome overprocessing since it generally needs to wastage of both capital and talent.