Manufacturing Waste 

Another way to look at cost-added activities is to say too much or too many. Too much inventory, too many set-ups, too much queue, too much material handling, too many inspections, too many transactions, etc.—they're all cost-added. More than enough to meet the requirement is cost-added. Now, can you begin to make a list of all the cost-added activities in your company?

Now that we've begun to identify the cost-added activities you might ask how we go about eliminating or at the very least, significantly reducing these cost-added activities. We have devel­oped a three-step rule to reducing waste. See Figure 3.

Figure 3. Three-Step Rule for Reducing Waste

First, reduce the waste by 50%. Cut it in half. This will require fundamental, not superficial, change and improvement. Next, reduce it by 50% again, and we will have 75% of the waste eliminated. The last step is to make it 10% of what it originally was, thus taking out or eliminating 90% of the waste in the process. Talk about a paradigm shift for reducing waste, for significant continuous improvement, and for substantially reduc­ing the long-term cost structure and global competitiveness of a business!

This 3-step war on waste can be applied anywhere. It can be applied at home. It can be applied in the community. It can be applied in government (what an opportunity there!), and it can be applied in business. Let's take 3 or 4 examples of waste reduction in a company and walk through the examples and the process. See Figure 4.

The 3-step rule for reducing set-ups or SMED (Single Minute Exchange of Die) is an example of how you can cut set-ups by 90% by taking the cost-added waste out of the set-up.

First, separate the activities that could take place outside the set-up or change-over from the activities that absolutely have to take place inside the time the machine is shut down for set-up or change-over. Watch out now—over half the activities can be moved outside off line or parallel to the inside activities. This will cut the set-up time (last good piece—first good piece) in half. Next, eliminate the adjustments. Eliminate the waste of first piece inspections and adjustments with each set-up by fool-proofing the set-up with automatic checks or failsafing or pokayoke to elimi­nate the waste of adjustment. The last step is to look at changing the process.

The 3-step rule for reducing manufacturing cycle time is an example of how you can cut cycle times by 90% by taking the cost-added waste out of the cycle time. First, reduce or eliminate the queue or wait time between operations. Queue time is generally 50-80% of the total time in a process. It is cost-added waste. Get rid of it and reduce cycle times by 50%. Next, work on reducing the cost-added activities of material handling trans­portation and distance and improving the flow of the process, consolidating, moving operations closer together, and going to a flow versus a functional layout will reduce the cycle time another 50%. That's a 75% reduction in waste before you even look at changing the process. Remember 70%-75% of the costs are in the cost-added activities. See Figure 6.

Here's a 4-step rule for reducing waste when thinking about automating any process. Everybody knows by now that you should never automate a process just as it is. That certainly is an old paradigm. What we should do is look at the total process and look for fundamental improvement (not superficial) and eliminate the waste and improve the process before we automate.

If you eliminate the cost-added activities you'll reduce the process by 50%. If you consolidate the activities that are left you'll reduce the process by another 50% and if you simplify the remaining activities you'll end up automating only 10% of the original process. 90% waste elimination. Again, what a paradigm shift! What a waste! See Figure 7.

To be Continued

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