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Manufacturing Waste 


PART III. 

 

Finally, there is a 4-step rule for waste elimination on the journey to world class performance. This can be used to take the cost-added waste out of the total business process as you continually improve performance on your journey to world class.

If you have implemented MRP you should have seen a reduction in some cost-added activities. With Class A MRP II there should be another reduction in cost-added activities with the increased performance. With JIT and TQM there should be an additional reduction of cost-added waste and increased reliability in perfor­mance. And, with world class performance, 90% of the cost-added activities. The waste and the variability of performance should be eliminated.

You can use the 3-step or the 4-step rule on any waste that exists in your business. Take any one of the wastes that we've identified or any other waste that you find in your business and cut it in half, then cut it in half again, then make it 10% of what it originally was. Declare your own war on waste and watch waste waste away.

By now you are probably well aware that we are talking about change—changing the way we do things, changing the way we think, changing our paradigms. But change is not easy. There is usually resistance to change. See Figure 8.

• Not Familiiar

• Uncomfortable

• Affects Status Quo

• Fear of Unknown

• Threatens Security

• A Knowing Organization

"We've Always Done It that Way."

Figure 8. Resistance to Change

This resistance to change must be overcome with education and understanding—understanding the reason for change, the why should we change and encouragement and motivation to make the change. See Figure 9.

• Survival

• Better Way

• Eliminating Waste

• Continuous Improvement

• Real Job Security

• A Learning Organization

Familiarity is Confidence 

                     Figure 9. Reasons for Change

Change is usually caused by one of three things—crisis can cause change to take place. Crisis is a great motivator but usually not the best. An inspired leader may catch a vision of the end state and lead the charge for change. The people may rise up and organize the change. The best possible scenario is visionary-inspired leadership together with educated and willing people. See Figure 10.

• Crisis

• Inspired Leader

• Will of the People

Figure 10. Causes for Change

This change in thinking, change in paradigms, change in the way we do things regarding costs-added versus value-added and a war on cost-added waste has produced world class results in compa­nies and prepared them to win the war of global competition.

Conclusion

Wage your own war on waste. Determine the difference between value-added activities (30%) and cost-added activities (70%). Continuously improve the value-added activities but eliminate, get rid of, do away with the cost-added waste activities. Use the 3-step rule for reducing waste—cut it in half, cut it in half again, then make it 10% of what it originally was and you will signifi­cantly, fundamentally change the long-term cost structure of a company and prepare your company to win the global war. Try it—you'll like it!

Subject

Before After

Management style

Accounting- Operations-driven

driven

Decisions

A few people Throughout the

only organization

Top management planning process

None Structured monthly and biweekly

Employee morale

Greatly improved

Employee turnover

44% 14%

Product flow

Scenic Structured flow

Floor space

No additional space reauired to support 72% sales increase

Stockroom space

Decrease by 25 %

Setup time

Many cut by 90%

Cycle time

Reduced by 60%

Work-in-process

Reduced by 87%

Safety stock

30 days 5 days

Delivery performance

71% 91%

Production plan

52% 98%

Scheduling

Weekly Daily

Inventory accuracy

Not measured 99%

Bill of material

Under 50% 99%

Sales

Increased 72%

Performance measurement

Financial only Functional and financial

Total overall performance

27% 94%

Earnings before tax

Increased 562%

Figure 11. Detroit Diesel Results


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