Waste Not, Want Not
The Seven Waste of Business is a key concept in LEAN and TPS (Toyota Production System) methodology.
T – Transportation
Every time a product is moved, it stands the risk of being damaged, lost delayed, etc. Transportation for the sake of moving product, adds no value that the consumer is willing to pay for.
I – Inventory
Inventory, regardless of being a raw material, WIP (Work-in-progress), or finished good, represents capital outlay requirements. Inventory represents dollars sitting on shelves. Stagnant, slow moving, obsolete, or damaged inventory, is capital being wasted.
M – Motion
Motion refers to the damage and/or use that a process inflects on the entity and/or the equipment, over time or during discrete events (i.e., accidents that damage or injure equipment or workers)
W – Waiting
In traditional processes, a large part of an individual products life is spent waiting to be worked on. In the same ways that employees, function under “hurry up and wait”.
O – Over-processing
Over-processing occurs any time more work is done to product other than what is required by the customer. This also includes using components that are more precise, complex, more expensive or higher quality of which is needed.
O – Over-production
Over-production occurs when more product is produced then required. Over production is considered one of the worst waste, as it hides and/or generates or leads to the other six wastes. Over-production leads to excess inventory, dollars sitting on shelves, which requires the expenditure of all resources.
D – Defects
Whenever defects occur, it creates extra cost due to reworking the part, rescheduling production, or customer quality issues. This in turn can cost labor, returns, more time in WIP, added production resulting in consuming more raw materials, all with cost that cannot generally be passed on to the customer.
Waste reduction is an effective way to increase profitability. The benefit of waste reduction goes straight to the bottom-line.