Saying “no” to waste – Step 1: Identifying wastes

Leaking money

Throwing money to trash is not the intention of business, obviously; nevertheless, despite this premise, is easy to find companies expending money in operations without adding value to the final product, which factually is a waste.

That´s why I am starting a series of three posts to guide you through implementation of “lean logistics” in your enterprise. Lean logistics is the application of lean manufacturing principles to supply chain management. Basically lean logistics pursues the two F´s: effectiveness and efficiency. Being effective, in short words, means getting the right things done, the “what”; being efficient is doing those things without wasting resources, the “how” (Baudin, 2004).

The question is: Are you being effective and efficient in your supply chain?

Hands holding traditional and energy efficient lightbulbs (Taken from http://blog.thehigheredcio.com/2011/08/31/efficiency-vs-effectiveness/)

There are firms operating for years following same procedures, creating “workshop blindness”; this is when an operator or executive after repeating a defect during a long time becomes unable to see the defect. It turns out to be a regular practice. So, the first step to go “lean” is identifying the opportunities in your processes.

Waste is defined as “anything other than the minimum amount of equipment, materials, parts space and worker´s time, which are absolutely essential to add value to the product” (AlRifai, 2008). Certainly the 7 wastes is a very common subject, it is a mode, and therefore I will not go deep on them. There are specialized books dedicated to this important topic that you can consult if you are not familiarized. The illustration below is a quick reference to them.

7 wastes Lean Logistics

Commonly, the “workshop blindness” appears as a virus in the system when we stop caring of details, the small things I mean. A good exercise is to deploy your processes is smaller pieces in order to identify easier the chances for improvement.

In the example below you can see how, from shipping process, the sub-processes of labelling are deployed step by step allowing seeing much better the opportunities. What wastes could you detect?

Shipping process example

Manual capture, movements to other office, re-validation of labels, transportation to other areas, search of products in warehouse are a few examples of findings where money could be leaking in your practices.

Decomposition of processes has the target of maximize the added value of each step and minimize the costs of operation, it can be applied to design complete new systems or as a roadmap to assess and improve existing systems (Mitsuishi, Ueda, & Kimura, 2008).

Once that you “zoom in” in your process map, the discussion is which steps add value to your product. Customer value is the value that customers will obtain from a product or service compared with the total cost of obtaining the product (Bjerreskov Dinitzen & Bohlbro, 2010); so the better utilisation of employees or machines; synchronisation of the supply chain; faster turnovers of stock and assets and another actions will help you to increase the customer value; your product will be more competitive in terms of quality, price or delivery time which make happiest consumers. Any other activity that is not helping you to optimise your resources and satisfy your customer expectations is a non-added-value item that must be eliminated.

Returning to example of labelling process. The 4th step is “go next door office”, think about: how much time is taking the operator to pick up the labels? That is effective but it is not efficient. Moving the printer to the operator´s office will save seconds that multiplied for the repetition of that process could mean a lot of parts more shipped during the year, which in terms of business makes more sense than drop your money to trash.

Identifying room for improvements could be a painful process; it will be common to repeat questions like: How could I allow waste get to my company? Why I didn’t see it before? If you are thinking that your process is perfect you need more help than others. Contact me for further discussion, we can find together the best way to add value to your supply chain.

Well, remember that this is the 1st delivery of a series of 3. So, click the button Follow in the bottom right corner to receive future posts in your email. Second part will be published on Aug 12th. Keep pending!

Thanks for reading, until next time!

Alan Rodríguez

@AlanRodEsp

SOURCES
AlRifai, N. B. (2008). Optimizing a lean logistic system and the identification of its beakdown points. California: University of Southern California.
Baudin, M. (2004). Lean Logistics: The nuts and bolts of delivering materials and goods. New York, USA: Productive Press.
Bjerreskov Dinitzen, H., & Bohlbro, D. (2010). Value-added logistics in supply chain management (1st ed.). (L. Krogh Jensen, Ed.) Copenhagen, Denmark: Academica.
Mitsuishi, M., Ueda, K., & Kimura, F. (2008). Manufacturing Systems and Technologies for the new frontier. The 41st CIRP Conference on Manufacturing Systems, may 26-28, 2008, Tokyo, Japan. Tokio: Springer-Verlag London Limited.

 

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