Eliminating wasteful activities in processes to improve efficiency and serve customers better is at the core of lean methodologies. Eight types of non-value adding activities are targeted to optimize operations.
These activities are steps in a process that the customer is not willing to pay for or are not crucial in creating value for the customer.
Reducing or removing these activities can result in significant savings for the company. Studies suggest that up to 50% of a company’s resources can be devoted to unnecessary tasks, often referred to as hidden costs.
For instance, a customer ordering a Coke without ice, but receiving it with ice, creates waste and inefficiency. The vendor must throw out the drink, waste time, and resources to make a new one without ice. This also affects customer satisfaction and the waiting time for other customers in line.
Deadly Waste in Business
Based on the lean six sigma book, waste is a work process activity that cannot provide added value to the processing of raw materials in a certain value stream.
So, based on this explanation, we can draw the conclusion that waste is garbage or waste that must be disposed of or must be eliminated.
This is due to the cost of waste for the company so that later it will cause losses and reduce the profit level of related companies.
In addition, materials will be wasted without the value stream in the waste, so resources that can provide added value to production will also be destroyed.
Broadly speaking, two basic types of waste must be considered when analysing eliminating waste, namely obvious waste and hidden waste. Obvious waste is a type of waste that is very easy to recognize and can be stopped immediately using minimal or no costs.
Whereas hidden waste is a type of waste that can only be eliminated or disposed of using the latest work methods, certain technological assistance, or establishing new policies.
Hidden Wastes Types
To cut costs, companies must first identify these hidden wastes and implement a plan to eliminate them.
1. Defects and Scrap
The creation and manufacturing of products that are faulty, require rework, repairs, or result in scrap is known as defects and scrap.
This type of waste can also occur in information systems, leading to miscommunication and loss of information. Not only does this result in wasted material, but also wasted time and human resources.
This can result in customer complaints, returns, reworks, and reduced satisfaction.
2. Overproduction
The production of more than what is required is referred to as overproduction. This type of waste often goes unnoticed, but it has a cascading effect, leading to the creation of other types of waste.
Overproduction can be caused by lack of resources, incorrect sales volume estimates, a desperate attempt to avoid late deliveries or to have adequate inventory during long changeover times.
3. Waiting
Waiting time before the next processing step is known as waiting. Examples of waiting include waiting for a meeting to begin or waiting for a prior step to be completed in a production line.
This type of waste can be caused by lack of raw materials or an imbalance in workload among employees and shifts.
4. Non-Value Added Processing
Performing activities that do not add value to the product or service from the customer’s perspective is known as non-value added processing.
This refers to excessive manipulation and modification of final products or services, beyond what the customer expects and is willing to pay for.
While sometimes it may be tempting to make products even better than what the customer expects, it is important to first determine if the customer will pay for the extra effort.
A simple example of over-processing is when ticket counter reps unnecessarily put printed tickets into an envelope before handing them to the customer, who then discards the envelope.
5. Transportation
The movement of material or data from one location to another is referred to as transportation. This involves touching, moving, and relocating raw materials, tools, finished goods, etc. for use at different stages of a process.
While transportation is necessary for the production of a finished product, it is one of the activities that the customer does not care about. To save time and reduce potential risks, this type of waste should be minimized.
6. Inventory
The excess supply of materials is known as inventory. This is created when more supplies are ordered than what is actually needed and inventory tracking is poor.
Anything that is collecting dust or stored in obscure, infrequently utilized corners is likely to be inventory in excess, which will soon become obsolete or spoiled. The added burden is that money is being spent to store it.
7. Motion Waste
The movement of employees and equipment that does not add value to a product or service is known as motion waste.
This includes excessive walking, excessive effort or process steps such as reaching far above one’s head to complete a task, and reversing or undoing actions, such as putting down components and reversing a fixture each time a process is completed.
8. Unutilized Employee Skills
The failure to utilize an employee’s abilities, skills, and experience to the fullest extent is known as unutilized employee skills. Having employees with good ideas and experience is a valuable resource, and ignoring their input is a wasted opportunity.
Employees are in the best position to identify issues with processes and suggest improvements.
Sharing ideas is beneficial not only for the company, but also for the employees, as they will feel valued, motivated, fulfilled, and more engaged with the company.
What are the Activities in Manufacturing?
As previously mentioned, waste is any form or thing that cannot add value to the product. That means waste has a material form that must be disposed of, including time, energy, and certain work areas.
So, if we look at it in terms of added value, manufacturing companies have 3 main activities, viz.
Previously, when viewed in terms of added value, manufacturing companies had 3 major activities, namely:
- Activities that have added value are often called value-added activities (VA).
- Activities that do not have added value or are often referred to as non-value-added activities (NVA).
- The influence of activities that do not have added value, but are needed, is commonly referred to as enabler activities or business non-value-added activities (VE / BNVA).
As we mentioned briefly earlier, the way to minimize waste is to use lean manufacturing. The goal is to keep losses to a minimum, commonly referred to as zero-waste.