Applying Six Sigma Principles to Client Operations: Waste
Waste shows up in many forms and in all projects. This happens regardless of industry, product, or service being provided. Nothing is perfect, no matter how hard we try. That doesn’t mean that the effort to reduce waste is for nothing. Anytime waste can be removed from a product or process is a plus regardless of how big or small.
A “waste” is defined as “anything done to a product that adds cost without adding value.” Typically, there are eight “wastes” that could be encountered during the production of a product or providing a service. You can remember what these “wastes” are using the acronym DOWNTIME.
- Defects
- Overproduction
- Waiting
- Non-utilized Talent
- Transportation
- Inventory
- Motion
- Extra Processing
Defects are any attribute of a product or service that the customer finds unacceptable or objectionable. It could be a device that doesn’t function as it is supposed to, or the item is apparently of poor quality and will not last very long. It can be a document deliverable that is inaccurate or unusable.
Defects that occur during the manufacturing process can be attributed to multiple sources. To truly improve the process, you need to find the root cause of the problem. To prevent defects from reaching the customer, a manufacturer may add inspection steps (see blog post “The Cost of Poor Quality”) to accomplish this. This does not prevent the defect from being made and will only result in increased costs and lowered profits. Preventing the defects from happening in the first place is the most cost-effective way to address them. This entails a thorough examination of the process to determine the root cause.
Overproduction is a common issue not always associated with “waste,” but it is one nonetheless.
If a company manufactures a product that has several components to be assembled, supply streams must match the overall production rate to be efficient. If two of the components are easy and fast to make, the mindset of “make as much as you can while you can” leads to downstream storage issues or possibly scrapping the material if changes must be made later.
Overproduction can also be found in documentation and other non-tangible deliverables. If your client asks for a one-page summary of a project to date, sending a five-page document is a waste. Not only will your client be required to wade through extraneous information to get to what they wanted, you will have wasted time preparing it in the first place. If you are thinking you are “going the extra mile” in doing this, you’re not. It will not make you “look good” in the eyes of your customer or client.
Waiting is the waste of time. Waiting for materials to be delivered, waiting for “Work in Progress” to move to the next operation, waiting on operators, etc. Time spent waiting is not productive.
Sometimes, simple changes can reduce time loss due to waiting. If materials need to move between two rooms and those rooms are connected by one door, two-way traffic is difficult. By adding another door, a traffic pattern can be established to smooth the flow of material and reduce the time lost by waiting.
Changing the way product deliveries are scheduled can also greatly affect the time lost to waiting.
Non-Utilized Talent is always a waste. People have a variety of talents, and no one has the same unique combination of talents as anyone else. Finding the right person for the right job is often extremely difficult. Many times, you may see job requirements that specify the need for an MBA when the work is easily accomplished without an advanced degree. Expanding the perceived job requirements is a “shotgun” approach used because companies will almost always try to look for the most talented, or skilled, person they can find. That may not be the best approach when waste is considered. A more tailored approach along with a well-defined job description would do well in reducing waste here.
Transportation of people and materials is a cost and a universal reality for any company. These are costs that simply cannot be avoided so, the trick is to identify and minimize those costs as much as possible. A disorganized work area or office for example falls under this heading. Disorganization costs time and effort in moving things from one place to another, or trying to find where you put that report you wrote yesterday, without adding any value to the final product. A production operation that does not utilize a logical workflow will add cost and decrease efficiency simply because of the extra transportation needed as well. Good organization will reduce wasted time and effort as well as stress and aggravation.
Inventory is another item not commonly associated with waste, but look a little deeper. Having more inventory on-hand than is needed by customer demand isn’t adding to the bottom-line, it’s taking away from it. Time, effort, and money have been put into the manufacture of components, storage, moving things from one place to another, etc. Holding those components or products would aid in the ability to quickly react to increased demand, but potential gains from sales are just that, “potential.” They have not been realized yet, and in the end, may not be realized at all. Having too much on hand is not a good thing.
Motion is closely related to Transportation as far as waste goes. The difference is that motion is more restricted to one specific thing or process. For example: executing more steps than necessary to complete an assembly, or too many people required to approve a document or report. In both examples, a lot of motion is performed on a particular thing when not all of it is actually necessary.
Extra Processing is doing more work on a product than is necessary, like printing in full color when black and white is acceptable, or performing an operation manually when it should be automated. For an extreme example, consider polishing something, say a car’s hood, just a little bit more than required. You might end up taking off too much underlying paint, and ultimately, the piece ends up in the scrap pile. A waste of time, effort, and possibly material for no appreciable gain in quality or increase in value.
All the above examples of “waste” take time, money, and effort. All end up adding to costs. No company wants to add to the cost it takes to manufacture or produce anything. They are in business to make a profit and waste, any waste, lowers that profit potential. Many times, quite substantially. How reducing waste is addressed is different for each situation. They all have a correct solution to reach the optimum outcome. Our job is to find them.
Tomorrow, we will finish up this series with a question that should be asked at the beginning of every project…
Did you miss yesterday’s blog? Read it here.