Ever since the Toyota Production System burst on the global industrial scene, people have written about the “Seven Deadly Wastes” in organizations. However, many have missed one of the biggest opportunities for quick improvement by overlooking one of the deadliest wastes, right under their noses: the inability to utilize the knowledge and skills of their employees.
With recruitment efforts and training budgets continually increasing in order to “get the right people on the bus,” once they are aboard, we often overlook the value of their knowledge, skills and attitudes to build on their strengths. As Jim Collins states in his book, Good to Great, you need to evaluate and develop your people’s assets. The goal should be to put the right people in the right seats to “drive your bus” to success.
This article will review the original “Seven Deadly Wastes,” and discuss the importance of getting everyone in the organization involved to improve all aspects of the operation, including reducing those Seven Deadly Wastes. The Eighth Waste — lack of employee involvement — is the linkage between Lean and Total Productive Maintenance (TPM). We will talk about how to improve the U.S. manufacturing world by taking advantage of our most valuable resource – the employees.
The most important step in helping preserve our country’s manufacturing industry is to instill ownership in our people. There needs to be buy-in to take advantage of people’s abilities and realize the benefits to reduce waste. It will take a lot of hard work to save prosperous jobs for our kids so they don’t have to grow up to learn how to say, “Would you like to super-size that?” Our society is quickly becoming a service industry due to the mass exodus of manufacturing jobs.
First, let’s briefly review the standard Seven Wastes.
- Overproduction – If the organization does not use a pull system to produce based on your customers’ needs, then you will most likely produce more finished goods than you can readily sell. You may also undersell or ship late, not meeting your customers’ demands. You should strive to meet 100% of your customers’ delivery compliance schedules. Overproduction is a waste, since it ties up valuable assets and causes your Materials and Logistics Departments to order more raw materials and produce more work-in-progress (WIP) goods that compounds the carrying costs. Do you ever have to store raw, WIP or finished goods in trailers because you have run out of warehouse space? This is a sure sign that you are producing the wrong mix of product compared to your sales forecast or your customers’ pull requirements.
- Delay (Waiting) – This is also a sign of not having the right mix of raw or WIP materials on hand when you need them. This can be process equipment or MRO components. How often are your craftspeople waiting for the right spare part to fix equipment? Do they ever have to cannibalize other pieces of equipment to get a critical machine back up and running to meet a customer’s need? When was the last time you worked on your vehicle or lawnmower and you reached for a wrench but found it wasn’t there? “Someone” didn’t put the tool back where you wanted it. Now you have to stop working on your task and search for the right tool to complete the job. Applying 5S to workstations can help eliminate these external delays. Another form of waste is an unbalanced work process where one person has to wait for the upstream operator to finish their task. “Takt time,” or the ideal time between phases of production output, synchronized to demand, is used to balance the work between operations to meet the customers’ needs in an efficient manner. Watch a NASCAR pit crew change four tires, clean the windshield and fill the tank in 13 seconds — that’s a balanced operation.
- Transport – All suppliers’ requests for quotes (RFQs) should be evaluated on a landed-cost basis. Many buyers forget about the cost to transport parts — that’s the Logistics Department’s responsibility, right? That’s the easiest way to document the cost to transport raw materials to your dock. Now try to calculate the cost to transport your raw materials, WIP and finished goods throughout your facility. Having a one-piece flow layout will reduce that cost and increase your turns. Using a process flow diagram or a Value Stream Mapping process will help document how inefficient and costly some layouts can be.
- Processing Inefficiencies – Using poor scheduling practices or running incapable equipment or tooling will cause process losses. That is why Standardized Work Practices (SWPs) are so important. Using a cross-functional team to validate SWPs or Standard Operating Procedures (SOPs) is the most sustainable method for instilling ownership and buy-in within the ranks of the most valuable asset you have — the people performing the work.
- Inventory – Excess inventory can be very costly. If the financial organization values your carrying cost at 30% and you have excess inventory in raw, WIP and finished goods, then there should be formal plans that reduce your inventory to increase your turns. Number of inventory turns is a standard metric to evaluate the effective utilization of your assets, that is, your material costs. Excess inventory can be a result of long lead times from your suppliers (internal or external), or the respective reorder triggers. Just-In- Time delivery and Kanban actions can reduce this excess cost. An inefficient workflow can also induce costly inventory into the process.
- Unnecessary Motion – Non-value-added efforts are like attorneys — you don’t realize how much time and effort you are wasting until you analyze the internal and external delays. Using a “dance chart” to document all of your travel time will illustrate how much time and effort you are expending without adding any value to the process or product. This will help you recognize the wastes in ineffective layouts, tooling or practices. Remember the pit crew? They review their performances using a bird’s eye camera view to evaluate any wasted movements and the motion, time and movement of each team member to balance the total operation.
- Scrapped Batches – If you have a plan to become world class to achieve a Six Sigma level of First Time Quality, then you understand the value of 1 PPM in scrap. Enough said. Making product that is out of spec is very costly.
The Eighth Waste
Lack of Employee Involvement – Provided you have the right people in the right seats on the bus, your human resources are your most valuable assets.
Why do we need to involve employees in the continuous improvement process? There are numerous reasons: to create a safer work environment, to improve job security and product quality, increase productivity, improve skills and maybe the most important reason in the U.S. manufacturing community — to remain viable competitors in the world economy. With the systemic outsourcing of many U.S.-based manufacturing jobs, it is imperative that we improve the quality of our work and eliminate waste through the involvement of the employees.
First, there must be a reliability effort in place in conjunction with an Operator Care (OC) initiative. The equipment must be in a repairable state for the people to care for it. The whole intention is to create an environment where the people want to take ownership of their equipment. If the equipment is not reliable, then the other Lean tools and OC initiatives will not be as successful.
Let’s talk about each of these OC benefits. We need a safer work environment, not just because a safer workplace creates a more productive facility, but also because of the increasing costs of health care and lawsuits/insurance. Healthcare costs are increasing at a rate of three times the cost of inflation. Accidents and lost time are expensive. A healthy employee is a more productive worker. Absenteeism is very costly; if your overtime rate is above 10%, then you are spending way too much on a premium that doesn’t add any value to the cost of your products or services.
The days of working for the same company for a lifelong career are long gone, at least for now. Job security also contributes to higher efficiency and morale. If the people feel that they are part of the family and don’t have to worry about the security of their job, they are much more likely to accept ownership and give back to the hand that feeds them.
Morale is a contributor to productivity, safety and quality. Creating an environment where the people want to take ownership will result in a competitive advantage similar to the mini-mills that have revolutionized the American metals industry and created more jobs while providing better quality products at a competitive price — job security! Improved quality is pretty easy to understand. If you are old enough, you may remember a time when you picked up a trinket and if it said “Made in Japan,” it was synonymous with ‘cheap’ or ‘junk’. Now look at how the Japanese products have continuously increased their market share over the last 30 years. They did that by listening to people like Dr. W. Edwards Deming, Shigeo Shingo and Seiichi Nakajima, and implementing their process improvements.
Productivity improvement will be a result of the employees’ involvement. One of the most widely recognized measures of productivity is the Overall Equipment Effectiveness (OEE) metric. This drives the organization to strive for 100% quality and higher utilization of the assets at their purchased capabilities.
Boosting Workforce Effectiveness
When dealing with people we need to be effective, not efficient. We need to be efficient with equipment and processes, but more deliberate when dealing with changing the way people think. This requires more effective training to develop those people skills and create a more proactive workforce.
Once employees have accepted ownership and treat the machines the way they treat their personal vehicles, then the results will pay off. The plan is for them to “Clean to Inspect, Inspect to Detect, Detect to Correct, Correct to Perfect.” If there hasn’t already been a 5S implementation, the workplace should at least be clean and organized. There needs to be a mindset, just as I used the misplacement of the wrench as an example, that there is a place for everything and everything is in its place. People know exactly where their toothbrush and toothpaste are when they need them. Why should the situation be any different at work?
Once the work environment is worker-friendly, autonomous maintenance will flourish. Employees have to treat their entire work environment like they treat their homes. They need to hold themselves accountable for their actions at work.
So, how do we manage change at work and convince people that we need to change our way of thinking and doing business in the shrinking U.S. manufacturing community? As Steven Covey helps us understand, we need to convince our fellow workers, at all levels, that we must start with an end in mind. We need to become more effective at getting the results we need and to do it repeatedly – in other words, sustain the changes so as to eliminate the wastes.
Our competitors are not going to sit on their laurels and wait for us to improve. That is why people like Shingo give us the recipe for success. They don’t believe that we will be sincere and really embrace the need to keep tearing down and rebuilding our processes to achieve continuous improvement. They think that we will water down the purity of the Lean tools and not succeed in our quest to eliminate the wastes that are making us noncompetitive.
We need to adjust our attitudes and choose to become more responsible. We do have the power to change our circle of influence, as a first step toward driving change throughout the organization. We need to effectively train our fellow workers, whether they are union brethren or not, that it is time to develop a win-win plan for change. We must create and control our future together, rather than sitting back and complaining about the deteriorating state of the industry.
There’s an urgent need to utilize the valuable human resources that can help us drive positive change. The ultimate destination of our journey is survival.
About the Author
Edward Bunce is a consultant for Life Cycle Engineering, Inc. (www.lce.com), which provides consulting, engineering and applied technology solutions that deliver lasting results to private industry, public entities, government organizations and the military. Headquartered in Charleston, S.C., Life Cycle Engineering also has offices in Norfork, Va.; Philadelphia, Pa.; San Diego, Calif., Washington, D.C.; and Mayport, Fla.