Tag Archives: identifying and eliminating waste

Identifying Waste?

waste is often the elephant in the room that nobody sees

As suggested in our previous post, our approach to Continuous Improvement (CI) has always involved a focus on the waste, as opposed to simply focusing on ‘improvement’.

What’s the difference?

Most of the big waste is hidden in plain sight — long-standing business practices that compensate for a problem that has not yet been solved. The root causes of the problem have not been addressed, and instead, compensating steps have been built in to avoid bad outcomes such as poor quality or lost productivity.

Compensating for Unsolved Problems
For example, a maintenance organization for a power plant “walks down” each preventive maintenance job to make sure the instructions are clear and the parts are available. A financial services company sends every transaction to “QC” for inspection and corrections. A financial services company sorts all of the transactions by client and by transaction type before processing them. Inventories are built up just in case, and long production runs are scheduled to avoid long set up times. Each of these is compensating for and masking an underlying problem that has not been addressed.

In fact, whenever you find yourself trying to find the best trade-off between two evils), you can be sure that you are masking underlying root causes which, if addressed, would lead to breakthrough business improvements. Nearly all the breakthroughs of the past forty years are a result of seeing waste and addressing the underlying causes where the competitors simply saw standard operating procedures.

The secret to doing better than the “optimum” is in surfacing and addressing the hidden assumptions.

Optimization is the process of evaluating the “trade-offs” between two things that seem to be in conflict. For example, as you increase inspection, you increase costs but you decrease the defects that get through. If you shorten your production runs, you can reduce your inventory but your production will decrease because change-over time required to change machines from producing A to producing B means more downtime. With optimization, you try to find the exact point that minimizes the total cost.

But every optimization problem has some “givens.” Taiichi Ohno, creator of the Toyota Production System, and his followers achieved breakthroughs by shifting their focus from finding the best “trade-off” to working on these “givens.” When we talk about “root cause” analysis, we mean to focus on those “givens” or “underlying assumptions” that cause you to try to find the path of least waste. Once you find and address the underlying cause, assumption, or given, you can find and move to an optimum that is at a totally new level! And more room for improvement opens up as you make more progress on the “givens.” Instead of diminishing returns you have expanding opportunities!

But people are most often risk averse. It is very uncomfortable and difficult for most people to acknowledge waste before they can envision a solution for it. An organization will not embark upon a sincere search for waste without strong leadership questioning why, encouraging and rewarding the identification of waste, and challenging conventional wisdom.

The ability to recognize waste is a rare and valuable skill and it grows with practice. Senior management needs to nurture the practice if it is to take hold within the organization. Until an organization recognizes the waste for what it is, there will be no full court press to eliminate the underlying problem.

3 Proven Steps
If you’re wondering how your organization might nurture the ability to recognize the waste embedded in your business processes, here are three suggestions for getting started:

  • Constant questioning. Ask yourself and everyone else if you would need this if everything were right, and right the first time.
  • It sometimes helps to bring in outsiders to help you look for waste, because it is easiest to think “outside the box” if you are “outside the box.” Customers and suppliers or people from adjacent processes may challenge assumptions we don’t even realize we are making.
  • Benchmarking internally, within the industry, and in different industries can also raise questions and help you recognize waste that you have overlooked before.

A Closer Look at Value-Added Work

value1As noted in our previous post, the most elementary definition of value-added work is “work our external customer would be willing to pay for. if they know what we were doing.”

Sometimes this is a product, sometimes a service, and sometimes a combination of product and value adding service. For example, a value adding distributor delivers the product to a work-site, but can also prepare or pre-stage the material so it is ready to be put into use, saving the construction company time and money. The value goes beyond the product they sell to the service of presenting it in the form that is ready for use.

But a large portion of every organization’s resources goes not to true value creation but to all the additional activities we have in place because we have not yet found a way to make them unnecessary.

For example, if given the choice, the customer would be willing to pay us to do the job right, but not to pay us to do it wrong first and then fix it.

Would they be willing to pay extra for error-prone processes that require us to inspect the output to try to find the mistakes?

Would they be willing to pay us to warehouse inventory (as it slowly grows obsolete), or to build in features they would never use?

Would they be willing to pay us to wait for the work that is held up by our bottlenecks?

Adding Value to the Bottom Line
The customer may be willing to pay the price we ask, but all of the waste is on our dime. Every bit of it we can eliminate can be taken right to our bottom line.

Many people and functions play a vital role in helping the internal customer provide value for the external customer by providing key enablers such as technology, safety, or information to those creating the value for external customers. Some of these people may also remove the complexities or problems from work, possibly through inspection and rework,  or through process improvements.

If we can eliminate the root causes of these complexities and impediments, the time we spend removing them can be redeployed to creating more value. However, if an organization is not yet well aligned and 100% focused on creating value for the external customers, internal customers may actually create waste by requesting products or services from internal suppliers (i.e., coworkers) that do not create value. This may include attendance at non-value adding meetings, reports that do not increase ability to serve external customers, data or analysis that do not increase ability to provide more value to the customers.

We can manage this risk and increase alignment by constantly challenging and rethinking work to ensure it creates value for external customers or helps internal customers create value for external customers.

In our next post we’ll take this final point further, and identify specific steps for increasing the percentage of work that is value-added.