Lean Manufacturing can offer a critical advantage to small and medium-sized manufacturers (SMMs) competing in the global market. In addition to integrating automation with new technology and building a network of strategic partners, continuous improvement and customer-first approaches can allow these manufacturers to stay competitive.
Success in manufacturing today demands storing product efficiently, creating value in distribution and shipping product quickly and accurately. These skills are a third-party logistics team’s core competencies. Defects and a recall can halt your production if your floor space cannot handle the added inventory.
How can a 3PL help eliminate these areas of waste and provide value to your product stream?
What is Waste in Lean Manufacturing?
In lean manufacturing, waste is any expense or effort that is expended but which does not transform raw materials into an item that creates “value” as defined by the customer. The removal of waste within an operation is a core principle in lean methodology. Within in any business, one of the most dramatic drains on profitability is waste in the form of time, material and labor. But the issues may also be related to the utilization of skill-sets as well as poor planning.
Value-added work directly creates the features, characteristics and benefits that the customer desires and is willing to pay for. Non-value-added work is made up of tasks that the customer does not care about and does not want to pay for.
To be considered value-added work, the following criteria must be met:
- Work that a customer is willing to pay for
- Work characterized by change in form or function
- Work that is performed properly the first time
Lean Manufacturing’s 8 Wastes
Lean Manufacturing has classified waste into eight categories. An easy way to remember them is to employ the acrostic to represent eight different types of waste within companies.
1. Defects
The value of a quality 3PL partner increases exponentially if you have a potentially defective product or enter a recall period. You will have to store the defective product and safely monitor your product to ensure that it is not contaminated. This will involves a person who will coordinate the reverse logistics and shipments to an isolated area.
Off-site storage can alleviate many of the issues during a stressful defect situation; however storage space is not the only problem for many manufacturers. The workload doubles with defective products. Flaws that get detected during manufacture or inspection can be addressed in-house but may result in more time, money, and resource costs as well as customer delivery delays. Defects identified after sales or transfers can result in product returns, dissatisfied or lost customers, partial or full refunds, and additional costs or legal action resulting from the customer’s use of a defective product.
Outsourcing logistics to an expert is a must. Utilizing a 3PL for your logistics operation also reduces the number of touches in a recall situation.
If a product or service does not perform as expected by the customer, it causes significant waste in the value stream, including:
- Defective products scrapped at the quality control stage
- Products returned to the manufacturing stage to be corrected or reworked
- Handling product returns
2. Overproduction
When a warehouse overproduces the levels of inventory needed to meet demand, this is known as overproduction waste. Overproduction often leads to the waste of resources and time. Any amount of time or resources used to produce a product beyond the customer’s requirements is considered waste.
Overproduction usually occurs with large batch sizes, inaccurate demand planning and poorly designed processes. Improved inventory management aids demand planning and decreases the likelihood of overproduction. As with any pendulum, preventing loss of sales based on scarcity and low inventory can swing too far in the other direction.
If your products stack up too high, you will see waste through:
- Time spent producing materials that don’t result in a sale
- Redeploying personnel and resources that are being lost to other tasks or production
- Movement, storage, shuffling, and potentially reworking materials
- Poor employee engagement and performance
3. Waiting
In the office, waiting waste can include waiting for others to respond to an email, having files waiting for review, ineffective meetings, and waiting for the computer to load a program. In the manufacturing facility, waiting waste can include waiting for materials to arrive, waiting for the proper instructions to start manufacturing, and having equipment with insufficient capacity.
While some tasks and activities take place simultaneously, most manufacturing stages rely on a sequential process for completion. Waiting-related waste may include:
- Waiting on the availability of raw materials, partially manufactured products or information required to complete a job
- Differences in processing time across stages; line imbalances (e.g., if Part B gets done before Part A)
- Shipping delays
- Machine repair and maintenance
4. Non-Utilized Skills and Creativity
This waste occurs when organizations separate the role of management from employees. In some organizations, management’s responsibility is planning, organizing, controlling, and innovating the production process. The employee’s role is to simply follow orders and execute the work as planned. By not engaging the frontline worker’s knowledge and expertise, it is difficult to improve processes.
Non-utilized talent could include insufficient training, poor incentives, not asking for employee feedback, and placing employees in positions below their skills and qualifications. In manufacturing, this waste can be seen when employees are poorly trained, employees not knowing how to effectively operate equipment, when employees are given the wrong tool for the job, and when employees are not challenged to come up with ideas to improve the work.
5. Transportation
Waste in transportation includes movement of people, tools, inventory, equipment or products further than necessary. Excessive movement of materials can lead to product damage and defects. Additionally, excessive movement of people and equipment can lead to unnecessary work, greater wear and tear, and exhaustion.
In the office, workers who collaborate with each other often should be close together. In the factory, materials necessary for production should be easily accessible at the production location and double or triple handling of materials should be avoided.
Some of the countermeasures to transportation waste include developing a U-shape production line, creating flow between processes, and not over-producing work in process (WIP) items.
6. Inventory (Excess)
Inventory is considered a form of waste because of the related holding costs. This is true of raw materials, WIP and finished goods. Over purchasing or poor forecasting and planning can lead to inventory waste. It may also signal a broken or poorly designed process link between manufacturing and purchasing/scheduling. Lean Manufacturing does not just focus on the factory but also requires process optimization and communication between support functions.
Purchasing, scheduling and forecasting can have a version of standardized work in the form of defined minimums and maximums. Purchasing raw materials only when needed and reducing WIP and eliminating or narrowing the definition of “safety stock” will reduce this type of waste.
Common Causes of Inventory Waste include:
- Overproduction of goods
- Delays in production or ‘waste of waiting’
- Inventory defects
- Excessive transportation
7. Motion
Motion waste is defined as any movement of people that does not contribute added value to the product. This can include moving equipment, reaching or bending, or gathering tools more than necessary, as well as unnecessarily complicated procedures. Motion waste is often caused by ineffective plant layouts, lack of visual controls, poor process documentation or poor workplace organization.
8. Over Processing
Manufacturing processes change significantly over time to reflect industry standards, raw material and equipment availability, government regulations, environmental concerns, and changes in customer needs. Management level changes may receive high-profile attention, but working processes do not always undergo comprehensive re-evaluation simultaneously.
Over-processing refers to any redundant effort in production or communication that does not add value to a product or service. Over-processing waste includes endless product or process refinement, excessive information, process bottlenecks, redundant reviews and approvals, and unclear customer specifications. It is caused by decision-making at inappropriate levels, inefficient policies and procedures, lack of customer input concerning requirements, poor configuration control, and spurious quality standards.
When you work on a Lean waste review and action plan, keep an eye out for any steps or habits primarily based on “this is how we have always done it” rather than current manufacturing needs. And whenever work processes change, encourage managers and workers to evaluate the complete set of steps within that stage of work to identify other efficiency opportunities.
What Are the Best Lean Waste Reduction Strategies?
Eliminating any form of waste involves five methods:
- Making waste visible, which helps you become more aware of the volume of waste.
- Recognize it, by being more conscious of the waste you are creating.
- Being accountable, by defining who in the organization is responsible for the waste.
- Measure the waste, by defining the size and its impact.
- Reducing or removing waste, which you can achieve by the following actions:
Eliminating any form of waste involves four steps:
- Stopping it, by ceasing it immediately.
- Reducing it, either by streamlining manufacturing methods or another practice such as automation.
- Merging it with another activity. For example, if you are stuck in the waiting portion of the task, you can merge it with another activity to potentially double productivity.
- Delegate it, either by outsourcing it or addressing the fundamental issues underpinning it.
The FLEX Logistics Team is Here to Help!
How do you find this waste in logistics operations or any aspect of your business? The easiest way is to simply go to areas of concern and just observe. Bring a pad and pencil along with a list of the types of wastes. See how many of the wastes you can identify then develop an action plan for resolution. To take an even deeper dive, develop a process flow map that identifies value added and non-value added steps in a process. Try to eliminate as many of the non-value added steps as possible.
Our team understands the importance of getting your products to the market. That is why we aim to understand your business and build lasting relationships with you and your team. Whether you are looking to add a new warehouse to your existing operations, growing and need to increase your distribution efforts, or starting a new company, FLEX has the solutions to meet your supply chain needs.
Contact us today to discuss your current and future warehousing and logistics needs. We will work together with you to understand your requirements and develop a solution that will set you up for future success.