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Procedural Adherence and Risk White Paper

Procedural Adherence and process discipline are achievable – but only when they’re treated as behaviors instead of tasks.

(This article is an excerpt from our Procedural Adherence and Risk white paper. Click here to acquire the full document in a downloadable format).

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Procedural Adherence iconAlmost never do people violate procedures with bad intent. When it happens, it is enabled by a vague work culture coupled with urgent product and service demands. The effects of rules broken ripple through the organization with a range of negative consequences: personal safety, financial results, employee morale and public perception. Learn how to reduce procedural adherence problems and boost performance with behaviors that influence how employees view and deal with risk.

The enterprise works hard to define and defend organizational procedures to maximize speed, accuracy and return — and still, rules are routinely broken. Individuals and teams opt for apparent shortcuts that appear to speed things up, but instead delay progress, sink performance or worse: put people in harm’s way.

Could it be that employees are wired to break the rules? With certain cultural ques; yes.

People view and manage risk at a personal level. This sometimes results in actions that oppose the stated values of the enterprise which include adherence to procedures and rule-following. But there is a contradiction here. Instead of diligent procedural adherence, the enterprise is often more concerned with chasing (perceived) fast results and near-term profit at any cost.

The translation: The true value of the enterprise is that it is actually ok to break rules, especially when a customer-facing issue or revenue stream is in play. From the point of view of the individual faced with the pressure of “getting the job done” it’s simply less risky to violate some procedures to keep the machine moving. This fundamental misalignment of values is a breeding ground for mistakes and ultimate poor performance – including and perhaps especially, catastrophic events.

Achieving a state of better procedural adherence — that is, predictably getting employees to stick to predefined processes and standards — is a losing battle for many organizations. They desperately want people to follow the rules, yet their own culture drives decisions to the contrary. Why? Because everyone treats procedural adherence as a step in a process instead of a behavior motivated by perceived risk.

Many factors impact how employees comply with procedures: company culture, environmental complexities, the quality of existing support systems, and human nature. In this white paper, we’ll break down what drives employees to behave the way they do, so you can recast your organization as one where procedural adherence is the norm.

The Safety Paradox

A popular consensus is that it’s easiest for people to follow safety rules. While a narrow view, it’s useful to illustrate some truths about risk.

The basic reason we enjoy some measure of success with procedural adherence in safety matters is because unsafe behaviors are visible and may result in immediate consequence.

Safety rules tend to be easier to adopt because violations are more visible, and consequences are bad for both the individual and the enterprise.

But there is a more fundamental reason why. Accidents cause personal harm and enterprise disruption. In other words; failure to follow the safety rules can be bad for everyone. This alignment – a mutual understanding of risk – serves to induce a state of better procedural adherence with respect to safety matters.

Safety programs further reinforce these notions by stating that anyone can spot and audit unsafe behaviors and must do so as part of a “safety culture.” Unfortunately, easy-to-observe violations cause only a fraction of all incidents. By contrast, invisible missteps tend to stay buried deep inside complex procedures, only coming to light when something’s gone very wrong.

Given this insight, it’s all the more astounding to realize that, even where it’s clear that procedural non-compliance hurts everyone and rules are explicit, people will still make choices that put themselves and others in harm’s way. When this happens, it tells us a lot about the underlying values of the enterprise and how we all think about and deal with risk.

Two Modes of Thinking Affect Risk Behavior

A procedure is a complex chain of tasks and processes that are linked and sequenced to deliver a product or service to a customer. In that “value chain”, many hands touch and impact deliverables: individuals, functions, departments, service providers, suppliers, partners and so on. Each actor has visibility into their part of the chain, but rarely to the ins and outs of the entire system, nor the potential cascade of consequences that could arise from a misstep.

Mostly, people move through the day doing their job, responding to inputs, and reacting to issues as they arise. Occasionally, there’s a need to divert attention to a more complex problem, but mostly it’s about turning the crank. Immediate surroundings and cultural norms — “the environment” — drive much of their behavior.

Does “get the job done” trump “do the job right” in your organization?

The pressure to perform follows a few main themes: Keep things moving, be efficient, manage costs and assure good quality. No matter what anyone says, or how many DO THE JOB RIGHT posters hang on the walls, job pressure doesn’t necessarily include following the rules. The status quo barks out: Get the job done. In such an environment, going with the flow is perceived as less risky than monitoring and complying with all the procedural requirements. After all, we’re problem-solvers, right? A little rule-bending is expected and condoned.

Thinking Fast and Slow

For all of us, two distinct modes of thinking are constantly in play: fast and slow. Fast thinking is reactive, responsive and automatic. It looks for patterns, gets us through our day and requires little energy. When considering the equation: 2+2, you quickly conclude 4 as the only possible answer. That’s fast thinking.

Slow thinking, on the other hand, is just that: slow. It uses lots of energy because it requires focused attention. You’d need to employ slow thinking to multiply fractions, for instance, or to figure out how to avoid your least favorite relative at the family reunion.

As we fast-think through our day, we’re trying to avoid risk by paying attention to what people around us expect. This is human nature and not much of a conscious decision. Cutting some corners feels reasonable.

At the enterprise level, where policy is made and direction is set, the job IS slow thinking: planning new and better ways of doing things, improving results, satisfying customers and avoiding unpleasant surprises. All of those outcomes seem more likely when people follow the rules, so adhering to standard procedures is viewed as a way to lower risk.

Risk profile comparison table for the typical organization

Table 1 – In a traditional organization, following procedures can be viewed as having high or low risk, depending on one’s vantage point.

Table 1 contrasts these dynamics from the point of view of the individual vs. the enterprise. This misalignment between risk perceptions, plus the reactive nature of fast thinking patterns, are the reasons why your organization might be having a hard time achieving better procedural adherence. If rules are routinely broken where you are, it’s because no matter what anyone says, your organization’s true values are to get the job done — even if it means not following procedures.

A caveat: the foregoing assumes that tasks, processes and procedures are well defined, well documented and well understood — which is almost never the case. If you expect compliance but have not made the procedures clear, easily available and understandable, you’re fooling yourself and shortchanging your valuable workforce.

Procedural Adherence (Re) Defined

Given our understanding of how human nature drives or hinders procedural adherence, we can construct a simple definition. Procedural adherence is:

Aligned values and explicit behaviors that demonstrate the highest regard for following established standards to minimize risk.

If we break the definition down piece by piece, these points are important to understand:

  • When individuals and the enterprise share the same values, that alignment will translate to observable behaviors. As the saying goes, actions speak louder than words.
  • If you expect someone to follow the rules, then you’d better make those rules clear and understandable.
  • Adhering to procedures must become low-risk for everyone.

Our definition of procedural adherence goes well beyond the notion of false slogans and checklists to encourage compliance. It provides handles for people to grab ahold of. If we really want better procedural adherence, values must be aligned and why values were not aligned in the first place is the real root cause analysis that must be done.

Start by getting a grip on definitions, documentation and conveyance of the procedures that need to be followed. Focus on the ones that are most vital to the enterprise. Rationalize the list of critical expectations and then ACT on them. This requires active governance (that probably doesn’t currently exist) versus the typical haphazard, “Let’s do everything” approach.

Once you have a solid set of rational procedures that must be followed, react strongly when violations occur and dig for the cultural root cause when they do. You’ll often find the violators felt they were acting in accordance to their bosses’ objectives and in the best interest of the enterprise. Note: There is often a lot of bad precedent to be undone here.

While the conventional approaches to procedural adherence problems – Defining, Training and Discipline – have their place, they could be sabotaging your compliance efforts by looking like progress, but instead are just more of the same.

Targeting Behaviors for Lasting Improvements

We now know your enterprise and the individuals inside it at many times think differently. People on the ground think fast and avoid personal risk by occasionally breaking rules — and if the organizational culture says it’s ok to do it sometimes, it’s ok to do it any time. Conversely, the “think slow” enterprise seeks to minimize risk by getting everyone to follow the rules.

The key is to align the risk profiles for both. It’s the only path that works because it operates at the behavioral level. This requires a direct frontal attack on the status quo — an uncomfortable proposition for most, but one that must be done if real change is desired. After all, we’re talking about replacing poor habits (behaviors) with good ones. This is a goal that can only be accomplished with an approach that is: (a) highly visible, (b) effective in its execution, and (c) simple enough for everyone to understand.

Functional Steering Committee structure

Figure 2 – A high performing FSC provides the organization a leading indicator of procedural adherence.

Our solution — which many high-performance organizations have successfully adopted — is an engaged and visible coalition of leaders whose implicit and explicit objective is to reinforce a set of values with which everyone can align. We call this body the Functional Steering Committee (FSC). FSC participants are directors and functional heads tasked with managing major process nodes along the value chain. They meet weekly and review procedural adherence status by asking three questions:

  1. Do we have the procedure?
  2. Do we understand the procedure?
  3. Are we doing the procedure?

Why meet weekly? In our experience, a weekly cadence is vital. If less, participants lose interest and urgency. Monthly sessions result in a last-minute rush to gloss over subpar progress and shoddy work. This is the very behavior that better procedural adherence is designed to attack. But by tackling issues weekly, communicating expectations, asking the right questions and demonstrating the benefits of procedural adherence, the risk alignment profiles noted in Table 2 become the new status quo.

Risk profile alignment table for high performing organizations

Table 2 – When the risk profiles are the same for the enterprise as the individual, everyone is motivated to act in the same way because the cultural norm is to follow procedures.

The chartered and structured FSC is a new behavior. It’s highly visible and is a leading indicator of better procedural adherence. Over time, the enterprise and individual employees begin valuing the same things, and decisions become more aligned, consistent and mutually beneficial. And, FSC benefits don’t stop here.

The FSC governs the technical aspects of improvement too, pinpointing gaps that might otherwise go unnoticed. For example, if someone does not have a documented procedure, who better to help than the FSC? If there is confusion about how a procedure is supposed to work, the FSC intervenes. If someone isn’t following the rules, the team will find out why and encourage / remove barriers to doing so in real time. The FSC can surface innovations that can then be built into the formal, standard approach.

With respect to procedural adherence, often this governance role is not being done well, or at all. This is a gap that needs to be closed. Yet the usual objections will be heard: “Do we really need another meeting?” and “Can’t we automate this?” Some will suggest that technology is a better answer, or another meeting is too much. Technology can help, especially in the area of standard templates and sharing best practices. Remember, however, that you’re dealing with a behavioral issue. If “just another meeting” seems like too much, eliminate three useless ones or have the FSC integrate the responsibilities of the team that’s investigating the most recent catastrophe.

One of the biggest problems your organization will face is getting functions and departments to come together to solve system-level problems like procedural adherence. The solutions to these types of problems: efficiency, effectiveness, productivity, quality and customer-focus are solved using Lean and other process improvement techniques. The first step is gap identification, and this new approach with the FSC is ready-made for that.

A New Destination Requires a New Path

Einstein famously defined insanity as doing the same thing over and over while expecting different results. You’ve likely heard that proverb a dozen times, nodded in agreement, and returned to old practices expecting new outcomes.

Likewise, returning to traditional approaches where procedures are treated like guidelines instead of values-driven standards will result in the level of compliance in your organization remaining unchanged… or inconsistent, at best.

It won’t be easy. Old ways die hard. Your organization will face tough decisions about chasing revenue, be tempted by the notion that a small defect or minor violation won’t matter, and that speed trumps standards. These moments of truth happen every day, swaying people to compromise and make poor choices.

The payoff for doing something truly different, however, is huge. Imagine a 20% reduction in catastrophic events and the benefits when this 20% is spread across all types of incidents. Imagine a team of leaders working across functions, better understanding each other’s needs, and monitoring handoffs between them. Finally, consider the relief, shot of confidence and productivity for frontline workers who know the rules, and no longer feel the pressure to disregard them – instead, operating in an environment that demonstrably values them.

 


This post is an excerpt from Kaufman Global’s White Paper: Procedural Adherence and Risk. To acquire a copy of the full white paper, click here.

If you’d like to learn more about the services we offer related to addressing Procedural Adherence challenges, click here.

Time is the Common Denominator of all Wastes

When it comes to improving operations, how many wastes are there really?

I recently read an article that asked the question: How many types of waste are there really? This was in reference to Lean and the original seven wastes in Taiichi Ohno’s iconic Waste Wheel, shown here.

Ohno Lean Waste Wheel

The comments were interesting. Apparently there are tightly-held beliefs on this topic. Let’s try not to over complicate something that Ohno intended to be quite simple, but because waste is the red thread of all Lean, it’s worth consideration.

Purists believe that there are 7 wastes as described by the sensei and there shall be only 7 wastes. Period. Another faction makes the argument for adding the “waste of people’s intellect” or something similar. This notion has become increasingly popular over the years. Kaufman Global added it long ago, but I’ve always found the classification a bit difficult. Is it intellect, human potential, creativity, insight, involvement, et cetera? Unlike Ohno’s originals, these descriptors seem abstract and difficult to attach to an action.

The case for waste of intellect arose from the observation that bosses and managers tend to treat people like cogs instead of active participants in value creation. Ohno’s writings illustrate his struggles to help people understand. Who knows why he didn’t include it in his original work? Maybe he considered himself an “under-cover” social engineer and felt that sticking to hard assets was more pragmatic. Or maybe he didn’t want to too openly point out that management was missing the point? The gap shows no sign of closing soon.

If you want to get really basic, there is only one true waste: TIME. With Lean, time is incorporated in many ways: cycle time, value added time, non-value added time, downtime, uptime, etc. Ohno simply broke it down in a way that made it easy to identify obvious targets to be addressed with appropriate techniques.

wasting time

My take: It doesn’t really matter. Waste can be subdivided many ways. If you think there are 20 different types of waste and this helps attack any one of them better; go for it. In the name of continuous improvement we must be willing to add or subtract in order to improve the system. Right? Yes. Be careful though: More choices seems somehow less Lean, doesn’t it?

People Energy, Alignment and Engagement

Which brings us back to the concept of the waste of people’s intellect. When it comes to achieving operational excellence, a tremendous amount of time is lost by failing to engage people doing their daily work. Non-inclusion results in false starts, half measures, low sustainment and do-overs. Workshops and Kaizen Events may be common, but sustainable results are only achieved when people are tangibly connected to everyday improvement.

Kaufman Global Lean Waste WheelAlignment

Any attempt to be operationally excellent means real and sometimes uncomfortable change; which always meets resistance in some form. Alignment is about getting everyone to support new ways of work. This is a cascading process where actions are different depending on ones place in the organization. If there was only one choice about what to align on however, it would be the need to engage everyone.

Engagement

Engagement means giving people a voice in the work they do and holding them accountable for continuous improvement. Achieving broad engagement up and down the organization is tough for many. Kaufman Global uses structures like the Executive Steering Team, the Lean Daily Management System ® (LDMS ®), and Procedural Action Teams to force engagement. They’re simple enough to understand and do too. If methods are overly complicated, they are easier avoid.

When it comes to waste, everything revolves around time but it’s okay to define as many subdivisions as you like. If you had two to choose, I’d recommend alignment and engagement. When you get these right, smart people working together toward a common goal always solve the other problems.

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Notes:

  • Muda is the Japanese term for waste. This is the word Taiichi Ohno would have used.
  • A simple definition of waste is: Anything an all knowing, all seeing customer would not be willing to support (pay for).

If you want to learn more about Kaufman Global’s approach to engagement and alignment, check out SLIM-IT, Procedural Adherence and Lean Daily Management System. For a deep dive into the waste wheel and how it applies to Lean, check out our White Paper: Implementing Lean Manufacturing.

Lean Manufacturing White Paper: Part 2 of 3

The following is the second excerpt in a 3-part series from Kaufman Global’s updated white paper, Implementing Lean Manufacturing: A Holistic Approach. In this paper we discuss:

  • An integrated model for Lean implementation
  • How to improve engagement and alignment
  • Why “pull” is so fundamental to Lean success

In this installment we discuss why Taiichi Ohno’s original 7 wastes must be updated to include two new ones: Alignment and Engagement – which if not addressed will foil any implementation.

Lean Manufacturing Evolves from Traditional Push Systems as Waste Is Eliminated

Lean is not “installed.” A self-regulating, Lean system is created by a continuous focus on eliminating small instances of waste or “muda” (muda is the Japanese term for “waste”). Waste is defined as any work that does not add value to a product or service. If the customer does not benefit from it, it is muda. All inspections, rework, repairs, walking, material movement, inventory of any sort, waiting, and so on are muda. They all cost money and produce nothing of value for the customer. Lean (pull) slowly evolves from a traditional (push) system as wastes are eliminated little by little. When an organization first begins to initiate Lean activities, it is a traditional system with perhaps a few Lean tactics being applied here and there. At some point, with dedicated effort, it becomes more of a pull system than a push system.

Lean Waste Wheel

Figure 4 – The four categories and nine types of waste (muda)

Figure 4 displays the four categories and nine types of Lean waste. This new model evolved from Taiichi Ohno’s original three categories; People (work), Quality and Quantity, and associated seven types of waste. In the late 90s, an eighth waste that acknowledged the value of people began to appear. That “waste” has been described in a number of ways, including: intellect, creativity, involvement, etc. In the time since it has become increasingly apparent that the people aspect still receives too little attention and prior descriptions have not been specific enough.

Kaufman Global gets more direct by describing the People Energy wastes of Engagement and Alignment. This draws attention to the elements that must be overtly addressed in order to make Lean really work and puts a finer point on the idea of holistic, integrated Lean. It’s necessary to do this because of the almost insurmountable implementation problems that many organizations encounter. Their struggles are driven largely by the fact that people energy wastes are not dealt with as an integral part of Lean adoption. Therefore, we have directly incorporated people energy wastes, along with ways to minimize them, into the basic conceptual model of Lean. The specific definitions of each type of waste are described below.

People Energy Waste

People energy waste wheelPeople energy waste arises from a failure to harness the potential that exists in all workgroups. This form of waste is the most important thing to address in Lean implementation or any other type of change initiative. Failure to harness people energy creates most of the significant problems that organizations encounter when they attempt to do something (anything) different.

Alignment Waste is the loss of value that arises when management and employees at all levels are not consistently aligned and energized to address critical issues. Making this happen is the sole responsibility of leaders and managers who are easily distracted. Alignment requires conscious and planned strategy and tactics that ensure messaging is consistent, priorities are established, communication is open and deviations are explained. “Flavor of the Day” or “Programs of the Month” are good indications of alignment waste. Good alignment means that you start, and stay, the course.

Engagement Waste is the loss of value that occurs when people do not have some control over the work they do. This is one of the toughest things for managers to abide because they feel like they are giving up some control – which they are. True engagement means requiring workgroups to measure their performance at a micro-process level and then expecting them to improve their performance over time. Many organizations waste a lot of energy on faux-engagement activities such as coffee talks and lunches with “their people.”

The idea here is to engage and align the organization via well-defined structures. All the good intentions and skills in the workplace cannot operate seamlessly if responsibilities, resources and personnel are not formally assigned and led. Structure requires a formally dedicated steering committee, work stream leaders and teams, explicitly assigned resources, schedules, charters, and champions.  Alignment and engagement compel two critical outcomes that are essential change- management requirements for successful implementation: relevance and ownership.

Relevance: To sustain any initiative, people must work on issues that are, in some part, relevant to them personally. The most basic and beneficial aspect of good alignment and broad engagement results when individuals and teams are compelled to deliver on improvements and fixes within the processes they control. This creates, by default, an environment where much of the improvement activity is truly relevant to those doing the work.

Ownership: Human beings are territorial and proud. If they are associated with something, it is absolutely essential for them to believe that it is admired and respected by others. This tendency is wired genetically into us all. If people are not permitted to exercise some degree of control and power over their work place, they will not be inclined to identify with it nor will they strive to make it excel. This is the underlying basis for the outstanding performance of all self-directed workgroups.

Concerning all People Waste, understand that it’s not that the people are being wasteful but rather that these are wastes that are visited upon people by a non-Lean configuration of work.

People Work Waste

People Work Waste WheelPeople work waste arises from human actions involving processes. This type of waste is most analogous to the waste encountered in industrial engineering concepts. It can be divided into three categories: processing, motion, and waiting.

Processing waste is the result of inefficient work. Typical causes are inadequately trained workers, hard-to-use / locate tools or poor-fitting parts. Employees are hard at work, but there is a better way to do the job.

Motion waste is all movement that does not add value. All walking and reaching for parts or tools is muda.

Waiting waste is people waiting for parts, help, a machine that is broken or down for a die exchange, and so on. People can add no value to the product or service while they are waiting.

Quantity Waste

Quantity Waste WheelThere are three types of quantity waste that arise because material (or data or paper) must be processed. This type of waste comes from creating too much inventory between workstations (WIP), Raw and Finished Goods inventory and material movement and transport – think; forklifts, stackers and trucks.

Inventory waste arises when inventory is not being used but has been paid for, perhaps has had value added to it, takes up space, requires expensive storage and retrieval systems and becomes lost, damaged and / or obsolete. Finished Goods inventory is even worse, as all of the intended value has been added and several weeks or even months may pass before it is paid for.

Work In Process (WIP) waste is inventory somewhere in the system between Raw Materials and Finished Goods. Whenever there is material waiting between two processes, it is waste. WIP waste occurs because process times are not balanced and matched with takt time.

Movement waste is all transportation of materials. Shigeo Shingo, the conceptual organizer of Single Minute Exchange of Die (SMED) and poka-yoke (error proofing) concepts, humorously observed that forklift and conveyor salespeople must routinely bribe traditional plant managers. Why? Because, he jested, no other mechanism could explain the incredible amount of unnecessary movement built into the processes of non-Lean plants.

Quality Waste

Quality Waste WheelFixing defects is the sole quality waste. Each defect turns value-added work to waste and requires more nonvalue-added work to be repeated during rework or repair. Prior to the implementation of Lean, quality waste is usually the most visible waste due to its impact on customers and the tendency of a traditional push system to fail to recognize the other types of waste as significant. Ironically, reduction of the other wastes through Lean always results in a dramatic decrease in defects. This occurs even without the focused implementation of powerful tools such as error proofing or Six Sigma.

The next section presents an integrated discussion of Lean tools, concepts and implementation techniques. The tools and methods should not be separated from the implementation approach. While this paper does not provide a detailed examination of Lean tactics, it does present sufficient information for the reader to determine what they must learn in order to develop a successful Lean implementation initiative in their organization.

Implementing Lean Manufacturing

As muda is eliminated through the application of various Lean tools and methods, a pull system gradually emerges. Figure 5 presents the Master Jargon Chart of Lean Manufacturing. The Master Jargon Chart summarizes and presents the various Lean wastes, tools and methods into a single conceptual framework. Figure 5 is Lean; that is, in order to “do” Lean, the waste reduction approaches and corresponding tools and methods shown there must be comprehensively applied in an integrated manner.

All of these tools and approaches need not be implemented simultaneously. In fact, it would be a mistake to do so. Further, the criticality of each tool varies in different environments. This is why a “one-size-fits-all” Lean implementation is a mistake. While all successful Lean organizations use many of the tools to some extent, various tools are more comprehensively applied in certain environments than in others. As we discuss specific tools and approaches, this will become obvious.

The Master Jargon Chart of Lean Manufacturing by Kaufman Global

Figure 5 – The Master Jargon Chart of Lean

The left two columns of Figure 5 present the four categories and nine types of waste described earlier. The structure of this model might suggest that each waste category is targeted by a specific approach and / or method. While this is true to some extent, all of the methods are extensively interdependent and interactive. You cannot “cherry pick” tools and techniques and expect long-term Lean success. In particular, if you do not employ the methods required to address people energy wastes, the other methods will fail to achieve competitively meaningful results.

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To be continued. In Part 3 of this series, we provide describe a fail-proof system for implementation. Or, if you’re ready to read the entire white paper now, click here to access it via our Resources page.

Prioritize Manufacturing Fixes For Better Results

There are times when a manufacturing operation needs to get better (a lot better) — fast. This can be the result of many things. Often it’s in response to an external stimulus, such as competitive pressure, a quality “event,” or a troubled product launch. Sometimes it happens when customer demand increases without warning, where the “without warning” comes by way of truly new information and / or orders from the customer. Perhaps it’s because of a failure of internal sales and operations planning (S&OP) process — which happens more than anyone would like to admit. Or, it could simply be that the manufacturing operation has fallen into complacency and someone new comes in to disrupt the status quo. Whatever the reason, there are fundamental Lean manufacturing steps that should be taken to increase production. These types of changes are often inevitable and are often easier to achieve when thrust upon us.

Prioritize Improvement Activities by Aiming at Objectives

Lean waste wheel with manuracturing hot spots

Lean Waste Wheel with People Energy Added and Top Priorities in Red

Lean manufacturing aims directly at factory throughput. A simple question to ask is: “How do we incrementally get more top quality product out the door with the same or fewer resources?” Taiichi Ohno’s waste wheel has a simple way of describing the things that get in the way of optimal throughput. The wheel describes seven classic wastes: Transportation, Inventory, Motion, Waiting, Over Production, Over Processing, and Defects. Within each one, there are many methods that can be applied for improving results. It only makes sense to give some priority to what to fix first.

The top three waste targets for improving manufacturing most quickly are: Waiting, Inventory and Defects. Everyplace IS different, but overall, these are the areas that get you furthest fastest. Most other forms of waste, and the methods to address them, fall in line under these.

Waiting Waste

Whether its machine capacity or human capital, there is no greater sin than waiting for product to move through the system. The question to ask is simple, “Why aren’t things moving?” The reasons are fairly standard: machines are down, there are missing people, parts and materials, etc. Many paths can be taken to fix these problems. It could be maintenance and machine downtime, or it could be organizational / skill versatility or shift-loading. Missing parts are often supply chain issues, such as forecasting and supplier management. In the end, the simplest question has many opportunities for discovery.

Inventory Waste

Inventory (e.g., raw, WIP, finished goods) is visible and extremely costly. It’s bad enough when you think about inventory in terms of the cash it represents. It’s even more frightening when you add the costs of moving it to the location where it sits, sorting it from time-to-time, and throwing it away when it becomes obsolete or a quality defect is detected. Only then do you begin to understand how despicable inventory really is. But that’s only part of the picture. There are other reasons why inventory is a logical first-strike target.

  • Inventory not only disrupts throughput by physically getting in the way, but it also clouds throughput issues by masking problems. When inventory builds up, it disguises real issues that affect throughput and delivery. WIP covers up overall equipment effectiveness (OEE) and quality issues. Raw materials disguise supplier delivery and quality problems, and finished goods inventory mask gaps in on-time delivery.
  • Inventory is the most visible attribute of a Lean versus a non-Lean operation. Not only does it show up throughout the operation, but it also shows up at headquarters where the people who measure results automatically assign dollars to inventory. A comprehensive reduction in inventory (i.e., an improvement in inventory turns) is a sign to the entire organization — from top-to-bottom — that something is improving. This is important to build enthusiasm for the dramatic changes taking place throughout the operation.

Defects Waste

Building bad product wastes time, energy and money because it’s already loaded with labor and material costs. On top of that, we add cost to detect, sort and fix defects. Quality is in the top three most important initial targets because it cannot suffer at the hands of the throughput objective. And, nothing will undermine an initiative to increase throughput faster than a quality problem delivered to the customer. In the automotive industry, recalls result in billions of dollars of lost value every year. In the Oil and Gas industry, a single quality problem leads to non-productive time (NPT) that can cost a million dollars per day. And, it’s not just the cost of fixing the problem that impacts businesses the most, it’s also the damage it causes to the supplier and customer relationship. The cost of the Macondo oil spill disaster (which was more a process quality issue than a material problem) is incalculable ― both in terms of tangible and intangible losses.

Everything Is Connected

Because the entire system is connected, addressing any one of these three wastes automatically impacts all the others described by Ohno. Ask good questions at the start and develop a plan of attack that always keeps your focus on the objective: “How do we incrementally get more top quality product out the door with the same or fewer resources?” Start with the few critical places where small improvements will have the greatest effect, and then develop an implementation plan that includes the broader organization in a holistic approach. When you’ve made it this far, you can then apply waste elimination tools, methods and techniques to your heart’s content.

To Learn more about Kaufman Global’s view on Lean manufacturing, download our White Paper: Implementing Lean Manufacturing: A Holistic Approach.