Suppose we grow and retail tomatoes to market. We started planting tomato seeds, and like growing any other produce, we see that losses at each stage of the chain are inevitable, and at some point, even uncontrollable. Though there was a relatively low level of waste at every stage, the combined business waste reaches an alarming level which, when accumulated, may result to tomato loss of 20% from the total seeds planted to the harvested tomatoes in pack, ready for sale.
Thus, if we have an annual cost of $1m for bringing tomatoes from field to table every year, $200,000 have been allocated to waste and inefficiency. Can we afford to lose this? Apparently, not. In the illustration above, it is not only vital that we quantify the level of waste but also identify and analyse where these wastes originated from at each stage. By all means, it is imperative that every business should explore how to implement business waste reduction into their system, and start harvesting more tomatoes with less.
Lean thinking is a business efficiency approach that aims to produce more with less – less effort, less time, less space, less equipment – while meeting consumer demands. Originally developed by Toyota to streamline production systems, eliminate waste, and focus on every aspect of manufacturing and distribution process on what delivers value, lean thinking is now being extensively applied across various industries aside from manufacturing, such as retail, agricultural, and service industries.
THE SEVEN WASTES
Waste, as identified by Toyota, is anything that consumes resources or time but does not add value to the product or service from a consumer’s perspective. To increase efficiency, it is necessary to understand the business waste in your business. The seven wastes apply to almost all industries, as enumerated below;
Where are you overproducing? Look for build up of stocks, work in progress and resources. Examples: excessive storage of produce until consumers needs them, working overtime, over staffing
Where do goods and services wait? What activities are adding value, which are not? Examples: waiting for the tractor parts to arrive, waiting for the boss to tell you what to do next, waiting for government funding
Where do things move? Look at moving goods, paper, people and machines. Examples: damage to product during transport, warehouse layout, walking required
- Inappropriate Processing
Are you using the right machine for the job? Are you using the right person for the job? Examples: wrong machine for the job, management wanting to make all decisions, lack of documented systems and procedures
Where are you storing value? Look in the piles of raw materials, finished goods, bank accounts and debtors. Examples: raw materials kept in stock, work in progress, storage of broken tools
Look for waste movement. Check the ergonomics. Examples: inappropriate location of tools, disorganised workplace and you can’t find what you’re looking for, employee turnover – retraining, paperwork, etc.
Where are mistakes occurring? Do we have rework? Examples: confusion due to poor communication, data entry error, machine failure
LEANING TOWARDS EFFICIENCY
Waste reduction is an effective way in increasing profits. The challenge for us leaders is how we get away with inefficient ways and start streamlining our processes and systems, thus increasing efficiency. How can we raise the quality of doing business while reducing effort, time, movement, or equipment? How do we produce more by doing less? It is important to conduct an audit of our working practices and examine which actions adds value and remove what’s not, called waste.
Lean thinking may not necessarily have the state-of-the-art facilities or automating processes but rather developing a different work mindset. Being lean is all about continuous improvement; it is about getting better each time, all the time. With sustained application of lean thinking, we could create a better value for the business and for our consumers as well.
Lean thinking could help us leverage our profits and retain our competitiveness if we could manage our working practices to lessen waste and focus on key aspects that adds value. Adapting this approach will help us identify better opportunities in terms of cost savings, enabling us to produce more with less. Should you wish to clarify some points and suggest additional insights on reducing business waste, please feel free to share with us through the comments below.