Lean Management: Eight Areas of Waste

Eight Areas of Waste

• Waste is the loss of something valuable due to excessive usage, ineffective or unnecessary usage.
• The Toyota Production System coined the term "Muda" to describe waste.

Types of Waste

• Defects: Imperfections that decrease value or utility.
  • Caused by machine wear, human error, unclear specifications, tampering, or neglected machinery.
  • Impacts qualitative attributes like appearance, size, delivery timeliness, and price symmetry.
  • Auditors should determine expectations and compare results against standards.
• Overproduction: Producing more output than needed.
  • Often driven by economies of scale, where fixed costs are shared over more goods.
  • To address risks, organizations perform counts, use climate-controlled facilities, implement access controls, and build infrastructure.
  • In service environments, consider: excessive printing/faxing, repetitive data entry, and unnecessary tests or services.
• Waiting: Delays in action while waiting for another action to be completed.
  • Often a result of non-value-added activities and lack of coordination.
  • Examples include: waiting for primer to dry, concrete curing, or missing information.
  • Auditors should identify waiting occurrences, reasons, and involved parties to recommend process improvements.
• Non-utilized Talent (Underutilized Employees): Resources are underutilized, resulting in decreased productivity.
  • Organizations waste talent by not providing opportunities for employees to fully use their skills.
  • Internal auditors should audit employee engagement as it impacts productivity, retention, customer satisfaction, and internal control.
• Transporting: Unnecessary movement of items from one location to another.
  • Involves excessive handling of materials, shuffling of inventory, and time wasted on transportation.
  • Impacts workplace settings through poor layout, batch sizes, and shared machines.
  • Telematics can track idle time and route efficiency to optimize transportation.
  • Ways to reduce transportation waste include reducing batch sizes and designing product-oriented work cells.
• Inventory: Excess goods, parts, and materials on hand.
  • Includes products, materials, parts, and documentation not being processed immediately.
  • Inventory incurs carrying costs, ties up capital, and can be written off as excess or obsolete.
• Motion: Operations in a poorly designed work environment.
  • Results from poor workspace layout, insufficient ergonomics, and excess movement while searching for items.
  • Impacts individual motion with financial and time waste, physical ailments like RMDs, and increased workers’ compensation premiums.
  • Value stream mapping is a tool to visualize flows through systems and track routes through workplaces.
• Extra Processing (Unnecessary Paperwork or Processing): Unnecessary paperwork or processing steps.
  • Transitioning to paperless processes reduces costs, improves productivity, saves space, and simplifies documentation and information sharing.
  • Technologies like e-forms, workflow applications, Web servers, and PDF adoption can be used.

Identifying, Assessing, and Preventing Waste

• Internal auditors play a crucial role in identifying, assessing, and preventing waste.
• Auditors perform audits at the beginning of cycles to detect anomalies and help management prevent them.
• By addressing waste, organizations can improve efficiency and achieve financial and operational objectives.
• Consider the financial, time utilization, ecological, health, and safety implications of waste.