From production to supply chain, the eight major wastes must be eliminated
The eight major waste concepts in the lean concept were born and have been used in the production field, but today companies are paying more and more attention to Supply chain synergy, so from a supply chain perspective, what wastes exist? What should we pay attention to in eliminating these wastes?
Do you understand lean and waste?
The lean concept has a long history and different definitions. Its origin is a management philosophy of Japan’s Toyota Motor Corporation. Toyota’s management philosophy is often called the Toyota Production Model. The reason why the lean concept is important is because of its huge value in improving efficiency.
Since the 1990s, many companies outside the automotive industry have begun to introduce this production concept, which is also defined as the lean concept. The lean concept also leads to “waste”. To understand the application of lean concepts in waste, we must first understand the definitions of value-added activities and non-value-added activities.
Each process consists of multiple activities, which together are called a cycle or production cycle. Product production cycle refers to the time from production start to completion, including production line waiting time and production processing time. Production processing time is the time required for activities or processes to convert input resources (such as raw materials) into outputs (such as end products).
Take the production of wooden pallets as an example. The value-added activity is to convert wooden raw materials into finished pallets. In this process, cleaning, trimming, cutting and other links are all part of the overall process. That is to say, although it only takes an hour to turn raw materials into finished products, it may take a week to complete the entire process.
In the lean concept, the time consumed by non-value-added activities is often longer than the production cycle. Non-value-added activities include inventory handling of existing materials (e.g. raw materials, work-in-progress, finished goods).
Merchants can calculate the time required to build a specific “value stream” (a single product/service or a combination of products/services) and derive the number of days of supply. As a result, the time occupied by non-value-added activities stretches into weeks (or months).
Value-added activities in many processes (or value streams) usually account for only 5% to 10% (see Figure 1 below). Non-value-added activities are also necessary, such as supervision, legal affairs, and verification of customer requirements. They cannot directly create value for customers, but they are essential. Operation efficiency should be improved as much as possible to reduce the waste of time and resources.
Figure 1 Value-added activities and non-value-added activities
Lean concepts treat non-value-added activities as waste. When products or information are stalled, detected, delayed, queued, or invalidated, such situations create no value for customers and are pure waste. Whether in manufacturing, administration, supply chain and logistics, or other parts of the business, this waste of resources and time can occur.
Waste from production to supply chain
There are 8 typical waste phenomena, whose English initials combined are “Tim Woods” (see Figure 2 below).
1. Transportation (Transportation) – the repeated flow of people, goods and information, including suspension of unplanned routes, excess return cargo, and the back and forth movement of goods in warehouses, which This may result in increased material handling distances.
2. Inventory – stock up on raw materials in advance or issue certification documents. Excess inventory is often caused by coordination differences in various links due to high scrap or rework rates, long equipment installation times, delivery delays, equipment downtime, or quality issues, including premature delivery, order quantities greater than actual demand, and raw material warehousing locations. There are errors, etc.
3. Motion – unnecessary transportation, transfer, turning, lifting and transfer in the factory room or production line, often due to poor warehouse management or unreasonable factory design caused.
4. Waiting time (Waiting) – the time wasted waiting for spare parts, information, upstream instructions or equipment, such as waiting time before the truck arrives at the factory, trailer loading time and from The time delay between receiving customer order information and starting picking.
5. Overproduction (Overproduction) – Production capacity exceeds demand, which may lead to excess inventory or unnecessary paperwork, which may lead to other waste phenomena.
6. Overprocessing – It is unnecessary to have a process audit that is too stringent or to require a higher grade of raw materials than required. For example, the longer it takes to process an order in a supply chain, the longer the cycle for shipping the goods and paying for the goods. To compensate for these mistakes, higher inventory costs will result.
7. Defects – rework, scrap or documentation errors, such as product quality issues or data errors in the supply chain leading to transportation delays and increased costs.
8. Skills – not fully tapping employees’ capabilities and not fully training employees before assigning work tasks may be the biggest waste, because employees are valuable to the company Resources are also the source of creativity.
Figure 2 Eight major waste phenomena
In addition to the above eight major waste phenomena, in the supply chain and logistics module There are other waste phenomena.
1. Data is too complex: The electronic era has greatly reduced paper documents (at least in theory), but the development of technology has also made redundant The redundant data has increased significantly.
Enterprises should learn to distinguish between redundant data and valid information, otherwise a lot of valuable time will be wasted on processing useless emails, reports and analysis reports.
2. Insufficient creativity: People usually choose the way with the least resistance to solve problems, but this way is often not the ideal way.
It takes time to develop creative capabilities, but companies can strengthen employee training, provide skill support and optimize incentives/systems by building a corporate culture system based on lean concepts.
3 . Unclear measurement standards: It is difficult to improve if it cannot be measured. According to the principles of lean management, the company’s supply chain system should have the ability to support the company’s overall strategy (from improving response speed to reducing business costs), and each strategy should have matching performance measurement Standards.
At present, with the support of barcode scanning technology and wireless radio frequency technology, data used for performance evaluation are easier to obtain than ever before. However, it is important to use accurate standards to Do measurement and comparative analysis. A major source of supply chain efficiency assessment indicators is the SCOR model
4. Excess expenditure: Inefficiency in the supply chain will directly affect the upstream and downstream expenditure budgets. Supply Chain inefficiencies can be caused by excessive inventory being held to mask problems in processes, or equipment such as forklifts, private fleets, and distribution centers not being used efficiently.
5. Over-design: Over-design will lead to the waste of over-processing. The implementation of lean collaborative product life cycle management can supervise the entire process from product definition to finished product processing, thereby minimizing over-design. This strategy involves people, data , processes and business systems.
6. Duplication of work: Employees in different factories or office locations may duplicate work and confuse each other’s work processes due to poor communication. Value stream Analysis is one of the ways to solve this problem. Through value stream analysis, companies can visually present links where duplication of work occurs, and then derive solutions and promote coordination between departments.
7. Insufficient planning: Many companies have the problem of overreacting to demand but insufficient planning. If front-line departments have a comprehensive and reliable sales and operations planning process, management can strategize and effectively Monitor lean performance management metrics.
Seven Principles of Supply Chain Waste Elimination
In today’s extremely fierce global competitive environment, identifying and eliminating waste will be a protracted battle that all companies have to fight. To eliminate the eight major waste phenomena in the supply chain, you can refer to the seven principles proposed by Machenko.
1. Let all parties involved in the supply chain understand the customer’s order status: The source of supply chain operation is customer demand. Sharing the specific details of customer needs with supply chain stakeholders helps everyone understand the real situation, perform their duties, and promote the efficient operation of the overall process.
2. Shorten the delivery cycle: Shortening the incoming logistics and outgoing logistics cycles can bring enterprises closer to customer needs, help alleviate the overall process’s reliance on forecasts, enhance flexibility, Reduce waste caused by overproduction.
3. Achieve horizontal movement: Horizontal movement of materials and information in the supply chain can effectively reduce waste at each node.
4. Enable pull system: In computer software applications, such as Material Requirement Planning (MRP), the use of pull system can reduce the process of production planning and overproduction. complexity, avoid waste, and also achieve visual management of supply chain logistics.
5. Increase turnover speed and reduce process differences: Implementing a small and frequent product distribution strategy to meet customer needs will help increase inventory turnover speed, reduce inventory and shorten delivery cycle , more flexibly and easily match the actual needs of customers.
6. Coordination and compliance with process procedures: Under the premise that all relevant parties in the supply chain clearly know whether the progress meets the production rhythm (such as market demand rate) and customer needs, It will be relatively easy to quickly identify problems, pinpoint causes, and take reasonable and effective measures.
7. Focus on the total cost: It is the fundamental essence of an enterprise to provide products and services that meet customer expectations at the lowest possible total cost.
From the overall perspective, it is not the most critical link in the supply chain where costs occur. This inspires us to avoid making strategic decisions that are only beneficial to the part but harmful to the whole. . When the financial benefits of production operations benefit all participants in the supply chain and can effectively eliminate waste, response measures at this level need to be considered.
Summary and sources
Research shows : Enterprises that apply lean supply chain management report that their departmental collaboration has deepened, production processes and materials have become more standardized, the number of stock keeping units (SKUs, SKUs) has decreased, and inventory levels have decreased. Compared with enterprises that have not applied lean management, their sales costs have improved. Reduced somewhat.
It can be seen that learning to identify and solve the “waste phenomenon” in lean production can fundamentally change the operation of the enterprise.
The “waste phenomenon” in lean production can fundamentally change the operation of an enterprise. </p
