From: John Yost [john.yost@procompass-ms.com]
Sent: Monday, June 30, 2003 7:06 AM
To: Business Leader
Subject: CompassPoint Newsletter - Issue 5

Issue 5                                                                                       June 30, 2003

 

 

If you have questions or inputs regarding this newsletter please contact us at mailto:Contact@ProCompass-ms.com

 

In this Issue:

 

Are you a victim of these Demons of Waste?

Businesses spend an enormous amount of time and resources developing their production and business processes.  Yet, every year these processes produce millions of dollars of waste.  Now, I'm not talking about the type of waste that goes into the dumpster, I mean wasted time and resources due to the following conditions:

Defects.  Business operations managers are typically very concerned about the efficiency and effectiveness of the operations.  Generally these managers exercise great care in devleoping processes that efficiently produce products and services that meet customer and business requirements.  Yet, despite these efforts defects continue to produce millions of dollars of waste.  In production environments this waste can be seen in the form of rework and scrap and in the shipment and eventual return of non-conforming products.  In administrative environments such waste can be observed in the the results of invoicing and billing errors, rewriting proposals and correcting typographical errors.

Overproduction.  Efficient production is essential to any business operation.  But, producing more that is required is wasteful.  Additionally, providing production capacity in excess of that required is also wasteful.  In manufacturing operations such waste is often seen in overcapacity or overspeed of a production line.  In non-manufacturing environments this can be observed in such activiteis as generating unused or unnecessary reports.

Transportation.  The effective transportation and transmission of materials and information is essential to operations of all types.  While most companies pay particular attention to shipment and transportation of their final product, internal transportation often produces very wasteful results.  Some examples are; double handling of material or information, unnecessarily long transportation routes and the ineffective movement of people (e.g. 15 people traveling to a building to meet with one particular person).

Waiting.  Most business and production operations involve multiple processes and inputs from different groups or departments.  The handoff from one group or process to another often involves delays resulting in wasted time.  Some examples of such waste in production processes are; waiting for material delivery from storage, one production process waiting for the preceding process to fininsh, waiting for inspection or approval. In administrative or service operations such waste may be observed in delays in data handoffs, waiting for approvals or waiting for a meeting to start.

Inventory.  Adequate inventory to support production and shipment of goods is essentially important to effective operations.  Most companies recognize this principle, yet many times businesses fall prey to wasteful inventory practices such as excessive finished goods inventories or excessive raw materials or work-in-process maintained as a “Just-in-Case” measure.  Such inventories create waste in tying up assets and floor space and create costs associated with storage, inventory shrinkage, damage and obsolesence.  Some administrative examples of inventory was might be multiple department and personal office supply locations, or the storage of records from obsolete activities.

Motion.  Some amout of motion or movement by people and equipment is required in all types of operations.  The key issue to limit the motion required to complete the process or operation.  Examples of excessive motion might be excessive reaching or motion to obtain materials, hand delivery of hard copy reports or ineffective office set-up.

Processing.  Most  processes are cafefully planned and analyzed to maximize efficiency.  However, it is not uncommon for unplanned or uncontrolled practices to create waste within these processes.  Unnecessarily tight tolerances, multiple inspections and unrequired hardware are typical examples of such waste in manfuacturing operations.  In adminstration or service operations this waste can be seen in the re-keying of data and unnessessary signatures for approval.

.Businesses do not set out to create wasteful processes and practices.  Yet, they are ubiqitous in almost all types of business.  There are basically two common reasons for the perpetuation of such wasteful practices:

1.        The processes were designed around incorrect or inappropriate assumptions.  For example the assurmption that all material from supplier must be inspected prior to use.  Modern materials and supplier principles has made this practive almost obsolete, yet many companies still plan and implement exensive inspection for their purchased materials.

2.        The process was designed around conditions that existed in the past but are now longer present.  For Example, the requirement that certain reports be delivered in hard copy form to certain managers.  For internal distribution, e-mailing such reports would be much more effective and efficient.

The good news is that businesses do not have to continue to be hampered by such wasteful practices.  Overcoming wasteful practices is not an overly complicated or daunting process.  Concepts of Operations Improvement can be applied directly to development, operations, and business processes to achieve significant improvement.. Principles of Leadership Development can foster improved communication, direction and clarity of vision to reduce waste due to ineffective management practices.

 

 

 

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