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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