Today I want to introduce you to a concept that comes from lean manufacturing called the 7 wastes which can be remembered by the acronym TimWood.
I don't write about systems and processes as often as I probably should but I see big potential for taking the techniques that have been developed in world class manufacturing organisations and adapting them to smaller service based businesses.
I very much believe in taking ideas from one area and applying to them to another. This is a concept that one of my mentors and inspirations, Jay Abraham calls Funnel Vision (the opposite being stuck in the rut created by an industry mindset called Tunnel Vision).
The Background Of The 7 Wastes
Taiichi Ohno published the book “Toyota Production System” and explained 7 categories many of the ways manufacturing businesses waste money which have become known as “The 7 wastes”.
In Japanese waste is known as "muda" and the lean manufacturing literature often uses the Japanese words for authenticity. Personally I find them hard to remember.
The 7 Wastes - TimWood
I don't know who identified the acronym TimWood but it certainly helps me to remember them so I will give them to you in that order:
- Transportation - unnecessary movements of materials and the product create wasted effort and risk loss, damage and delays.
- Inventory - raw material stocks, work in progress and finished goods all represent money tied up in the process which can be used elsewhere. Inventory levels can be a symptom of problems e.g. work in progress will build up before a bottleneck or a reaction to problems e.g. unreliable deliveries from a raw material supplier cause stocks to be deliberately increased. Unfortunately the inventory hides the problem and stops it being corrected at source.
- Motion - this is movement of the people and the equipment in the process rather than the material movements which are covered in transportation. Motion wastes time and energy and creates wear and tear that can damage health and safety. Last week my lower back was in spasms so reducing motion and improving ergonomics is a hot topic for me.
- Waiting - time is a huge competitive issue so waste that arises from a product waiting around for the next action is a clear target for improvement. Waiting also applies to people and resources. A key concept in the Theory of Constraints is that an hour lost at the bottleneck is an hour's output lost for the entire system.
- Overproduction - this waste covers overproduction in quantity and early production in time and is a common cause of excess work in progress and finished goods inventory levels. From my manufacturing days, this was a huge problem when we were in backlog situations, since overproduction of products we didn't want meant more delays for products we did want. The natural reaction to this waste was for more overtime and out of hours working but that incurred extra costs.
- Over-processing - this waste happens when more work is done than is required to meet the customer's requirements or where more expensive personnel are used than necessary. There is a tendency to over-engineer and create excessive costs. For an example look at the unused facilities on your mobile telephone, Microsoft Office or any other modern product.
- Defects - producing output that is scrap or requires reworking is an obvious source of waste. Philip Crosby promoted the idea that "Quality is free"
The 7 Wastes In Services
If you have manufacturing experience then you will be able to see how the seven wastes combine to create excessive costs and time take to create the product.
Additional wastes including the underutilisation of people have since been added to the list so do see the seven wastes as a starting point rather than a finishing point.
In service businesses and retailing, the wastes can still apply although the form may be subtly different.
Overproduction in quantity can't be done for a dry cleaning service since you clean what you have but it can be a problem for a catering service who makes lunch for 15 instead of the 12 as ordered "just in case".
Overproduction in time is certainly a problem for both as doing work early may mean that higher priority items are delayed because of poor scheduling systems. In the case of the catering service, the curled up edges of the stale sandwiches directly damage the customer's perception of quality.
I am sure that you get the idea. Although the concept of the 7 wastes started in the production systems of Toyota, the concepts can be applied to most businesses, regardless of the sector.
Using the 7 Wastes
The 7 wastes need to move from an interesting idea into something that creates action and improvement.
It doesn't matter what kind of business you have, if you are responsible for the operations of the business or even a department, get yourself a bit of paper and turn it on its side, draw seven columns and head each for the TimWood elements.
Then start brainstorming.
Where is time, energy and money being wasted?
I think you will be surprised at what you find. My big problem is "work in progress". I start more ideas than I finish from books I am reading to products that I am developing and even blogs that I start but don't publish. As work in progress each represents a huge amount of time that has been wasted although if something isn't going to work, the sooner you give up on it the better.
When you see the potential of the 7 wastes take the concept and work with your team.
The spirit of lean manufacturing and six sigma (quality) is very much to involve your team as much as possible because they are the experts in what they are doing.
Waste elimination through the 7 wastes reduces costs, increases profits and customer satisfaction and value and safeguards the jobs of the employees. It also makes the employees jobs better.
Aren't the worst jobs those that involve putting right things shouldn't have happened and persevering with regular frustrations because no one is paying enough attention or cares enough about fixing a problem at source.
What Do You Think About The Seven Wastes?
Let me know what you think about the seven wastes by leaving a comment.
I am particularly interested to hear about applying the seven wastes outside of the manufacturing sector.
The Two Sides of Profit Improvement - Cost Reduction / Efficiency and Revenue / Margin Enhancement
The 7 wastes captured in the Tim Wood approach are a great way for you to think about making your business more efficient and productive.
But cost reduction can only go so far in improving profits and ultimately you have to turn your attention to increasing sales revenue and contribution margins.
You are invited to take a 30 day trial in my small business growth training system at www.ProfitableGrowthStrategies.org for $1 or £1. You will discover many ways you can increase your profits by selling more, more often to more customers.