Is your business efficient — or is it
wasteful? One of the biggest problems in
businesses today can be narrowed down to waste — of time, human capital and resources.
“Business waste is anything that does not
add value to a product or service,” says
Louie Hendon, program manager at
Corporate College based in Cleveland. It
can be obvious waste, such as unproductive meetings, excessive paperwork or
wasteful use of energy consumption.
Waste can also be hidden, such as poor
design of business processes, excess overtime and labor.
Smart Business spoke with Hendon
about the principles of waste in business,
and what business owners can do to
become more efficient.
Where do you see waste in businesses
today?
There are seven types of waste that happen frequently in businesses — in both
service and manufacturing industries. The
waste centers around three areas: people,
quantity and quality.
People. There are three types of waste
that commonly occur with people in an
organization. The first is processing waste,
which is doing something that doesn’t add
value to the customer. The second is
motion waste, which is unnecessary activity that can cause a waste of time and the
potential for injury. The third is waiting
waste, any excess time it takes, for example, to process an order.
Quantity. There are three areas under
this category. The first is making too much
product — for example, a customer orders
500 pieces but your process only allows
making 1,000. The second is inventory
waste, such as product sitting idly on
shelves. The third is moving waste, such as
the number of times paper or items need to
be moved from one area to another.
Quality. The last type of waste is fixing
defects: taking the wrong order, fixing a
damaged product, etc.
These types of waste are the basic principles of lean, which is a systematic
approach to continually improving wasteful processes originally developed for the
automobile manufacturing industry —
companies such as Ford and Toyota. (You
can learn more about these principles at
the Lean Enterprise Institute’s Web site
www.lean.org.)
Could you give an example of how lean
would work in a service industry?
Let’s say a bank wants to reduce the
amount of cash on hand at its branches to
free up money to invest. If you take the
principles of lean and closely examine the
daily process of ordering money at the
bank, you might find that every branch
orders money differently. Some order it
every day, some order it all at once. This is
a wasteful process. By using the principles
of lean, you can put some controls into
place to deal with the waste — such as
only allowing reorders of money when a
branch reaches a minimum.
Another example in a service industry is
the inefficient movement of paperwork. Is
it really necessary to require employees to
get five or six signatures on a contract
before it is processed? Lean is a common-sense approach that helps companies take
a hard look at what is efficient and what is
wasteful.
Six Sigma is also an excellent system.
(Readers can learn more about Six Sigma
by visiting www.isixsigma.com). There are
many consulting firms, national organizations and colleges that provide training in
these techniques.
Who in an organization would best benefit
from learning about these waste-reducing
techniques?
Everyone can benefit: From top executives to shop floor workers to salespeople.
That said, one of the key ideas regarding
quality systems is that it has to come from
the top down, and upper-level management
needs to be spearheading the organization
to adopt these methodologies and make
them part of the overall business strategies.
How does an organization begin to identify
waste in all these areas and become efficient?
It is difficult for an organization to go
completely lean overnight. Usually going
lean is done in stages, since you will need
buy-in from other areas of the organization
to make it successful. For example, one
team or department can quickly go through
the process of lean and identify the wasteful areas and brainstorm how to get rid of
the waste. They can then go in and implement these ideas to see if they work. It
could be as simple as moving raw materials closer — or moving all the printers to
one location — or it could be more complex. The whole point of lean is to identify
the waste, find a solution and then test that
solution. Ultimately, this kind of process
will affect the entire culture of the organization in a positive way.
LOUIE HENDON is the program manager for Lean Six Sigma at
Corporate College, www.corporatecollege.com. Based in Cleveland, Corporate College offers employers affordable, cutting-edge
and custom-designed training programs to enhance future work
force development, job growth and job retention in Northeast
Ohio. Reach Hendon at [email protected] or (216) 987-2919.
