It's no surprise that many businesses set lofty goals for profitability and efficiency. While there are many different strategies you can utilize, one that is often overlooked by business leaders is the elimination of waste, or muda, which is foundational in lean manufacturing.

Every business carries some amount of unnecessary waste, yet many people in manufacturing and other industries are unaware that lean manufacturing may be able to solve many of their business’s problems. Instead, they waste money on more floor space, more employees, new equipment- the list goes on and on. Unsure if lean can be applied to the stale, seemingly unsolvable issues and inefficiencies they’ve had for years, too many business owners experience many more years of frustration as their business fails to reach achievable goals and profit potential. They don’t recognize the activities in their business that are wasteful and are therefore unaware of what they have to gain by eliminating them.

Stop cutting corners and trying every gimmick for short term solutions to your problems; here are the 5 most common areas containing waste that are hugely detrimental to the goals of a competitive manufacturing company in 2021.

1. Cost

The bottom line is that most businesses aren’t profitable enough and spend too much money on unnecessary waste. Too often, companies have routine activities that add cost, but no true value. It takes a trained eye to separate value-added activity from those that only add cost.

For example, over 70% of operator motion in most factories is waste. A good rule of thumb for labor reduction in a successful lean implementation is 50%. The savings don’t stop with labor; inventory is also reduced. This frees up cash and reduces the cost of managing/moving/storing/counting, etc associated with inventory. With reduced labor and inventory, the floor space and other overhead costs are reduced. Improved productivity reduces or eliminates the need for capital investment for sales growth. Manufacturing lot sizes are reduced in part by reducing or eliminating setup times, which also improves equipment capacity.

2. Quality

Do you have products with quality issues in the field or in the factory, meaning you have too much scrap and rework/reject rates?

Lean manufacturing requires that quality be built into every process. Reduction in defects not only improves customer satisfaction, but it also drives down costs. Materials and labor lost in producing defective products and reworking defects are utilized in producing defect-free products. Equipment and time that were wasted in generating defective products become available for production. Defects produced in earlier processes are not passed on to later processes, saving costs throughout the organization.

3. Delivery

Delivery issues can have a domino effect on your business. If delivery is late and processes take too long, it’s typically because your factory is overwhelmed for one reason or another and missing shipping deadlines. Issues expand from there when you then have to keep workers overtime or bring in temporary help to meet deadlines. Your business is burning your employees out with what appears to be a capacity problem but is really a waste problem.

On the other hand, there is also a large amount of waste in delivery as it relates to delivering things from one station to another within the factory. Inefficiencies in the line evolve from a delivery problem to a cost problem (over time, you then have to turn business away because you’re behind or outsource).

Late completion in manufacturing adds all kinds of costs: expedited freight costs to prevent late deliveries to customers, shipping staff staying late to load onto trucks, etc. Late delivery can easily result in lost business, and within the factory, it causes lost time and chaos, which drive up cost. Companies often increase inventory in an attempt to reduce the impact of poor performance, but doing so only adds cost and reduces any sense of urgency to correct the real problems.

4. Safety

If employees in the factory are unsafe, it can be massively detrimental to your business. Hard, physical work causes injuries and fatigue— and results in employees not being able to work at the required pace. Injuries can also be expensive with worker’s comp claims.

Safety is integral to improving efficiency; without safety prioritized, many issues on the shop floor cannot be properly addressed. With lean manufacturing, we begin by eliminating the hard work first, before attempting other improvements.

5. Morale

People don’t want to go home tired and sore. Poor company culture and low morale drive great employees away. It costs money and time to hire and train new people, and experienced people are more efficient and produce at a higher quality level than inexperienced people. In addition, good morale equates to creative people, who help solve problems and improve your business.

In lean, we talk a lot about kaizen culture: cultivating creative people that help solve business problems. Time and time again, it’s been proven that people who are passionate about their work are more productive than people who are just trying to make it through the day. Allowing your employees to have input and encouraging creativity in solving problems improves their “buy-in” and morale. A stable workforce reduces the cost of training, hiring, and improves quality.

Lean solves problems simply: greater profitability, higher quality, lower cost, and shorter lead time. Through the elimination of muda (waste), there is an increasing proportion of value-added work in every process.

Are you looking for a lean manufacturing consultant? LJ OKeefe Inc is a premiere lean manufacturing consulting firm with over 30 years of experience based in Atlanta, Georgia. Contact us today to discuss your challenges and learn how we can help you stop wasting so much time and money. Or, check out our client's real results, our approach and services, and other helpful lean manufacturing blogs.