- Question 1
- Overproduction Waste
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- Inventory Waste
- Motion Waste
- Waiting Waste
- Transportation Waste
- Overprocessing Waste
- Defects Waste
- Under-Utilized Human Capital
- Question 3
- Internal Benchmarking
- Determine Which Processes to Prioritize
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A lean system has a primary goal of eliminating waste. Lack of sophisticated quantification and identification of visualization of waste significantly hinders the efforts of lean management. The problem of waste can be eliminated by carefully investigating the waste. The difficult part in trying to solve the problem is not removing the waste but identifying it as well as highlighting. Eight types of waste that have caused inefficiencies in the company making the company struggle in combating competition have been identified. They include overproduction, inventory, motion, waiting, transportation, over processing, defects, and under-utilized human capital. Therefore, identifying the waste and making recommendations will help eliminate inefficiency and increase the profitability of the company.
Overproduction involves manufacturing products before they are required by consumers. The company produces more than the customers demand. PieЕ„kowsk (2014) argues that this waste is very costly to business, since it hinders smooth flow of goods and eventually degrades production and quality. An overproduction increases the lead time that causes the firm to incur huge storage cost making it difficult to detect. Overproduction leads to consumption of resources ahead of company's plan and shifts the focus of the business on what their customers require. The problem is caused by the production of large sizes of the batch. The solution to this problem is to schedule as well as to produce what the firm can sell immediately. It may also be solved by improving machine’s changeover and set up capability. Overproduction is also caused by lack of focus on the customers. It can be solved by identifying customer's wants so that every product is manufactured only when it is needed.
Inventory waste is brought about by purchase, issuance and storage of excessive supplies and other materials. This type of waste can be caused by overproduction of excess products, and work-in-progress are accumulated. Domingo (n.d.) maintains that the problem is brought about by the lack of proper planning and failure or inability to match purchases with consumption. Another example is the storage of obsolete and slow moving stocks like materials and tools. The causes include overproduction, imbalanced line, big batch sizes, long lead times, local optimization, unreliable suppliers, large minimum order quantities, and inappropriate material issuance and requisition standards. The solution to the problem is buying the actual quantities of the inventory needed at a particular time. Also, reliable suppliers should be identified, and the company should come up with the proper material issuance and requisition standards. The company should also review its forecasting model.
Motion waste occurs due to the unnecessary human movements when doing a certain task. Examples include reaching, searching, lifting, bending, walking, and other bodily movements. Employees create this waste by looking for documents or tools when their workstation is disorganized or cluttered. It is mostly caused by poor housekeeping and layout, non-standardized and unclear work instructions, vague materials flow and process. Employees spend time walking to the printer or fax, between offices, finding missing files in a central filing system and backtracking between computer screens. Motion waste often causes delays in the start of work and also hinders smooth flow of work. The management should develop a standard operating procedure so that each employee gets clear instructions. Employees should be trained properly in housekeeping to avoid spending time looking for documents in a cluttered workstation. Office equipment like copiers and printers should be arranged in strategic locations to prevent unnecessary movements (Okpala, 2014).
Waiting waste involves working slowly or doing nothing while waiting for the previous steps in the process. The company has to pay the employees for the hours they spend waiting even if they do not add value during waiting time. The time loss is made up for during overtime which implies that the company has to pay employees a higher rate. The company can also lose customers due to the wastage of their time. The cause of the problem is the unbalanced processes such that if a procedure takes more time than the next, then workers will be idly waiting or performing other duties that make it appear as if they have a lot of work to complete (Okpala, 2014). Unreliable processes also cause the problem of waiting. They are the results of frequent breakdowns and quality issues. Examples of waiting waste also include slow computer speed, waiting for approval or clarification. The problem can be solved by balancing the processes and developing reliable methods to avoid breakdown.
Transportation waste occurs as a result of moving products in between processes. It increases the cost, yet it does not add value to the product. Excessive handling and movement may lead to damage and may cause deterioration of quality. The movement from one location to another does not add value to the customer, and the customers may not be comfortable paying for it. The cost associated with transportation includes material handling equipment, training, staff, and extra space among others. Transportation waste often leads to waiting waste due to delays. The main cause of this waste is overproduction which implies that inventory will be transported between the facilities of the factory. Another cause is poor organization layout which results in functional silos (Pereira, 2009). Managers can eliminate such wastes by changing the layout in accordance with the principle of lean manufacturing. The company should create production cells that have all value adding processes. The firm should also reduce space between operations and invest in small and cheaper machines suitable for operating in small spaces.
Overprocessing waste occurs when the company adds more value to a product than the customer requires. An example includes painting areas that will never be exposed to corrosion or be seen. Overprocessing can reduce the product life and it costs the firm more money in terms of the materials used, time spent by staff, and wear on the equipment. Shigeo Shingo maintains that the cost becomes significant over time leading to inefficiency and reduction in profit (The Lean Academy, 2012). The problem is caused by lack of standardized work practices, lack of improvements, lack of understanding the processes, and poor attitude "it is always done like this." It can be eliminated by having the standard operating procedure, job training and reviewing designs using, techniques like value analysis and value engineering, identify tolerances that are tight (Sutherland & Bennett, 2007).
Defect waste occurs when a product deviates from the specifications and what the client requires. The cost associated with the defects includes rework, material, rescheduling materials, transport, set up, lead time, paperwork, delivery failures, and losing customers. Defects can be avoided when designing products, processes, and equipment. Many defects occur as a result of non-standard operations, differences in the way different operators handle products during shifts. Other causes include failure to maintain equipment, fixtures, and machines. Lack of culture that allows workers to report problems also contributes to defect waste. Also, lack of training and rewarding wrong behaviors like quantity instead of quality cause the waste of defects. Examples include missing screws, incorrect components, faulty parts, and scrap. Defects can be eliminated through automation, implementing standard operation procedures as well as training employees. The company should also develop such culture that motivates employees to report problems immediately and concentrates on quality instead of quantity only (“Kaizen definition & principle,” 2006).
Under-Utilized Human Capital
Under-utilized human capital occurs as a result of restricting worker's responsibility and authority in making routine decisions. It also involves having high paid employees do routine work that does not need their expertise. An example is the failure to provide business tools required to perform and improve the worker's assigned work and failure to trust staff to stop production and fix a defect or deal with the organization of their work. The solution to this problem is to allow staff to take responsibility for their work. Management should provide tools to every employee and should trust their staff to organize their work and to fix defects in their workstations (Zokaei & Simons, 2006).
A lean system must focus on identifying the waste and implementing recommendations to eliminate inefficiency. It will also help increase the profitability of the company. The difficult part in trying to solve the problem of waste is identifying and highlighting it. Types of waste may include overproduction, inventory, motion, waiting, transportation, overprocessing, defects, and under-utilized human capital. For a company to remain competitive, it must eliminate all the inefficiencies brought about by the highlighted wastes.
Benchmarking provides comparisons between the performances of a firm and the identified best practices which become standards of improvement to be used by employees. Internal benchmarking reveals the best practices within a firm. The operating unit should identify the best performing unit to learn their practices. They should then prioritize processes according to the various methods because it can be costly to implement changes in all processes at once.
Determine Which Processes to Prioritize
The firm needs first to understand its business environment and critical success factors to help identify business drives and processes. It also helps develop parameters for benchmarking. The criterion for prioritizing is associated with the reasons for process existence and overall importance to the firm's mission, strategies, and values. Balzan and Baldacchino (2007) argue that reasons for the existence of a company's process can be determined by assessing customer satisfaction and by its importance to a customer-supplier relationship. A further criterion should be determining the importance of a decision on improving practices and how internal benchmarking is to the process. The importance of the strategy and plans is also a good criterion.
Once the company has selected decision criterion, it can use tools such as criteria testing, analytical hierarchical process, maturity testing, or key business process assessment. In criteria testing, a decision matrix is used to determine which process is to receive this testing. It includes criteria and relative weights on each other. It also involves the critical processes and their influence on selected criteria. A subject matter expected may be required because some subjectivity is necessary for the prioritization process.
The analytical hierarchical process is based on agreed decision criteria. It is structured in a way that it uses the consensus of experts in the subject matter. A list of prioritized processes is developed, and it contains the characteristics of all processes. The analytical hierarchical process can be used in various fields where complex alternatives are involved and need to be evaluated at the sub-process level. Experts in the subject matter build a hierarchy of characteristics of processes. The group create consensus on overall goal and then divide the goal into the sub-goals that support overall objective, and these sub-goals can be divided further. Experts then assign weights to every characteristic in the hierarchy using a consensus method (Kaur & Bhatia, 2015).
Performance maturity analysis evaluates the strengths of business processes and compares them to the company's objectives. A set of characteristics of each process is created and values are assigned to these characteristics based on judgment and available facts. Key business process assessment can also be used to determine the processes to prioritize. The influence of major functions like product design, production, and marketing is analyzed. Benchmarking is then done on the processes that have the most influence.
One of the actions the benchmark team should perform is to collect necessary data. The company should determine the indicators and methods of data collection. Performance measures need to be selected which are accepted measures of excellence such as leadership, policy and strategy, people and resource management, business processes, customer satisfaction, impact on the society, and business results (Soni & Kodali, 2010). A collection of data must be done using the proper measurement methods for a meaningful comparison. The collection includes site visits and in-person meetings. Visits can be done by a benchmarking team with the help of a facilitator. The questions are developed and written in a document to help with the collection of information, and the team should ensure that the workers filling the form are honest and objective. The team should then assess the current level of performance. This involves identifying gaps between the benchmarking unit and the operating unit. It also includes analyzing data and comparing the data of the operating unit and the reference unit. The comparison is then presented on a weighted scale in the form of charts for the selected performance factors and can show current level of performance, the best performance, and the average.
The team should determine future performance levels. Expected improvements on their partner should be forecasted so that any goal they set will be outdated within a short period. The process of forecasting can be hard and might require the help of an expert. Binder, Clegg, and EgelвЂђHess (2006) argue that a report is generated by considering internal and external factors. The team should present their findings to the senior management to gain acceptance. An action plan is developed based on the agreed strategy. The operating unit should then implement specific actions and keep on monitoring the process. Finally, benchmarks should be re-evaluated and updated according to the recent performance.
Internal benchmarking can be a costly process that cannot be implemented on all units at the same time. Therefore, a company should be prioritizing processes according to the various methods such as criteria testing, analytical hierarchical process, maturity testing or the key business process assessment is necessary. Once, the high priority processes have been identified; the company should carry out the steps to improve it. The steps involve collecting data to determine current levels of performance. The team should also determine future levels of performance and present their findings to the management. Further, the company should keep on re-evaluating benchmarks after implementation.
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