The seven types of wastes, also referred to as Muda, highlight which resources can typically be wasted when companies produce their products. The aim of each company should therefore be to decrease or eliminate these wastes, which will potentially lead to greater production effectiveness, lower production lead times and higher profits.
Below, the seven types of wastes are shortly described.
When companies produce more than actual customer demand, these companies are wasting their resources on the fabrication of excess products, and may also waste resources when having to stock the surplus of products. Companies might be over-producing because smaller batch sizes are difficult to handle, because they do not accurately know what is demanded and because they might need extra stock to address warranty issues and defective products. However, there are potentially many other reasons behind an over-production, which is not listed here.
Companies might reduce its over-production by improving its forecasting, and by building up a more flexible supply chain with minimal lead time and capable of producing smaller batch sizes. Finally, companies might try to improve the quality of its products, so that they will not need a big stock to cover for faulty products.
Queues in the production line are oftentimes related to production standstills. During standstills the company will waste resources on labor. Likewise, if production standstills are very common, the company might also be wasting resources on maintaining stock covering for production standstills.
Companies might avoid queues and production standstills by improving its production plans and forecast, and by eliminating potential bottlenecks in the production line.
If products and materials are transported beyond what is necessary, this can also be regarded as waste. Companies might spend a lot of resources on transport throughout its entire supply chain.
Companies might decrease its waste on transport by moving its production closer to both suppliers and customers, and by building up an internal production layout with minimum internal transportation.
Companies oftentimes waste a lot of resources in their stock. Huge amounts of capital are often tied up in the stock, which might be costly due to interest rates, inventory handling costs, and the risk of stocked items being outdated.
As mentioned above, companies might reduce their stock by performing better sales forecasts, and by building up a more flexible supply chain.
Companies might waste resources if they carry out to many non-value adding activities. And it is important that every worker or machine is optimized to do only value-adding activities.
Many companies oftentimes over-process their products. This leads to waste in both labor- and material costs.
Companies might improve their over-processing of products by analyzing their customer’s needs and wants very closely, so that the companies will only design and produce products and products functionalities that are desired by the customer.
Defective products are oftentimes very expensive to fix and repair and these repairs might take away production capacity from the production line. Therefore, it is important that companies will design high quality products, and build up production layouts that are supporting quality.
A brilliant way for companies to work with reducing waste is to introduce a LEAN manufacturing system. The LEAN manufacturing philosophy is supporting the elimination of all wastes mentioned above.
Read about LEAN Manufacturing in this Article: What is Lean Manufacturing?