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Global warming, oil spills and other environmental disasters seem to be on everyone’s mind these days. Business magazines write about “green” companies and movie stars drive hybrid cars in order to appear environmentally responsible. But most businesses overlook the single biggest opportunity they have to go green-simplifying, streamlining and optimizing their internal operations.
Since many businesses (even profitable ones) spend about one-third or more of their budget on waste, scrap and rework, it’s reasonable to assume that eliminating that waste would reduce not only costs but various planetary problems. Reducing and eliminating waste is the goal of lean production. Waste reduction reduces consumption, which, in turn, reduces the energy required to produce the product in the first place.
Leaning the BusinessMost of us grew up learning about Henry Ford and the concept of mass production. Mass production led to economies of scale that reduced costs-as long as the company was making a single model with no options. Today, consumers demand a customized product, regardless of whether it’s a new car or a burger at their favorite restaurant.
Then along came lean (a.k.a., the Toyota Production System). Lean focuses on eliminating unnecessary delays and movement. It creates economies of speed that reduce costs and boost profits while minimizing environmental impacts. Whereas mass production focuses on big batches, lean focuses on small batches and quick changeover. With mass production, it’s easy to commit the sin of overproduction, which creates inventory that has to be warehoused and managed. Lean only creates a small batch when a customer requests it, thereby avoiding all unnecessary production or inventory. Nothing goes to the warehouse; you make it, you ship it.
It no longer makes sense to create a thousand units of a product quickly if consumers want a product customized to their needs. A business can easily end up with thousands of units that no one wants. All of the energy and materials used to create these products are wasted, and it takes energy and landfills to recycle or dispose of the product. When the economy slides into recession, mass production leads to more and more inventory that must be stored and managed.
Imagine the environmental impact that a shift from mass production to lean production could produce. If a company only prepares enough products or services to meet customer demand, it doesn’t have to inventory, store, or manage a lot of raw materials or finished goods. This prevents the unnecessary movement of inventory, and reduces storage costs and overtime.
Consider the following examples. One chemical company had $200 million in finished goods sitting in rail and shipping yards all over the planet. Managing that inventory cost a fortune. A metal fabricator recycled a million pounds of finished but flawed product every month that had to be chopped up and fed back into the furnaces. Saving the energy used to chop and melt the recycled metal could help save the planet. A magazine printer had high-speed presses that could print a million magazines in a day, but the bindery could only handle 200,000. The other 800,000 had to be stored where they could be gored or toppled by forklifts over the next five days. The simple solution was to print 250,000 the first day and 200,000 every day thereafter, making the production schedule more flexible and allowing more print jobs with less rework and overtime.
The Tools of LeanTo maximize the value of lean, manufacturers should strive to reduce delays and the unnecessary movement of people or materials. Two main lean tools are value stream mapping (VSM) and spaghetti diagramming. Much like a flowchart, value stream maps show the workflow from a time perspective. Spaghetti diagrams, on the other hand, show the movement of people and materials through a workspace.
On a VSM, the arrows between steps are where the product or service spends most of its time. Eliminate the delays between steps to increase productivity, reduce errors and maximize profits.
On a Spaghetti diagram, calculate the distance an employee or a work product moves through the space. Often, workspaces are poorly designed, which leads to lots of unnecessary movement. To see a well-designed lean production “work cell,” visit any Subway® restaurant, where you’ll find a small oven (right-sized machine) for fresh bread, and small buckets of meats, cheeses, and vegetables. Chips and drinks are self-service.
Walking is wasteful. Ask your employees to wear pedometers for a week and record their movements. A redesign of the workspace could lead to significant savings.
Environmental ImpactEliminating delays and movement while reducing batch sizes and inventory not only speeds things up, it also reduces the chance for error by 50%. Faster production-combined with less rework cuts costs-boosts profits and reduces environmental impacts that range from the overuse of raw materials to high energy consumption.
Use the tools of lean to reduce delay and movement and benefit Mother Earth as well. Lean is not just about the bottom line, worker satisfaction, or customer satisfaction-it’s also about the future of the planet and its inhabitants.
About the AuthorJay Arthur, the KnowWare Man, is the author of Double Your Profits: Plug the Leaks in Your Cash Flow and Lean Six Sigma Demystified. He has spent the last 20 years helping companies maximize revenue through the “Lean Six Sigma System,” a collection of audio, video, books and software, and he created the “QI Macros SPC Software” for Excel.
For more information, call (888) 468-1537 or visit www.qimacros.com/excel-spc-software.html.
SIDEBAR: The Seven Speed Bumps of Lean1. Overproduction leading to excess inventory leading to environmental impacts
2. Too much inventory (inventory is evil)
3. Waiting (delay)
4. Unnecessary movement of people
5. Unnecessary movement of materials
6. Unnecessary or incorrect processing (e.g., inspection)
7. Rework to fix mistakes