Manufacturing waste is something business owners often overlook, yet left unchecked, it can cost a business a significant amount of money. From transportation waste, inventory waste, defective products and more, waste can accrue in a range of areas across the company.
This article explores the different types of manufacturing waste, and how to reduce them. Finally, we look at how lean manufacturing can help proactively avoid wastage and improve manufacturing productivity.
What is manufacturing waste?
Waste is any activity that uses resources but doesn’t add value for the end customer, and can therefore be eliminated.
Viewed this way, some activities that see materials going in the bin are actually valuable to end customers and shouldn’t be considered as pure waste – for example quality testing to prevent defective products reaching consumers.
Waste can be classified as:
- Necessary waste. This waste doesn’t add value but it is necessary. For example, quality testing, production planning, creating business reports
- Pure waste. This waste doesn’t add value and it’s not necessary. For example, waiting for someone to finish using a machine before you can use it
Now that we can identify genuine waste, let’s explore the seven types of waste and how you can reduce them.
The seven types of manufacturing waste
There are many things that can lead to wastage in a manufacturing business. Some of them are easy to identify, but others less so. The seven types of waste according to Lean theory are:
- Waste of inventory
- Waste of transportation
- Waste of motion
- Waste of waiting
- Waste of overproduction
- Waste of overprocessing
- Waste of defects
Waste can accrue through defects in raw materials, which end up as scrap and are unusable. Waste can also happen through the processes and materials involved in transporting goods.
Nor is waste isn’t always about something tangible. Waste in a manufacturing business can also take the form of time wastage (or ‘waiting’ wastage), where tasks are completed inefficiently leading to wasted time and resources.
Wastage can also occur from overproduction of goods which can’t be sold, overprocessing of materials unnecessarily, and ‘waste of motion’ – where people, machinery or tools are moved around during manufacturing unnecessarily.
We’ll cover each of these types of wastage below and provide tips on how to reduce them.
Waste of inventory
Inventory becomes excessive when you hold stock for “just in case” situations, such as to meet unexpected demand or protect from production delays. It may also come down to a simple error in ordering stock – someone over-ordered an item without assessing the businesses and customers’ needs beforehand. The danger of this type of waste is that it is ultimately cash — tied up in assets — which cannot be used for anything.
How to reduce waste of inventory
Usually inventory waste occurs for a variety of reasons: the procurement team aren’t able to forecast demand, managers don’t have visibility over sales trends, the business can’t account for supplier lead time or other problems.
A straightforward way to reduce waste of inventory is to use inventory management software. It can help keep track of raw materials and components throughout procurement, production and sales. Because it’s an all in one system, managers can easily view performance and more accurately forecast demand. Doing so minimises the risk of over-ordering inventory that won’t sell.
Inventory software can also help reduce wastage when it comes to stock takes. Often, new stock orders are inefficient because existing stock wasn’t counted accurately. Inventory software tools such as barcode scanners can help make this process less manual, reducing the risk of error.
Waste of transport
Waste of transport comes from unnecessary movement that doesn’t add value to the product. Moving materials around excessively can be costly and potentially damage your products. Usually transportation waste occurs in the manufacturing plant and the inventory warehouse, especially in larger warehouses housing lots of stock. However, transportation waste can also happen on a larger scale if there are goods or materials being transported between warehouses, regions, or countries.
Perhaps the most extreme example of transport waste reduction comes from courier firm UPS, whose delivery trucks never make left-hand turns. That’s because in the US turning left means idling at an intersection waiting for a break in oncoming traffic – or for a traffic light to give you right of way – followed by fuel-heavy acceleration. UPS worked out that avoiding idling by plotting urban routes with a preference for right-hand turns reduced petrol consumption. In fact, this strategy, along with other route optimisations, reduced fuel use by an estimated 10 million gallons in 2016.
UPS reduces waste of transport by only making right turns
How to reduce waste of transport
If wastage is happening within the warehouse, this can often be due to poor layout of the warehouse floor. If staff are having to bring tools from one side of the warehouse to the other multiple times a day, for instance, this can lead to time and resource wastage. Here are some ways you can maximise warehouse efficiency:
- Store best selling items near the assembling or shipping area to reduce travel time
- Store items that are frequently bought together close to each other
- Automate pick lists that can be sent to mobile devices so your warehouse team doesn’t have to keep picking up paper orders
- Keep aisles and work stations clutter-free so transport vehicles can drive freely and staff don’t have to find alternative routes
Waste of motion can lead to delayed production or even injuries
Waste of motion
Waste of motion refers to movement of people, resources or machinery. For example, multiple staff may be operating one machine when only one person is necessary, resulting in time and resource wastage. These inefficiencies can also be dangerous and lead to workplace injuries and delay production.
Waste of motion doesn’t always have to be on a large scale. Small scale waste of motion includes things like rummaging through a pile of materials to find the right component, walking to the printer across the warehouse, or even sifting through sheets of paper.
How to reduce waste of motion
The key to reducing motion waste is to assess your workflows and layout to identify areas of waste. You could try:
- Creating a workflow or process document to ensure staff follow methodical steps to reduce unplanned movement
- Rearrange warehouse layout
- Store most frequently used tools closets to the area
- Store heavy items at the bottom
And remember, the experts in waste of motion are likely to be the staff dealing with production day-to-day: a good waste of motion review starts with asking for feedback from your workers.
Waste of waiting
One of the most easily recognisable wastes, the waste of waiting happens whenever goods or tasks aren’t moving. For example, machines waiting to be fixed, documents waiting for final approval, staff waiting for further instructions, or goods sitting waiting for delivery.
How to reduce waste of waiting
- Use frameworks such as a Yamazumi chart to visualise delays, wastage and bottlenecks
- Improve machine reliability by scheduling regular maintenance
- Avoid component shortage by using inventory management software to automatically reorder stock when it reaches low levels
- Upskill staff so they can perform a variety of tasks and aren’t limited to one or two.
Making too much? Inventory software can help prevent overproduction
Waste of overproduction
One major form of waste in manufacturing businesses comes from overproduction. Overproduction waste happens when you make too many products or components during the manufacturing process and they can’t be used.
Overproduction waste can happen for a number of reasons. It may be due to a poor understanding of customer needs — for example, demand unexpectedly slows for a particular product and the manufacturing process does not adapt accordingly. It can also happen when design needs change — perhaps someone finds a fault in the original product but the manufacturing process does not adapt quickly enough.
How to reduce waste of overproduction
Inventory software can help prevent overproduction waste by tracking and recording all key changes related to demand, product design, sales trends and more. By doing so, managers can better assess how much of any given part is required at any given time – and manufacturers can adjust machinery, staff and materials to suit.
Waste of overprocessing
Another form of waste is caused by overprocessing during the manufacturing process. This happens when manufacturers spend unnecessary time, resources, machinery or tools on making a product or component. For example, painting a part of a product that the customer will never see. This type of waste can add up quickly, and lead to inefficiencies throughout the process.
How to reduce waste of overprocessing
Are you spending too much time or effort on any one task? If so, it may be time to reassess.
- Review your core manufacturing tasks and general processes
- Identify tasks that take up time but aren’t necessary or valuable
- Create and implement standard operating procedures so that your team have guidance for each task and don’t spend more than the recommended time on any one step
Waste of defects
Another form of manufacturing wastage is caused by defects in materials or end products. This type of waste is one of the more costly types of waste because it bleeds into other forms of waste, such as transportation, overproduction and overprocessing.
Waste of defects can be caused by inefficiencies in manufacturing processes, unclear operating procedures, poor quality raw materials from suppliers, or staff who are poorly trained in the use of machinery or tools.
Some examples of defects include:
- Incorrectly assembled parts
- Missing screws
- Using the wrong components because operators lack instructions
- Poor quality parts continue to get made because the business rewards quantity over quality
How to reduce waste of defects
To reduce this type of waste, you must identify the root cause of defects. Imagine if out of your batch of 1000 widgets, 500 of them are consistently of bad quality. At first glance, you think the machine was unreliable. Digging deeper, you find that the night shift workers don’t understand how to use the machine as well as the day shift workers because they didn’t have the same training. To remedy this, you’ve sent your night shift workers for a training course and now all your widgets are of top quality!
Here are some other ways you can prevent defects from happening:
- Implement standard operating procedures (SOP) and training to ensure everyone knows the right methods and quality expected
- Create waste audits to regularly find where defects arise
- Monitor the quality of raw materials or components coming from your suppliers to make sure they meet service level agreements
- Reward waste-reduction efforts
- Schedule regular maintenance for machines and tools
Lean methodology to reduce waste and boost manufacturing poductivity
Waste builds up in many different ways throughout the manufacturing process. And the waste that is most dangerous to your business is the waste you can’t easily identify.
The Lean methodology is an effective way to identify and address waste without sacrificing productivity. In lean manufacturing, the customers’ needs define what is of value at every stage, in terms of what they would pay for the product or service. The idea behind the method is to identify what doesn’t add value for the customer and the process and adjust tasks or resources as necessary.
The key principles involved in lean manufacturing processes are automation, visual control of production flow, flexibility, waste reduction, relationship management with suppliers, and continuous improvement. Unlike other methods, the Lean methodology not only reduces waste, it addresses the root cause of your waste and empowers your team to solve and prevent their own problems.
Complement lean methodology with an inventory management system
Using a cloud-based inventory management software will aid your efforts to be leaner. It automates otherwise manual and time-consuming procedures such as stocktakes and stock reordering, it gives you visual oversight of performance, and it allows you to track waste so that you can improve processes and make them more effective.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.