Improving Profit And Your Life By Reducing
Would you like to be able to improve the profit
you are making or have more personal time?
Reducing waste in your business can improve
profit; reducing waste in your own personal life
can give you more time. An extra 20 minutes a
day saved in your life gives you an extra ten
FULL DAYS over a year. But what is ‘waste’?
||Well, a founding thinker in Lean production,
Taiichi Ohno, identified seven types of waste.
Understanding these can help you cut costs and
improve profit AND give you more time.
Before we look at the seven wastes though, you
need to ask yourself ‘Is the process I am
undertaking actually adding value?’. If the
answer is ‘no’, then there is no point in
reducing waste in that process. Just get rid of
the process. I worked with a business where a
second invoice was issued to every customer
three days after purchase. No-one in the
organisation knew why! And the customer didn’t
ask for it. We stopped doing that process and
let the team focus on more productive processes.
Do you have processes or do things that do not
add value and you should stop?
Now you have decided which processes add value,
we can start to eliminate waste in them. So what
are the seven wastes?
Transport. Transporting does not do
anything to transform a product or service. It
adds cost, and every time you transport
something, you increase the chance of damaging,
losing or delaying it. This is also true for
services. If I need to travel for two hours to
see someone, this adds no value. Delivering the
same service via the web or video conference
Inventory. Holding excess inventory (raw
materials or finished goods) or work in progress
is cash you have tied up on the shelf. Waste. In
addition, inventory can become obsolete or
deteriorate and need to be thrown out. Again,
waste. Taking action to reduce stock holdings
increases cashflow and reduces waste. Many
modern business computer packages can assist you
Motion. The more a person or machine
moves, the risk of damage increases, safety risk
increases and time is wasted in the production
process. Imagine you need to go to a cupboard
for items four times a day, and each time it
takes five minutes. That is 20 minutes a day
going to the cupboard, or 80 hours a year! Over
two whole working weeks! Move the cupboard to be
behind you and reduce the wasted time. When you
employ people, this adds up fast!! Even screwing
the nut on a bolt. It is only the last turn that
tightens it. All the other turns are just
motion. A waste of time.
It is the same in your home. Ever gone looking
for something because it wasn’t put back in the
right place? Do you put dishes in the sink
instead of straight into the dishwasher? You are
wasting time. This extra motion impacts your
Waiting. “I haven’t finished the job
because I am waiting for my boss to make a
decision”. In this case, the customer may not
get their goods on time and you don’t get paid.
If the goods are waiting for delivery, they
could also get damaged. If you hear the word
“waiting” in your workplace, this means you have
a process which has waste built into it. You
need to review this process and change it. Look
at empowering your staff to make decisions, or
changing the way processes flow.
Over-processing. If you do more work for
the customer than they asked for, you are
over-processing. The customer will not pay you
for this extra work. If you feel you need to do
extra work or over service to get a job or keep
a customer, this is still not what the customer
asked for. The extra expense is infact,
marketing expense, not a cost of production.
Over-production. This is the worst waste
of all. It drives all the others. If we grow or
produce more than our customers wants, it will
need to go into storage (inventory) and might
need preservation (refrigeration). It will need
to be moved multiple times. It sits around
waiting. Ever seen 10-15 lettuces going off in
the supermarket? The supermarket has
over-produced to the requirements of the
customers they service. It then sat in
inventory. Now they will throw it out, and they
have paid for it and paid to store it. They then
order less from their supplier, but the supplier
has already planted a crop to meet what they
thought was the demand! Waste. Find out what
your customer wants through formal customer
feedback and deliver to it.
|Defects. Have you ever received a good or
service and it was not to your requirements?
Then sent it back, or ask for it to be fixed?
This rework costs us time and money. Waste. Can
we identify earlier in our processes if there is
a defect? If we could, we could eliminate the
source of the issue, or rework earlier.
Understanding these seven wastes can help you
identify areas of your life and business to
improve. And it makes an easy acronym – TIMWOOD;
Transport, Inventory, Motion, Waiting,
Over-processing, Over-production and Defects.
Lastly, always remember, good systems mean a
business operates without you, which means it
makes more money, and you can sell it as it
doesn’t rely on you. And personally, good
systems give you more time.
If you are stuck on how to get started in your
business, give Andrew Farquhar from WHK Business
Growth a call on 0418 473 955, or 6332 6101.
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