Waste is the largest harm to business viability

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This is why we love helping clients with inventory management
March 13, 2019
eliminating wasteful activity processes

Waste is the largest harm to business viability

To survive in this competitive environment, manufacturing organisations need to look for every opportunity to be more efficient, improve their productivity, reduce their cost structures while increasing the quality of their product or service.

To address these issues, manufacturing businesses have implemented LEAN manufacturing principles that have allowed them to manage every process and cost within their environment and thus make great headway in achieving these improvements.

Incredibly, there is nothing stopping the growing service industry, or any other industry as a matter of fact, from taking a LEAN business approach to help them develop a hyper-effective processes and profitable business model.

In most cases, LEAN process improvements not only prevent waste but actually eliminates existing waste. By focusing on reducing waste first  instead of trying to merely manage existing processes, companies have made great headway in managing their costs.

Eliminate Waste

Companies tend to account for waste and activity at every stage as part of their overhead – costs which get rolled into the price paid by customers. There isn’t a customer alive that wants to pay for your organisations waste and inability to control their costs. Thus, an essential step in creating LEAN business processes is eliminating wasteful activities that eat up time and resources and that provide no value to you or the customer.

Waste is not just a manufacturing and production related issue, any process or activity in any organisation that provides no value to the customer or contributes nothing to your bottom line, can be considered “waste”. These processes and activities are often overlooked but when actually measured, cost the organisation on a monthly basis and come straight off the bottom line.

This type of waste exists at every level of your company, in every department, and within virtually every activity that takes place. When you can transition your teams away from a “that’s just how we do it” mentality, you can start developing LEAN business processes by identifying and eliminating key areas of waste.

The ultimate LEAN target is the total elimination of waste. And while that is virtually impossible to achieve, it should still be the goal. Here are the most common areas of waste in business, regardless of sector or industry.

Inventory

For product-based businesses, inventory can be a massive waste. This is especially true in the CPG industry where products can expire. Any inventory that isn’t directly required for meeting customer orders should be considered potential waste. Examine your inventory against sales data to reduce inventory to the absolute minimum. 

Warehouse management process

Overproduction

For manufacturing, this ties back to your inventory. Companies often want to keep employees busy, so their labour is well-used, they’ll continue production, and move more stock into the warehouse. The better approach is to reduce hours and trim those employees when the work is done.

Over-processing / Defects

It’s staggering how many companies utilise an extensive system of checks and balances to catch errors, yet they still occur. Where we aim for improving quality on the output, we wind up wasting more without making a significant dent to justify the costs. Over-processing often occurs when extra work is required to fix issues and defects, or to rework a problem that could have been done properly the first time if processes were carefully followed and/or improved upon.

Transportation

It’s shocking how much cost goes into moving something, be it product or data. For manufacturing and physical goods, products are constantly moved from one location to another despite the fact that they may sit for an extended period. In many cases, they’re constantly routed around the same facility to make room for additional inventory being moved.

moving of inventory with forklift

Downtime

Downtime occurs regularly, often as a period of forced inactivity due to a downstream process that is halted or bottlenecked. Waiting for parts and subcomponents, change in orders, broken equipment, too-frequent inspections, product changes, a lack of orders and more can all bring manufacturing to a halt.

Searching for Product

Employees in manufacturing and warehouses waste large amounts of time walking to find stock. You know it’s in stock, but you can’t remember where you put it. A systems can firstly keep track of where it was placed and secondly plan the shortest route to take and instruct the person where to go next. 

 

Eliminating bottleneck waste process

Bottlenecks

Bottlenecks in processes compromise efficiency and productivity. Problems, like moving products between stations can make it hard to keep things moving smoothly. Identify the bottlenecks.

An efficient business is a successful business - you waste less time on correcting mistakes and spend less money shipping corrected orders if you take the time to get it right in the first place.

Warehouses are an integral part of most industries – but order fulfilment can take a lot longer than is strictly necessary if your picking and packaging processes aren’t as efficient as they could be. Just half a percent of picking mistakes can lead to losses in profits for both your and your customer’s business.

If you’re trying to make your process more efficient, ManageABLE WMS will help you improve the picking and packaging stages of order fulfilment.

 

Give us a call today for a complimentary review of your warehouse and production environment.