Beyond Lean: Optimal ways to Eliminate Waste

What was originally known as the Toyota Production System (TPS) has evolved into a management philosophy and set of production practices that focuses on the use of resources to create value that a customer is willing to pay for.

As Toyota became more successful around the world, interest in their processes spread. Their set of tools, now know as Lean production or just Lean, were developed to ferret out and eliminate wastes, or Muda.

Basic Lean Workshop

Here’s a set of questions to help you facilitate a workshop to start thinking about ways to reduce the original seven kinds of Muda/waste:

1. Transportation: In what ways are there unnecessary (non-value added) movement of parts, materials, or information between processes in the system?
2. Waiting: In what ways are people or parts, systems or facilities idle – waiting for a work cycle to be completed?
3. Overproduction: In what ways are we producing sooner, faster or in greater quantities than the customer is demanding?
4. Defects: How and when does the process result in anything that the customer would deem unacceptable?
5. Inventory: What, if any raw materials, work-in-progress (WIP) or finished goods do NOT have value added to them?
6. Movement: What, if any, excessive movement of materials, people, equipment and goods occur within a processing step?
7. Extra Processing: What extra work is performed beyond the standard required by the customer?
8. Engagement: In what ways, are people disengaged in the process that has an unnecessary impact on the system?

Later on, new wastes were added to the list, including the waste of unused human talent, and wastes that for the time-being are necessary to enable the production system to function, but which can ultimately be designed out of the system. Here are two more questions to consider:

1. Focus: Which wastes (Muda 1) are unnecessary, that you might eliminate first, or wastes (Muda 2) that are non-value-added but necessary for the system to function which you can minimize until you can eliminate them?
2. Capacities/passions: In what ways are we under-utilizing people’s capabilities, interests and passions to achieve a synergistic result?

But that’s not all. When production and service delivery systems are considered from a complex adaptive systems perspective, the approach that we at Maverick & Boutique have developed, there are at least five extra Muda to be considered, which offer even “more bangs for the buck” because they involve thinking about systems from the points of highest leverage (Meadows Institute, 2015).

Sub-optimal system transformations: What Lean does not seem to take into account are the transformational shifts that occur in the socio-technological system, which present opportunities for the elimination of wastes. These wastes become apparent when you start to think of production/consumption as a complex adaptive system.

If you adopt a linear perspective to production/consumption rather than a complex adaptive systems perspective, it is quite possible you will not be able to recognize the large scale periodic transformations of the socio-technological system, that keep arriving with ever shorter times-scales.

New technologies, and the systems that support them, come along every so often and largely displace, one or more existing products – best described back in the 1980s by Richard Foster, a former vice-president of McKinsey, in his book, The Attackers Advantage. As each new disruptive technology emerges, after an often clunky start, they race up the experience curve and often achieve productivity gains measured in the hundreds or thousands of percent. Think containerization, the motor car, digital photography, the iPhone, Amazon and the radial tire. At these transitions, the structure of the system changes, not just the technology, but the production and distribution methods, skills required and the theories/models that underpin their development.

The productivity gap between the emerging product system and the previous product system is waste/Muda.

Inadequate Conception of Risks and Solutions: Anyone who works in the risk management world will tell you that occasionally black swans and unknown unknowns or Unk Unks come along to cause major problems. Black swans are events we can imagine, but have never seen before. Unk Unks are not ever on our radar. Think events such as the Japanese tsunami which swept straight over the sea walls, the missing MH370 777, the BP Gulf blow-out which was not supposed to happen, and rise of the Caliphate in the Middle East instead of the Arab Spring. All of these are wastes, sub-optimal expressions of value that the customer does not want to pay for.

We get to understand these possibilities by seriously considering a wider range of models/theories from a broader range of experts, who can help us develop a more robust model of the system. Robust Models, says Conant, one of the father’s of complexity theory, are essential to being able to exercise control over a system. If we are still thinking linear and our competitors are thinking ecology, then we are sure to lose.

Inappropriate Scale of the Tools we Use: The use of tools and skills that are inappropriate to the scale of the problem or opportunity is also a source of waste. For example:

• Expecting a bureaucracy to invent new products.
• The use of mortars, tanks and fighter planes to develop a better relationship your next door neighbor creates a huge gap in customer satisfaction.
• Using a sledge hammer to drive home a nail.

Not Preparing for the Future: The new kid on the block is anticipatory awareness. Amazon has perfected, and Big Data is trying to get its head around this idea. Amazon ships products to warehouses near you in anticipation that you (or others) will buy them within a statistically predictable window of time, thereby reducing the time the goods are kept in stock or out for delivery, and reducing waste even further. And although Big Data is trying to do something similar, the data merely confirms the hypothesis. You still need humans to figure out what new models/theories are emerging, and using an out-of-date model to run your organization costs time, which costs money. The difference between a successful and unsuccessful project can easily be the length of time you need to borrow the money. Too long and the cost of servicing the debt becomes a millstone around the project’s neck, which can quickly escalate into seriously expensive Muda.

Lean+ Workshop

Here are some additional workshop questions that help identify the wastes that the original process did not uncover:

1. Optimal Wise Application of knowledge: How well are we achieving the wise application of knowledge for the entire system, e.g. inadequate pay for staff, negative impact on the environment, resulting in costs to the consumer after use e.g. disposal of hazardous chemicals or remediation of old mine/factory sites, which are paid for by all
2. Transformation between paradigms: In what ways are we failing to transform all aspects of a system (roles, rules, tools, relationships, culture), so it continues to operate sub-optimally e.g. embedding old coordination, leadership, decision, learning models in a new technology/production system or product/service
3. Robust model of the system: In what ways do we have an inadequate model of the system by leaving out black swan/unknown unknowns, trans-disciplinary learning features, etc. especially for early stage products; missing out on efficiency/productivity gains by regarding systems as a network, rather than an ecology
4. Appropriate Scale: In what ways is the production/distribution system unable to adapt to changes in scale required, i.e. production ramp up/ramp down, raw materials shortages, natural disasters e.g. tsunami, hurricane
5. Anticipatory awareness: In what ways are we not getting a solution to the customer fast enough so the NPV (net present value) is optimal and there is little or no waste due to capital servicing?