1.8 Tools: The Eight Wastes

You may have heard of the concept of “lean” manufacturing. The idea behind lean is to eliminate waste—i.e., get rid of all processes, steps and materials that do not add value—in order to meet customers’ needs as efficiently and effectively as possible. Lean principles fit everywhere, including all areas of the logistics and supply chain management (e.g., transportation, warehousing, information systems, and customer service). The Lean Institute and the Toyota Production System have defined the following process for implementing lean techniques:1

1. Look through the Eyes of the Customer: Understand a product’s value proposition as the end customer sees it. What does the customer really want? Achieving the value the customer desires constitutes effectiveness.

2. Eliminate Process Waste: Identify and evaluate all the processes in the supply chain for each product, eliminating all activities and processes that do not add value. Eliminating waste equals efficiency.

3. Eliminate Wasted Time and Space: Eliminating wasted time and space between the value-added processes improves the flow to the customer.

4. Repeat: Continuously revisit these steps until a state of perfection is reached in which the right value is created with no waste. Lean companies follow a continuous cycle of “Plan, Do, Check, Act.” However, in our constantly changing world, no one ever really achieves perfection.

Kiichiro Toyoda, one of Toyota’s early leaders, summarized, "The ideal conditions for making things are created when machines, facilities, and people work together to add value without generating any waste."2 Classic lean philosophy invites decision makers to avoid the eight wastes. Table 1.3 describes and exemplifies the eight wastes.3 Notice how the order of the terms describing the eight wastes have been arranged to spell “down time.”

We have already mentioned a few ways that companies attempt to “cheat” the classic trade-offs by applying lean principles—whether they call them lean principles or not. For example, earlier in the chapter, we discussed Rue La La’s efforts to use previous order history to prevent people from ordering things that they will probably return. The goal: To eliminate the waste caused by excess transportation.

When eliminating the eight wastes, you need to take a holistic or systems perspective. Ask, "How does a change that you are considering to solve one problem affect other parts of the system?" For example, in the Rue La La example, if reminding customers what sizes worked for them in the past is done in an offensive manner, customers may choose not to place an order. Saving on returns at the cost of losing customers doesn’t make sense. If Rue La La can remind customers that sizes run differently for different brands and help customers pick the right size in a friendly, non-offensive way, then everyone wins. Waste is eliminated, improving the customer’s experience and Rue La La’s profits.

To effectively implement lean principles and eliminate the eight wastes, organizations usually hold Kaizen events (sometimes called Kaizen bursts). Kaizen events are gatherings of people who are involved in the day-to-day management of the process. They know how the process works and can ask two core questions,

1. How can this process be improved?

2. If we make this change, how will the rest of the process be affected?

Process mapping—creating an accurate depiction of a process complete with performance statistics—can make a process visible, improve the brainstorming process, help you identify opportunities for improvement, and define implementation plans.