Operations Management

Eliminate Waste From Your Operations

Written by Andrew Goldman for Gaebler Ventures

Part of having good Operations Management is eliminating wasted from your processes. Make sure your company is equipped to seek and eliminate waste in all areas of your company.

One of the main principles of Just-in-Time management is the elimination of waste from all of your operations.

Waste can be defined as any non-value added activity.

A value-added activity is simply, any activity that gives value to the product. If you were baking a cake, putting icing on the top would be a value-added activity, while moving the cake from one table to another would not.

By eliminating waste in your operations, you can reduce your lead times, increase quality and decrease your costs. You should consider waste your enemy and seek to eliminate it at every corner.

Before you can eliminate waste from your processes, you need to be able to identify it. Many small businesses have a good deal of waste in their operation, but they do not track it. In addition, many small businesses become complacent and accept waste as part of their operation. Don't fall for either of these traps; make sure you track your waste and seek to eliminate it.

In tracking waste, you should understand how many good parts you're getting to how many bad parts. This could be applied to raw materials or finished products. If you're constructing metal chairs and you have a good deal of scrapped steel, you should be aware of what percentage of your order is being utilized.

Once you've identified waste in this area, you should try and identify the problem. Maybe the supplier is delivering product of a poor quality or maybe there is something wrong with your process. In either case, the scrapped steel is lost money and waste and should be eliminated.

Waste on the finished goods side can be extremely costly. There's nothing worse than having to dispose of a finished product, after all the labor and materials have been poured into the product. If you are shipping fewer products out the door than you actually produce, you may have serious problems with waste.

Finished goods that are held too long in inventory can spoil, or break during the storage process. In either case, you should be aware of the problem and actively seeking to find a solution. By working to solve these problems, you can greatly increase the quality of your product while reducing your operating costs.

Waste is not limited to the production floor. You can find waste in your office or other areas of your company. Is your sales team completing unnecessary paperwork? Is your accounting department running all over the office trying to find an invoice? With either of these situations you have instances of non-value added activities. Seek to eliminate these issues as well, streamline your system and create checklists and identifiable bins to help reduce this form of waste.

The tracking and elimination of waste is an on-going process. When waste is not actively sought and removed, it will continue to build in your company. Once you make a habit out of seeking and eliminating waste, you'll find it more and more difficult for wasteful activities to spring up in your company.

The benefits of reduced waste are clear; it just takes some action to get the process started.

Andrew Goldman is an Isenberg School of Management MBA student at the University of Massachusetts Amherst. He has extensive experience working with small businesses on a consulting basis.

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