Orientadoras del I.E.D. Policarpa Salavarrieta

In many organizations, the items (people, products, parts, supplies, etc.) being processed or serviced must be moved from one location to another over several stages. Two factors determine the distance through which items must be moved and the transportation means (conveyors, carts, forklifts, overhead cranes, etc.) to move them: the layout of the facility (the location of machines, desks, departments, reception areas, shipping and receiving docks, and so on) and the routing sequence of operations to produce or service the items. For example, Figure 3.1 shows the layout and routing sequencing for processing three items (products 1, 2, 3). The facility could be a factory or an office that processes many kinds of items. Letters inside the facility represent equipment to perform the operations. Notice in the figure the overall distance through which the items must move in the course of the process. In many organizations this distance can total miles, and the time involved is very large. Since typically no work is performed on items while they are being moved, time spent en route is wasted. All equipment and labor

involved in moving and tracking the items is costly and wasteful, too.

Figure 3.2 shows an alternative equipment layout, part of which is devoted solely to the three items. By rearranging the layout and putting equipment for sequential operations close together, the distance through which the items move is a fraction of the previous distance. The time to move the items and the cost of systems to move and keep track of them, as well as space required for the processes, are been substantially reduced.

Inventory

Toyota calls inventory the root of all evil.3 _{That is a strong statement meant to imply that wastes}

stemming from inventory go far beyond the items held in stock. Inventory represents items waiting for something to happen, a waste in that there are costs associated with items waiting and lost time since no value is being added to them. Inventory holding costs increase with the size of the inventory since it costs more to hold more. Holding costs include the charges for storage space, paperwork and handling, insurance, security, and pilferage. Since the capital needed to acquire and produce the items in inventory cannot be used elsewhere, there is an opportunity cost as well. If the inventory comprises items procured with borrowed funds, there is also an interest expense. The sum holding costs among all inventories carried by an organization throughout a year can be sizable.

Figure 3.1 Routings for three products.

Figure 3.2 Alternate layout.

Inventory is also considered evil because it covers up other kinds of wastes and encourages, or allows, wasteful practices. Inventory has been called a just-in-case management philosophy, meaning that managers use inventory as a hedge against things that might go wrong. While they recognize the costs of inventory, they also think of inventory as necessary to overcome other kinds of problems. What they fail to see are alternatives for dealing with these problems. Three such scenarios follow.

1. Inventory is carried so that material flow will be uninterrupted in the event of equipment breakdowns or delivery delays. Preventive maintenance programs and close customer–supplier working relationships can eliminate most equipment breakdowns and delivery delays, which would obviate the need for protective inventory.

2. Inventory is carried to cover defects in materials and finished products. Making suppliers responsible for the quality of their products and improving product quality through better product design and production processes can eliminate defects at the start, which would make inventories

to cover defects unnecessary.

3. Large inventories result from large production runs, which managers say are necessary because of time-consuming and costly production setups. If production setup methods were improved and the setup costs were reduced, then small batch production would be economical. The by-product of smaller production runs is smaller inventories.

We can use the analogy of a ship on water to clarify the point. As Figure 3.3 illustrates, a high water level makes it unlikely that a ship will encounter the rocks below. When the water level is lowered, the rocks begin to be exposed and care must be taken to guide the ship around them. Inventory is analogous to water level: high inventory covers up problems in the system and allows management to cruise without fixing them. As inventory is lowered, problems in the system (poor forecasting, poor maintenance, long setups, poor product design and quality control, etc.) are exposed, and management has to resolve them in order for the system to work. In lean production inventory reduction is not an end in itself; it is a device for exposing problems and wasteful practices in the production system.

Figure 3.3 Inventory as a way of avoiding problems (when the inventory tide goes out, the skipper must carefully navigate between the rocks or find ways to eliminate them).

Overproduction

Companies sometimes produce more than they have sold or might sell because they want to build inventories (for reasons given earlier) or because they want to keep their equipment and facilities running (to achieve high-level resource utilization). Whatever the reason, making products for which there is no demand is wasteful. If demand does not materialize, then at some time the items will have to be discarded or disposed at reduced price. In the meantime they are held in stock where they accrue all the costs and wastes associated with inventory.

Waste from overproduction is difficult to identify, and unless you compare what is produced with what is sold and shipped, nothing appears wrong. In organizations that habitually overproduce, everyone is busy, and when everyone is busy no one has time to scrutinize what is happening or see what is wrong.

Waiting

Unlike waste of overproduction, waste of waiting is easy to identify. It takes many forms, including waiting for orders, parts, materials, items from preceding processes, or for equipment repairs. It also occurs in automated processes, as when an operator loads and turns on an automatic machine, then watches and waits until the machine is finished.

Some companies pride themselves in minimizing waste of waiting with a policy of keeping workers busy and machines running, regardless of demand. In other words, they overproduce. This practice replaces one waste (waiting for demand) with a worse waste (overproduction) since shutting down machines and idling workers on occasion is less costly in terms of material, equipment, and overhead than producing inventories for which there are no orders.

Processing

A process may itself contain steps that are ineffective or unnecessary. Take, for example, a product that goes through two steps: cutting, then filing to remove burrs along the cut edge (Figure 3.4a). This process might be altered to reduce wasted time and steps. Automatic filing of the edge is more efficient than manual filing (Figure 3.4b); still better is periodic maintenance or replacement of the cutting tool so it gives a smooth edge that does not need filing (Figure 3.4c). The item might even be redesigned so the cutting operation is eliminated (Figure 3.4d).

Figure 3.4 Paring waste from a cut and burr-removal process.

Taking advantage of natural forces such as gravity can eliminate processing waste. Instead of having a worker remove a finished part from a machine and put it in a bin, the part can be disengaged automatically from the machine and fall down a chute into the bin.

Motion

People in work settings often confuse being in motion with working. In reality motion and work are not the same. For definitional purposes, work is considered a particular kind of motion that either adds value or is necessary to add value. A person in constant motion throughout the day (i.e., a busy person) may in actuality be doing little work. Motion that is not necessary to do the work is considered waste. A useful concept for identifying waste of motion is work content, or the proportion of all motion in a job that is actually considered useful work:

Work content = Work/Motion

For example, a job that takes 10 minutes but involves 6 minutes of work and 4 minutes to pick and place tools and materials has 60% work content.

For any job the goal should be to achieve work content near 100%. This is attained by eliminating wasteful motions, not by increasing work. Among wasteful motions in jobs, the most common are searching, selecting, picking up, transporting, loading, repositioning, and unloading. These motions take precious time and increase the cost, but do not add value.

Although it is common for companies to increase output by increasing the number of workers or number of hours worked, a better way is to attack wasted motion. For example, suppose the work content of a busy worker is 50% (half of the worker’s time is spent on wasteful motion) and his daily output is 10 units. To double the output, the company might put on an additional worker or ask the current worker to double his hours. An alternative, however, would be to examine the worker’s job and try to eliminate all the wasted motion. This, in effect, would double the work content to 100% and double the worker’s output. The worker would still be busy, but he would be busy doing only useful, value-added activities.