Thriving in a recession - drive out waste
In the automotive industry Toyota are acknowledged world leaders in ‘lean' business processes and their experience is now applied across many different industries.
Toyota asserts that the cost of waste can be up to 20% of sales revenue!
Here are some areas of waste that may be applicable to your organisation:
- Overproduction (or over-delivery): For example manufacturing (or providing) ‘just in case' rather than ‘Just in Time'. Examples include duplication, errors, producing for stock without accurate sales forecasts.
- Waiting: This can be relevant in manufacturing as it increases Work in Progress (WIP) and in service industries where the principle delivery is time.
- Transport of WIP, finished goods or people is expensive: Every transport event should be a necessary one
- Inappropriate processing: Senior staff doing work that juniors could do, using expensive machining centres for simple operations
- Inventory: Unnecessary WIP and finished goods needs funding. They also camouflage weaknesses in the process. Forcing a reduction in WIP and finished goods stock exposes the issues and forces better process design
- Motion: Specifically relating to factory and workspace layout and good ergonomics
- Defects: Potentially a high reward area. Target reduction in the direct costs (rework, warranty, on site repairs) but also the hidden costs of losing customers.
To make this work put ‘Waste Reduction' as a line item on monthly management meetings and task all departments to come up with their top 5 suggestions for reducing waste, and the potential savings to be made
In addition to driving out waste ask yourself, could anybody else do this better? Pro-actively consider outsourcing non-critical activities
For more information contact Mike Robson on 0207 100 1233 or mike.robson@azurepartners.co.uk
Azure Partners work alongside the Boards of progressive companies from their earliest stages through growth and maturity to preparing them for sale or flotation. We have the skills, the commercial experience and the necessary knowledge to significantly enhance the value of your business