ENTERPRISE LEVEL WASTE dule to Support Team Assignment Course 16.852J/ESD.61. -Fall 2002 “ Integrating the lean enterprise” Prepared by Joe mize Alexis stanke Enterprise Level Waste 10/20/200
ENTERPRISE LEVEL WASTE Module to Support Team Assignment in Course 16.852J/ESD.61.J – Fall 2002 “Integrating the Lean Enterprise” Prepared by: Joe Mize Alexis Stanke Enterprise Level Waste 10/20/2002 1
ENTERPRISE LEVEL WASTE Joe Mize, MIT Alexis stanke. MIIt The elimination of waste" is one of the fundamental tenets of " lean thinkin Waste"may be defined as"any action, process or activity that consumes resources and does not directly add value for a stakeholder. We will first review how waste is traditionally viewed when value stream maps are developed within production operations. We will then consider comparable wastes considered when performing enterprise- level value stream mapping and analys must be within information systems. There are other wastes at the enterprise level that must be Waste in Production Operations Traditional value stream mapping efforts have been performed primarily production operations. The developers of the Toyota Production System identified se basic categories of waste condition caused by(1)a production operation waiting for maintenance, for material/parts from previous operation, tooling, operator readiness, etc, or(2)production parts waiting in a queue(perhaps in batches) Transportation: Excessive movement of materials/tools between production operations, between facilities, or to and from storage Over-Processing: Using oversized equipment or equipment not designed for the task at hand, thereby requiring excess running time and costs; using equipment that has not been properly maintained, thereby requiring excess processing Excessive Inventory: Maintaining stocks of raw materials in excess of current production requirements; or stocks of finished goods in excess of current demand; or stocks of work in progress as buffers between un- ynchronized production operations Unnecessary Motion: Human actions/motions beyond the minimum required to achieve the task at hand, i. e, tasks which, in themselves, do not add value Defective Products: Parts, materials, sub-assemblies or products that do not meet specifications and which must be scrapped or reworked to bring into conformance Overproduction: Producing more than is required or producing before required any work performed which is not" pulled"by the next stakeholder in the value stream Enterprise Level Waste 10/20/200
ENTERPRISE LEVEL WASTE Joe Mize, MIT Alexis Stanke, MIT The elimination of “waste” is one of the fundamental tenets of “lean thinking”. “Waste” may be defined as “any action, process or activity that consumes resources and does not directly add value for a stakeholder”. We will first review how waste is traditionally viewed when value stream maps are developed within production operations. We will then consider comparable wastes within information systems. There are other wastes at the enterprise level that must be considered when performing enterprise-level value stream mapping and analysis Waste in Production Operations Traditional value stream mapping efforts have been performed primarily in production operations. The developers of the Toyota Production System identified seven basic categories of waste: • Waiting: A condition caused by (1) a production operation waiting for maintenance, for material/parts from previous operation, tooling, operator readiness, etc., or (2) production parts waiting in a queue (perhaps in batches). • Transportation: Excessive movement of materials/tools between production operations, between facilities, or to and from storage. • Over-Processing: Using oversized equipment or equipment not designed for the task at hand, thereby requiring excess running time and costs; using equipment that has not been properly maintained, thereby requiring excess processing. • Excessive Inventory: Maintaining stocks of raw materials in excess of current production requirements; or stocks of finished goods in excess of current customer demand; or stocks of work in progress as buffers between unsynchronized production operations. • Unnecessary Motion: Human actions/motions beyond the minimum required to achieve the task at hand, i.e. tasks which, in themselves, do not add value. • Defective Products: Parts, materials, sub-assemblies or products that do not meet specifications and which must be scrapped or reworked to bring into conformance. • Overproduction: Producing more than is required or producing before required; any work performed which is not “pulled” by the next stakeholder in the value stream. Enterprise Level Waste 10/20/2002 2
See Table C 1 in Appendix C for examples and associated causes of each of these production waste categories In general, these seven categories of waste have proven to be sufficient for dealing with efforts to convert production operations to "lean". When engaged in mapping the value stream of a product family, these categories of waste are the primary targets for elimination or reduction As efforts have been made to apply value stream mapping outside production operations, these seven categories have been found to be lacking. We will first consider how we may use these categories for categorizing wastes found in information systems then we will move to the enterprise level and explore additional categories of waste needed Seven Types of Information Waste Clearly, waste also occurs outside production operations. An important enterprise element in which significant waste can occur is the information system of the enterprise The seven types of information wastes discussed in this section to the seven types of manufacturing wastes for any environment where there is not physical product involved. The handling, exchange or transportation, and processing of information has some unique and some common characteristics with the handling, transportation, and processing of physical material Waiting Idle time due to unavailable informati Transportation (unnecessary movement): (In the case of information, this waste category is the same as Excess Processing, below Excess Processing: Processing information beyond requirements, e.g unneeded precision Inventory: Information that is unused or is"work in progress Unnecessary Motion: Any human movement necessitated by poor Information System design Defects: Any element of data, information or intelligence that is erroneous Overproduction: Producing and distributing more information to more people See Table C 2 in Appendix C for examples and associated causes of these information waste categories Enterprise Level Waste 10/20/200
See Table C.1 in Appendix C for examples and associated causes of each of these production waste categories. In general, these seven categories of waste have proven to be sufficient for dealing with efforts to convert production operations to “lean”. When engaged in mapping the value stream of a product family, these categories of waste are the primary targets for elimination or reduction. As efforts have been made to apply value stream mapping outside production operations, these seven categories have been found to be lacking. We will first consider how we may use these categories for categorizing wastes found in information systems, then we will move to the enterprise level and explore additional categories of waste needed. Seven Types of Information Waste Clearly, waste also occurs outside production operations. An important enterprise element in which significant waste can occur is the information system of the enterprise. The seven types of information wastes discussed in this section are analogous to the seven types of manufacturing wastes for any environment where there is not a physical product involved. The handling, exchange or transportation, and processing of information has some unique and some common characteristics with the handling, transportation, and processing of physical material. • Waiting: Idle time due to unavailable information. • Transportation (unnecessary movement): (In the case of information, this waste category is the same as Excess Processing, below.) • Excess Processing: Processing information beyond requirements, e.g. unneeded precision. • Inventory: Information that is unused or is “work in progress”. • Unnecessary Motion: Any human movement necessitated by poor Information System design. • Defects: Any element of data, information or intelligence that is erroneous. • Overproduction: Producing and distributing more information to more people than is needed. See Table C.2 in Appendix C for examples and associated causes of these information waste categories. Enterprise Level Waste 10/20/2002 3
Enterprise Level wastes More broadly, waste occurs at the enterprise level in a wide variety of contexts Many of these wastes can be mapped into Toyoto's seven fundamental categories. Some, however, are unique and require additional categories Waiting/Delays: Idle time due to late decisions, cumbersome and excessive approvals, and unsynchronized enterprise processes Excessive Transportation: Unnecessary movement(including electronically) of administrative paperwork; multiple approvals and handoffs nappropriate Processing/neffectual Effort: Effort expended which does not increase value to any of the enterprise's stakeholders, can occur within the workforce, within management ranks, or across the entire enterprise Inventory: Unnecessary levels of any enterprise resource: capacity, space workforce, suppliers Excessive Motion: Any human effort that does not increase stakeholder value Defects/Rework: Erroneous results from enterprise processes and decisions Overproduction: Any creation of enterprise outputs which does not increase stakeholder value In addition, two other categories are added to accommodate waste categories at the enterprise level Structural Inefficiencies: Waste resulting from inappropriate organizational structure, policies or business model structure Opportunity Costs: Wastes resulting from lost opportunities, e.g., untapped talent in the workforce See Table C 3 in Appendix C for examples and associated causes of each of these enterprise level waste categories. Also, see Table C 4 in Appendix C for a Taxonomy of Enterprise Wastes Enterprise monuments Another aspect of faulty enterprise design is that of"monuments", which can be considered another factor contributing to waste. Books focusing on Lean Manufacturing stress that“ monuments” need to be eliminated. Womack defines a“ monument” as any machine or process which is too large to be moved to accommodate dynamic reconfigurations as the value stream changes and whose scale requires operating in a batch and queue mode. a" right-sized tool, on the other hand, is a design, scheduling or production device that can be fitted directly into the flow of products within a product family so that production no longer requires unnecessary transport, storage and waiting Example of monuments are huge presses, centralized paint booths, etc Analogous enterprise monuments are Centralized command and control structure Centralized, tightly coupled Highly bureaucratic rules, regulations and procedures Enterprise Level Waste 10/20/200
Enterprise Level Wastes More broadly, waste occurs at the enterprise level in a wide variety of contexts. Many of these wastes can be mapped into Toyoto’s seven fundamental categories. Some, however, are unique and require additional categories. • Waiting/Delays: Idle time due to late decisions, cumbersome and excessive approvals, and unsynchronized enterprise processes. • Excessive Transportation: Unnecessary movement (including electronically) of administrative paperwork; multiple approvals and handoffs. • Inappropriate Processing/Ineffectual Effort: Effort expended which does not increase value to any of the enterprise’s stakeholders; can occur within the workforce, within management ranks, or across the entire enterprise. • Inventory: Unnecessary levels of any enterprise resource: capacity, space, workforce, suppliers. • Excessive Motion: Any human effort that does not increase stakeholder value. • Defects/Rework: Erroneous results from enterprise processes and decisions. • Overproduction: Any creation of enterprise outputs which does not increase stakeholder value. In addition, two other categories are added to accommodate waste categories at the enterprise level. • Structural Inefficiencies: Waste resulting from inappropriate organizational structure, policies or business model structure. • Opportunity Costs: Wastes resulting from lost opportunities, e.g., untapped talent in the workforce. See Table C.3 in Appendix C for examples and associated causes of each of these enterprise level waste categories. Also, see Table C.4 in Appendix C for a Taxonomy of Enterprise Wastes. Enterprise Monuments Another aspect of faulty enterprise design is that of “monuments”, which can be considered another factor contributing to waste. Books focusing on Lean Manufacturing stress that “monuments” need to be eliminated. Womack defines a “monument” as any machine or process which is too large to be moved to accommodate dynamic reconfigurations as the value stream changes and whose scale requires operating in a batch and queue mode. A “right-sized tool”, on the other hand, is a “design, scheduling or production device that can be fitted directly into the flow of products within a product family so that production no longer requires unnecessary transport, storage and waiting.” Example of monuments are huge presses, centralized paint booths, etc. Analogous enterprise monuments are: • Centralized command and control structure • Centralized, tightly coupled information systems • Highly bureaucratic rules, regulations and procedures Enterprise Level Waste 10/20/2002 4
Excessive Layers of Middle management Highly Concentrated, Centralized Headquarter Facilities Excessive, Bloated Corporate Staff Functions Monolithic Functional Organizations(Silos): Purchasing, H.R., Finance Engineering, etc Enterprise Level Waste 10/20/200
• Excessive Layers of Middle management • Highly Concentrated, Centralized Headquarter Facilities • Excessive, Bloated Corporate Staff Functions • Monolithic Functional Organizations (Silos): Purchasing, H.R., Finance, Engineering, etc. Enterprise Level Waste 10/20/2002 5
APPENDIX C WASTE IN THE ENTERPRISE Table c1 PRODUCTION WASTE Table c2 INFORMATION WASTE Table c3 ENTERPRISE LEVEL WASTE Table C 4 ENTERPRISE WASTE TAXONOMY Enterprise Level Waste 10/20/200
APPENDIX C WASTE IN THE ENTERPRISE Table C.1 PRODUCTION WASTE Table C.2 INFORMATION WASTE Table C.3 ENTERPRISE LEVEL WASTE Table C.4 ENTERPRISE WASTE TAXONOMY Enterprise Level Waste 10/20/2002 6
TABLE C 1 PRODUCTION WASTES TYPES OF PRODUCTION WASTE EXAMPLES CAUSES Employee waiting for Idle time in which· tooling Poor scheduling work coordination no value is added equipment repair. Inadequate preventive maintenance uality inspector. Lack of employee empowermer · material machine to· Push system complete operation. One employee assigned to each machine Machine waiting for owing o same equipment repair. same · quality inspector|·same employee Inattention; poor scheduling; unbalanced operations; no back-up or cross training of co-workers set-up changeover. Long set-up times; monolithic equipment Production order machine availability. Push system; unbalanced operations transport to next. Poor coordination; functional process layout operation Enterprise Level Waste 10/20/2002
TABLE C.1 PRODUCTION WASTES TYPES OF PRODUCTION WASTE EXAMPLES CAUSES Waiting Idle time in which no value is added Employee waiting for • tooling • equipment repair • quality inspector • material machine to complete operation • Poor scheduling, work coordination • Inadequate preventive maintenance • Lack of employee empowerment • Push system • One employee assigned to each machine Machine waiting for • tooling • equipment repair • quality inspector • material • employee • set-up changeover • same • same • same • same • Inattention; poor scheduling; unbalanced operations; no back-up or cross training of co-workers • Long set-up times; monolithic equipment Production order waiting for • machine availability • transport to next operation • Push system; unbalanced operations • Poor coordination; functional process layout Enterprise Level Waste 10/20/2002 7
TYPES OF PRODUCTION WASTE EXAMPLES CAUSES Materials/ tools moved. Batch and queue(push)syste Excessive move etween functionally Functional process layout ment of material, grouped equipment or. Monolithic equipment/prc tools or parts processing centers, or. Irrational facility/site locations between different Production orders Push system; poor layout moved to and from stores Finished items moved. Traditional hierarchical distribution system through multi-level distribution channels Enterprise Level Waste 10/20/2002
TYPES OF PRODUCTION WASTE EXAMPLES CAUSES Transportation Excessive movement of material, tools or parts Materials/tools moved between functionally grouped equipment or processing centers, or between different facilities/sites • Batch and queue (push) system • Functional process layout • Monolithic equipment/processes • Irrational facility/site locations Production orders moved to and from stores • Push system; poor layout Finished items moved through multi-level distribution channels • Traditional hierarchical distribution system Enterprise Level Waste 10/20/2002 8
TYPES OF PRODUCTION WASTE EXAMPLES CAUSES Over-processing Work that could be. Poor product design Effort expended combined with other. Poor process planning/manufacturing engineeri which does not operations via fewer add customer individual parts or multiple operations on same equipmen Work performed on. Improperly sized equipment; poor maintenance; poor instruc wro ong-sized equipment, and training running time, or excess perating costs Enhancements Lack of clear customer requirements; tendency for engineers to precision beyond over-desigr customer needs aproper material Rework Excessive testing Poor product/process design; lack of qualified performance certification system Enterprise Level Waste 10/20/2002
TYPES OF PRODUCTION WASTE EXAMPLES CAUSES Over-processing Effort expended which does not add customer value Work that could be combined with other operations via fewer individual parts or multiple operations on same equipment • Poor product design • Poor process planning/manufacturing engineering Work performed on wrong-sized equipment, requiring excess running time, or excess operating costs • Improperly sized equipment; poor maintenance; poor instructions and training Enhancements, precision beyond customer needs • Lack of clear customer requirements; tendency for engineers to over-design Improper material • Lack of current knowledge of alternative material capabilities Rework • Inadequate preventive maintenance; lack of automated process controls; poor workmanship Excessive testing • Poor product/process design; lack of qualified performance certification system Enterprise Level Waste 10/20/2002 9
TYPES OF PRODUCTION WASTE EXAMPLES CAUSES Inventoried Excessive raw materials. Maintaining stocks of materials in excess of current production requirements; inadequate selection of suppliers; lack of JIT materials beyond discipline in supply base; lack of coordination with suppliers JITrequirements inaccurate inventory records Excessive finished Push system; building to forecast; multi-level distribution system production to maintain employment level Push system; batch and queue; buffers between unsynchronized progress production operations; high variability in process times; "lost Obsolete and out-of Waiting too long to dispose, frequent design changes; production parts and undisciplined configuration management; lack of understanding of materials sunk cost Enterprise Level Waste 10/20/2002
TYPES OF PRODUCTION WASTE EXAMPLES CAUSES Inventories Accumulations of materials beyond JIT requirements Excessive raw materials and supplies • Maintaining stocks of materials in excess of current production requirements; inadequate selection of suppliers; lack of JIT discipline in supply base; lack of coordination with suppliers; inaccurate inventory records Excessive finished goods • Push system; building to forecast; multi-level distribution system; production to maintain employment level Excessive work in progress • Push system; batch and queue; buffers between unsynchronized production operations; high variability in process times; “lost” production orders Obsolete and out-ofproduction parts and materials • Waiting too long to dispose; frequent design changes; undisciplined configuration management; lack of understanding of “sunk cost” • Enterprise Level Waste 10/20/2002 10
