Lean Six Sigma: The Expensive Cost of Waste

Lean Six Sigma
Lean Six Sigma
Lean Six Sigma

Lean Six Sigma: The Expensive Cost of Waste

Walk into a bakery and you are surrounded by the smells of sugar, cinnamon, and chocolate. You have your favorites, but looking at all the pastries, brownies, and cookies behind the glass is overwhelming! It can be an impressive display with too many delicious items to choose from.

Now, imagine looking at a bakery after learning about Lean Six Sigma concepts. With Six Sigma, reducing waste and streamlining processes is central the core of its principles. Looking at an overstuffed case of pastries and donuts might not seem so impressive from a Six Sigma perspective. Instead, you might think that this excessive inventory is nothing more than money, time, and space being wasted. Leaders of successful companies understand that eliminating waste leads to higher efficiency and profits. Maybe having everything you make for viewing in a glass case is not the best way to run an efficient business.

Identifying the 7 Types of Waste

One foundation of the Toyota Production System is the consistent striving towards the “absolute elimination of waste, overburden, and unevenness in all areas to allow members to work smoothly and efficiently.” The Toyota Production System, based on the research of W. Edwards Deming was the genesis for what is now called Lean Six Sigma. The idea is to cut waste across all resources: time, effort, people, processes, inventory, and production.

According to Lean Six Sigma, the 7 Wastes are Inventory, Motion, Over-Processing, Overproduction, Waiting, Transport, and Defects. We’ll use the bakery example to demonstrate these wastes in practice.

  1. Inventory – Pies, cakes, doughnuts, cupcakes, cookies – so much variety and so many of each product. Although this bakery display may look impressive, the more baked goods sitting out, the more space they take up. The more space they take up, the more electricity is needed to keep the cases cold, and the longer they are on display, the less appetizing the goodies look. At the end of the day, leftover inventory may have to be thrown out. What would be some of the immediate benefits to the bakery if they kept less inventory on hand and baking and making what is needed based on analyzing historical sales data?
  2. Motion – Humans and machines can waste motion. When the baker is trying to bake a cake and all of his ingredients are not within arm’s reach, he is wasting motion and energy as he moves from spot to spot. When a baker uses a large mixer for a small batch of product, the machine is wasting motion, energy and ultimately money. Part of Lean Six Sigma is ensuring everything a company and its employees do adds direct value to the product. A wasted motion will never add value.  Streamlining processes and workspaces are part of the solution to eliminate this kind of waste.
  3. Over-Processing – Over-processing occurs when employees are performing unnecessary processes or using the wrong tool for the job. This can result in defects. Incorrect measurements could lead to scrap dough for bread and cakes. The wrong baking surface can lead to burnt or stuck cookies.​​ Putting time and effort into things that do not add direct value to the product is also part of overproduction. Leaders, managers, line workers should always ask themselves if the task at hand is adding direct value to the product. Cake pans need prepped with butter, flour, and parchment, but cookie sheets need no prep. You can see that a worker prepping cookie sheets like cake pans, is a waste of time, money, product, and effort.  
  4. Overproduction – The aim of lean is to make only what is needed when it is needed by customers. Making too much too soon creates excessive inventory and waste. Analyze how much inventory, talent, time, and effort is required to make the specific number of units the customer ordered. If they ordered two dozen cookies in the shape of blue socks for a baby shower, do not make three dozen hoping the rest will be sold.
  5. Waiting – Preheating the bakery’s commercial ovens takes time.   Waiting equals wasted time and wasted time equals less profit. When one department has to wait on another for a part, a price, or a process to be completed, production and/or service stops. Anytime processes are not synchronized according to a set of best practices waiting occurs. Waiting disrupts flow and becomes a serious impediment to the effective elimination of waste.
  6. Transport – Eliminating transport waste can facilitate savings in multiple areas across business processes. Coordinating deliveries according to location, cake size, and delivery time could cut the bakery’s transport waste. Sometimes just moving the product from where it was baked to where it should be cooled and then finished can be an example of an internal transport waste.
  7. Defects – Anytime a baker makes a batch of product that doesn’t come out correctly, time, money, resources, and effort are wasted. Many times, a customer is the first to notice a problem.  This is ; not an ideal scenario! Making smaller batches of a product gives one a better chance to recognize and correct defects as soon as they occur.

Assessing Waste Leads to Eliminating Waste

The website, www.ISixSigma.com notes that The 7 wastes “are at the root of all unprofitable activity within your organization.” One of the first things companies should do when implementing a Lean Six Sigma approach is to examine each of the seven areas of waste. After cutting the waste, a company is ready to implement a new set of best practices to enhance performance and boost profits.