On average, most business processes are inefficient and create an unhealthy amount of waste: once you learn to see the process waste all around — with Lean Thinking as your worldview — you will notice overprocessing, transportation, overproduction, waiting, inventory, motion, and defects. Aside from our processes producing waste, our processes also create burden on our people and also burden on the earth.
A company that I once did some work for was very concerned about the burden it was placing on its people and on the earth. In what follows, I will show that a firm can still be enterprising, care about people, and care about the earth.
As a review, let us first discuss Value, Waste, and the perspective of the customer.
What is a Process?
A process is an systematic activity comprising of smaller activities that culminate in an outcome ” service or product. A process can take up time, space, and resources. All processes can be categorized into the following categories: Value-added, Non-value added but necessary, and Non-value added.
From the Customer’s Perspective:
- Value-added: This step in the process adds form, function, and value to the end product and for the customer.
- Non-Value-Added: This step does not add form, function, or assist in the finished goods manufacturing of the product.
- Non-Value-Added-But-Necessary: This step does not add value, but is a necessary step in the final value-added product.
(2) & (3) naturally create waste, of which there are 7 types:
- Over-Production: Producing more than is needed, faster than needed or before needed.
- Wait-time: Idle time that occurs when co-dependent events are not synchronized.
- Transportation: Any material movement that does not directly support immediate production.
- Processing: Redundant effort (production or communication) which adds no value to a product or service.
- Inventory: Any supply in excess of process or demand requirements.
- Motion: Any movement of people which does not contribute added value to the product or service.
- Defect: Repair or rework of a product or service to fulfill customer requirements.
It’s important to understand Value in terms of the customer. From the customer’s perspective, Value could be defined in the form of a question:
Which process steps (and associated costs) do our customers not have to bear?
It’s a revealing question ” most companies are glad that they do not have to reveal how their product or service is created, for fear of their inefficient processes and wasteful operations revealed to the customer. This stance is sometimes aptly called “not revealing how the hot dog is made”, amicably referring to the unknown contents of the hot dog.
Burden on People; Burden on Earth
It is easy to see how the 7 Wastes above add substantial cost to the firm, reducing it’s margins, and negatively impacting the customer. But, what is less obvious is the burden that inefficient processes have on the earth.
I was on the Supply Chain and Logistics side of this company. This company aimed to reduce usage of packaging and wrapping material through simplifying specifications for packaging and wrapping and by promoting the use of returnable containers or bins. As a result of the efforts of a lot of caring people, this company reduced its volume of packaging by 15% than the previous year. Below is a picture of the results:
What is remarkable is that by lessening the burden on people by reducing the weight, bulk, volume, and material used for packaging, the earth also benefits because there is less CO2 used and less material is required to the same work. What is not highlighted is that safety and ergonomics was also a huge benefit — people now deal with less weight, bulk, and volume, which makes for a safer work environment.
This reduction of material used is a big win for People and for the Earth. What is also important, though less important than People or the Earth, is that costs were reduced by a substantial amount, which increases the gross margins of the firm, making shareholders very happy.
A False Dichotomy
Contrary to popular thought, there is an opportunity to be a good steward of the earth, take care of people, and also be an enterprising capitalist. The example above is a case study that supports that fact.
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T. Bowcut says
It is good to hear that some companies due take into consideration the burden that their production has on earth and that they are taking steps to reduce this burden. For an excellent example of how significant this burden on the earth really is check out the very well done video found at http://www.storyofstuff.com, it really makes you stop and think about this.
shaun sayers says
The argument can be tracked back in to some very uncomfortable territory for some producers. Rather than seeking ways to reduce the environmental damage of production processes through better methods, in a lot of cases the question can be asked “do we really need the crap that is being produced anyway?”
It is a fact that “need” is often mistaken for “desire” and that “desire” can be created and manipulated out of nothing by the advertising industry. As a species we are unique in that we are highly suggestible. You try convincing any other animal it needs something that it clearly doesn’t – no other species will have any of it
Now I’m not advocating a dismantling of the world economy or a move to any sort of pastoral anarchism, but a bit more regulation on advertising wouldn’t go amiss. We are already comfortable with the idea that we shouldn’t advertise things too freely that will kill us, maybe we need to look at this in a broader context, because there are lots of things that are produced that in one way or another do more harm than good. For example things that take time effort and resource to produce, have a life span of a millisecond, and then present nothing but a disposal problem – the crap that gets given away to kids with fast food for instance. All this will do is challenge our creative types to look for products with a more clearly demonstrable public and social good. And I think that where there’s a will there’s a way
Karen Wilhelm says
Lantech is a company that has become legendary in the lean world, but they make equipment that wraps pallets in plastic film. I’ve been told that they are very conscious of the fact that in a lean world, their product would be unnecessary and that they need to plan for that phase of their existence.