Homepage > Services > Operations > Articles > Reducing Waste

Reducing Waste: Does it jeopardise output?

When many organisations try to improve, they initially focus on the reduction of the wastes of inventory and idle time. These improvement initiatives often do not deliver bottom line results and in extreme cases can negatively impact the performance of the organisation. So how can reduction in waste actually make things no better or even worse?

Inventory often self selects itself for improvement initiatives because it ties up the company’s cash, preventing future investments. However this inventory is often masking many other system problems and removing it without first understanding what it is protecting can seriously impact output. Typical inventory masks:

1. Disturbances in supply of raw material
2. Unpredictability in demand from the end customer
3. Variability in processing time
4. Low process yield
5. Poor planning capability

When inventory is indiscriminately targeted for reduction, protection from the above is removed causing a negative impact on the following:

1. Lead time
2. On time delivery
3. Output
4. Responsiveness
5. Cost

Another easy target for improvement programmes is the reduction of person/machine idle time. Steps are taken to ensure that everyone and everything is kept busy at all times. When capacity exceeds what is required to deliver the order book, then the inevitable outcome will be to produce inventory / work in progress. If idle time is targeted then the outcome can cause the following problems:

1. Increased inventory (in direct conflict with the previous  inventory reduction exercise)
2. Jobs being processed out of sequence to keep people and machines busy which can cause processes farther down stream being starved of work (in direct conflict with the goal of keeping busy)

This second target for waste reduction has similar negative consequences on:

• Lead times
• Due date performance
• Output
• Cost

The key to successful waste reduction is to understand where it is appropriate to do so. Waste reduction can obviously have a positive impact on the performance of Operations and the company as a whole if carried out in a way that is both safe and effective. Goldratt UK, using the Theory of Constraints, has developed a robust and proven process to ensure that waste reduction is appropriate in ensuring that it does have a significant positive impact.

Contact us to find out how to simultaneously reduce waste whilst increasing output.

©2007 Goldratt UK