Question

Chapter 13 talks about the concept of Waste, which we talked a bit about in the Green Ops chapter. Pretend that you are running a factory that produces consumer goods. Whats an example of an area where a company can reduce waste? Give an example.

Answer 1

There are possible 5 types of waste that can occur in factory producing Consumer goods-

1. Overproduction - Producing goods without having an idea about the expected demand from customers often leads to overstaffing and high inventory cost. Thus having a better market information is quiet a critical factor in reducing such wastes. Example - Plant can plan productions as per the order placed by customers and thus produce the exact number of goods required by the market.
2. Unnecessary Transport - Unplanned transportation of raw material, finished goods and WIP goods lead to over-expenditure and wastage of time. In addition to this, it also causes deterioration in the quality of goods due to these frequent transportation. Example - Juice packets being needlessly transported from one warehouse to another may lead to spillage and damage to its container. To solve such issue, a well planned distribution network should be implemented.
3. Waiting - Due to improper workload balancing, it might happen that the workers are sitting idle and waiting for the completion of process in previous unit. This cause a huge lose of man-hours and thus reducing the efficiency of process drastically. Example - We can maintain a predetermined cycle time and thus deploy resources in various units accordingly, and hence preventing such instances.
4. Over-Processing - Excessive processing of goods may lead to deformation, unnecessary movements of good and deterioration of quality.. Thus, we should ensure that the goods don't get over processed and become completely unusable. Example- Over-refining of cooking oil make it corrosive and thus, should be avoided. Pre-defined levels of refinement should be concluded upon to avoid this.
5. Poor Tracking of Inventory - Improperly managed inventory may lead to expiry of goods and deterioration of its quality. Moreover, it may also increase the inventory cost to great extent. Thus, appropriate steps should be taken to optimize the order cycle and thus, having an optimal level of ordering cost & inventory cost. Example- Company can deploy sophisticated systems like ERP to manage its inventory better.

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