Shigeo Shingo A Well Known Japanese Guru Commerce Essay

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Shigeo Shingo is a well-known Japanese quality guru an expert in manufacturing industrial practice and in Toyota Production System which originally created from "Lean Manufacturing." Taiichi Ohno, Shigeo Shingo and Eiji Toyoda developed the system between 1948 and 1975.[1]

Toyota Production System (TPS) is an integrated manufacturing and logistics systems which inclusive information of the entire organization process flow enhances their suppliers and customers interactions mode. The main objectives of TPS are to identify and eliminate waste also called as "muda" in Japanese to improve the performance of the business.

Shigeo Shingo (from his studies of the Toyota Production System) identified "Seven" forms of waste. In his argument, he clearly pointed out while an end product radically varies between organization and industries in a typical manufacturing industry the wastes found are quite similar. For each waste, there is a strategy to reduce or eliminate its effect on a company, thereby improving overall performance and quality. Therefore it is important to understand exactly what waste is and where it exists from.[2]

The followings are the "seven wastes" or "seven muda" identify resources which are commonly wasted, that were acknowledged by Shigeo Shingo as part of the Toyota Production System (TPS).[3]

Transport (unnecessary movement of materials)

On every occasion when a raw material, product, documents, people or information is being transport or moved, it stands a high peril of being damaged, destroyed, redundant or misplaced.

The reason of this wasted transport or unnecessary movement of parts between processes is mainly due to a complex material flow path which is difficult to understand by employees, by poor close coupling of processes, and also by large wasted of floor space. Thus, badly designed material process and sharing of equipment such as transportation crane can also consist of the transportation wastage.

Unnecessary transportation is identifies as a waste because the action increases production time, consumes resource and floor space. Not leaving behind the poor communication gaps between employees which eventually increases work in progress, and also brings potential damage to products.[4]

Apart from the damages this waste will only bring extra cost with no customer value to the business. For instance, specific transportation machine such as fork-lift must be used to move the product or materials, resulting in another organizational cost (fork-lift purchasing cost) that adds no customer value. These wastes can be seen in both product and service industries, as below examples explain further;

In the service environment, an unproductive movement of one individual to another, within departments or between departments, this adds time to the overall work process. Eliminating transportation can at one extreme mean the combination of tasks or another extreme mean relocating workspace to minimize the movement physically. Eliminating excess transportation can also involve combining steps to eliminate work process loops. Cutting the hand offs in half generally cuts the queue time in half. At the other end is the option to rearrange the workspace to match the flow of the process.

This waste can happen in a sub chemical energy power plant which is built away from the nearest main power plant where the major transportation is done. Chances are, the sub chemical energy power plant will always have a large fuel transportation cost going back and forth between the subs to main plant which is a muda.

Moreover wastes take place when there is an inefficient layout of process functions. Consider an assembly line where components must be moved from place to place for assembly as opposed to an assembly line where a component is finished at the location where it is needed next. This process end of the day will not bring any value, at most incur cost and it's a waste.

Moving material unnecessary for long distance, a great amount of forklift movement occurs to get material to saw is considered waste. Material from the back of the storage bays requires that at the front to be moved, much forklift movement occurs before finished item is warehoused, parts craned up and down from a pallet on floor and this movement is a waste.

Inventory (excess inventory not directly required for current orders)

Any raw materials, end product finish goods or work in progress (WIP) is considered investment expenditure or an overhead cost, which will not produces any income for either the organization or purchaser.[5] Whichever of the above items not being actively processed and not having value added to them is an inventory waste.

Shigeo Shingo also pointed out that in order for an organization to improve their operating performance, they have to recognized and diagnose their hidden excess inventory waste.[6] The Inventory muda is mainly, caused by operation production schedule not leveled, inaccurate forecasting by the planning managers and also large production batching system in the organization. What's more waste could also happen with unreliable suppliers whom don't get the raw materials suppliers on time of the production processes. All the above actions are considered a muda because it adds up capital cost.

Imagine if an organization needs to rent or even build a warehouse for an extra storage space just to store the finish material for short time line. Renting or building a warehouse for material storage will lead to an extra resource to manage by the organization.

Consequently, waste also increases production lead times and delays the detection of tribulations in an organization. It's crucial to revamp the manufacturing process flow to achieve a faultless flow between internal process departments. By doing so, an organization able to reduce their capital cost, reduce inventory waste and improve customer service. [6]

In an article published on November 28, 2004, Small Manufacturers Find Great Waste in Inventory Stressed, one of the greatest wastes of a manufacturer's resources is in the inventory department. According to Rocky Smolin, President of E-Z-MRP, "Everyone who has been in manufacturing for any length of time knows at least one company that was the victim of its own success. They succeeded in the sales department, and failed in manufacturing by losing control of their inventories. Ruinous waste in excess inventories has driven many companies to record sales and record losses because they lost control of this key manufacturing expense."

For further elaborations of the above waste, lets say an item A production produces double as many components as needed for producing item B. The extra production of item A must be moved or stored (waste of transportation) to a warehouse or storage. Imagine if there would be a manufacturing process change the next day, the extra production of item A stored will considered as an inventory waste. [7]

Another good example on inventory waste would be, running out of shortage of the best sold item in a store or supermarket. There will be an opportunity lost for the supermarket if they did not meet their customer buying needs. Lost income (sales) cum inventory is also a form of waste. [8]

Motion (extra steps taken by employees because of inefficient layout)

Motion waste is very much related to movement such as walking, transfer, travelling and even lifting, which can cause an additional cost for an organization. This waste happens when there is no standard operating procedure in an organization and there's poor internal related department design.

In addition, some organization for instance shipping industry whom are abide and govern by safety regulatory like Occupational Safety and Health Administration (OSHA) facing problem with motion waste. [9] They need to analyze and redesign their excessive containers or job motion in order to improve and reduce the waste. Any motion is considering a waste when it interrupts an organization production process flow and increases the production time. Hence, any error in motion waste can cause injury which eventually leads to cost.

Motion waste also can be calculated by movement of "man". Example, waste motion occurs when individuals move more than is necessary for the process to be completed. An employee walking from the 1st floor (where he is sited) to the fifth floor just to fax 1 document, this will take time also effect the employee productivity time. Another example, an employee is taking longer time to look for goods in the storage warehouse because there is no proper item storage code is implemented. This leads to motion waste.

Waiting (periods of inactivity)

On every occasion when a finish goods or product sits ideal, the muda of waiting occurs. The cause of a product being put on waiting is mainly due to a shortages & unreliable supply chain happens. Downtime and breakdown in that particular product or an organization also can cause waste in waiting.

The waste of waiting manifests itself in many ways. A bottleneck in a process causes the waste of idle time in the next process step and backups in the previous process step. Goldratt (Theory of Constraints) has stated many times that one hour lost in a bottleneck process is one hour lost to the entire factory's output, which can never be recovered. Linking work processes together so that one feeds directly into the next can dramatically reduce waiting. Long checkout times also cause the waste of waiting for the customer. Labor cost, lost customers, and expediting are examples of increases in costs associated with waiting. Typically more than 99% of a product's life in traditional batch and queue manufacture will be spent waiting to be processed. [10]

Example; a forklift is waiting to pick up raw material to deliver at a production queue but it's (forklift) put on idle while waiting to collect the raw material. Whereas the forklift can be used to pick up other raw material for production.

Another example is an employee waiting in the time clock line to punch in or out. Employees' waiting for others to attend a meeting is waste. Any time wasted is lost time and adds costs to the company. Once people are taught about the costs involved with waiting, they are motivated to suggest ideas that assist in the elimination of waiting. [11]

Over-Production (occurs when production should have stopped)

Over-Production or "Just in Case" is a term often referred in manufacturing environments. Over-Production waste happens each time when an organization produces faster or in higher quantities of product or service sooner before the actual demand. [12] Due to this, an organization will fail to achieve a smooth product or services flow and leads to excessive inventory waste.

Thus, Over-Production product need to be stored and are subject to obsolescence or spoilage. In the long run, overproduction results in higher wastage and cost. It is not important that every employee be busy in the production of goods and services, especially during slow times. Rather than overproduction, a better use of employee time would be maintenance or improvement activities.

The Over-Production muda is considered one of the most expensive muda because it increases costs and inventory waste. [13] For instance, when a product A is over-production, it needs a storage space to store the product A. Space utilization in a warehouse is a cost for a manufacturing company. Another relevant example is when a raw material parts cut few weeks earlier and it is stored in warehouse.

In an article published on April 23rd, 2010, Atlantic Monthly: Food Waste Opportunities By Andrew Shakman, (as Helene cites in Bon Appetit's study) [14] stated that food waste from volume kitchens is an often overlooked problem that truly plagues in the foodservice & restaurant industries. They have identified their primary waste happens from overproduction, expiration, spoilage and trim waste. Later implement a systemic solution which controls their process-based approach like enabling steps to track their food waste on a daily basis

Over-Processing (rework and reprocessing)

The waste of Over-Processing means doing a particular process outside the standard required by the company or the customer. [15] This Over-Processing happens because there is no proper understanding the actual process, no standard operation procedures, and lack of manufacturing process improvement & enhancement.

Example, a product quality control inspection for all the products that is stored in the warehouse when the product data indicates that there is no need or demand for that product. But the company or customer pays for that unneeded inspection step. Another example is the need of multiple approval signatures for an activity when only one signature will do. [16]

However with current IT technology advancement the above waste on Over-Processing can be solved easily. In an article published on September 15, 2005, Largest Chinese Electronic Waste Processing Center Taking Shape,[17] it is stated over 30,000 tons of electronic waste is produced in Tianjin every year, among which industrial waste and household appliance waste takes up to 50% of the total. Taiding (Tianjin) Sci-tech Environment Protection Company invested CNY100 million to construct the electronic waste processing center where by after waste processing treatments, the general electronic waste of processing can be made completely harmless; over 90% of materials will be reusable.

Defects (do not conform to specifications or expectations)

Defect is factor which is deeming unacceptable to pass the quality standard of a product or service by a company or customer. Waste in defect of a product will reduce customer satisfaction. Waste happens when there is a human or machine error occurs during production. Furthermore, an employee with low product knowledge and skill will also be an element to contribute to defect waste. Printed Circuit Board DMAIC project managed to reduce their product defects to 92% by just identifying the waste defect [18]

Defect is considered as one of the waste because its adding costs as the other muda discussed earlier. An organization need to look for solution to reduce the defect waste because its waste consumes resources creates extra paper work and worst reduces customer confidence in the product which eventually affect the business.

With current changes business environment emerging, it's vital for all business to be competitive among them and achieve their business objectives. The first step in achieving that goal is to identify and solve the seven wastes as discussed above, customers will pay for value added work, but never for waste in business.

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