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Efficiency – A Breeding Ground for Waste

Boy, if there were ever a more counterintuitive statement than the title of this article, I would like to hear about it.  How can something that promotes efficiency harbor waste? By the time you reach the end of this article I hope you will be able to answer that question yourself.

During my training sessions I discuss two terms that are often used synonymously.  The terms are, “efficiency” and “productivity.”  They are as different as apples and oranges.  Webster defined efficiency as, “bringing about the result wanted with the least waste of time, effort or material.”  Wow, that pretty much sounds like what one should expect by applying Lean Thinking – right?  Check out the definition for productivity before you form an opinion.  Simply stated, productivity is, “creating the most value in the time available.”  Why is that an important distinction?

The focus of an efficient process is to create outputs at the lowest possible cost.  When in charge of any production scenario we are always challenged to squeeze all the blood from the turnip.  The goal is to produce as many parts as fast as possible.  The more output a process could create per hour, the lower the unit cost.  That is a reasonable assumption, but it isn’t necessarily Lean.  The CNC machine is a case in point.  I think every reader will agree that a 5-Axis router can produce more output from that one machine than all the individual pieces of equipment from a by-gone era could produce.  It is fast, accurate and efficient.  There is little waste of material, time or effort.  So, what is not productive about that?

Value creation should be the focus of every Lean process.  Value is measured by the absence of waste.  The CNC machine is inarguably efficient, but it can easily lead to the Waste of Overproduction.  If you are a student of Lean, you know the Waste of Overproduction is the most deadly waste and it is also the most difficult to detect.  Efficient processes usually get the least attention when looking for opportunities for improvement.  Efficient processes are perceived to be running fine.  The machine is spitting out parts and the operator is actively engaged doing what you hired him to do.

Evaluating a process to determine whether it is efficient or productive should be done from the internal customer’s perspective.  Can the customer consume the output being created by the efficient process?  If the CNC machine continues to generate output with no regard to the status of work-in-process at the internal customer, it is not operating productively.  The process is creating waste.  It is consuming raw materials unnecessarily, which may trigger the purchasing process to kick in prematurely.  It is consuming valuable floor space, and possibly making it difficult for people and other materials to flow freely.  It is adding to the chaos and confusion by making it necessary to search for the next items to produce.  The added work-in-process causes the customer’s process to have to be positioned further away from the supplier, which adds to the Waste of Transportation and the Waste of Motion.

I belabor the point because it is a real situation that occurs daily within the walls of your shop.  I know because I was recently challenged in that thinking by the team leader of the Finish Department at one of my customers.  Comparing a labor-intensive finishing process to an efficient CNC process may not seem a likely comparison, but it is.  The team leader was batching work so his team would process all parts requiring the same materials at the same time.  You may do the same thing.  The team leader had another motivation that is probably prevalent in your shop as well.  He wanted to keep his people busy.  How many times have you heard that or have promoted it yourself?  An idle person is an unproductive person – right?  Wrong.  The team leader claimed the batching process was more efficient because the staff didn’t have to make so many changeovers and all the parts could be nested to promote efficiency in applying materials.  He was clearly focused on efficiency rather than on what his internal customer’s needs were.  His thinking was not creating the most value in the time available.

By keeping his staff busy, he masked the fact that he had too many resources for the demand created by the pull from the internal customer.  That is a primary reason why the Waste of Overproduction is so dangerous.  It creates an allusion that more resources may be necessary to handle an increase in demand.  If all the people are busy now, how will we manage a larger volume of work?  We will need more people, more equipment and more space.

As the Finish Department situation was being assessed, the CNC operator came searching for more carts.  There weren’t enough empty carts for the cabinets he was cutting.  A quick visual of the work-in-process ahead of the edge bander and cabinet assembly processes indicated they didn’t need any more work.  They were already overwhelmed.  In conversation with the CNC operator he stated that he had to cut according to “the schedule.”  He was following directions with blinders on.  It wasn’t his fault.  He was following the protocol of a broken system and culture.  What should he have done?

He should have stopped production at the CNC.  Oh my, he can’t do that!  He might get fired for standing around doing nothing.  You’re smiling, but that is the perception at your shop as well.  “I’m going to get in trouble if the boss sees me standing around.”  If you want to see productivity increase at your shop, tell everyone it’s okay to stop working if the internal customer doesn’t need parts.  Counterintuitive?  You bet.  However, when you implement that philosophy and people adhere to it, you will suddenly discover a pool of resources everyone believed didn’t exist.  Those resources can be used to perform maintenance that never seems to get done.  They can cross-train on another process to create a more flexible workforce.  They can float to a bottleneck or constraint process to create more “real” pull.

The take away from this article should be, “Never mistake activity for productivity.”  How do you measure productivity?  It is measured by the absence of waste.