Eliminating the 7 Areas of Waste Through a LeanER Approach

Manufacturers today are facing greater competitive pressures than ever before. Global competition, complex supply chains, rising material and transportation costs, and increased customer demands for product customization and favorable pricing structures are just a few of the challenges. As a result, organizations are striving to reduce their operating costs as much as possible to ensure profit margins are maintained, delivery schedules are met, and customers are satisfied.

One of the most effective ways manufacturers can reduce costs is to prevent or at least minimize waste. Driving out waste is one of the core principles of Lean Manufacturing, a time-proven strategy that focuses on optimizing business process flow across the enterprise by eliminating all extraneous, non-value added activities. Seven areas of waste that can plague a manufacturing enterprise include:

• Overproduction – Inaccurate demand forecasting and faulty communication are a few reasons why manufacturers tend to produce more than their customers need or want. Simply put, a business that persists in producing more products than the market demands is simply wasting time, money, energy and labor resources.
• Excess Inventory – A direct result of overproduction and long cycle times is excess inventory, whether in raw materials, work-in-process or finished goods. This type of waste can be especially burdensome when it begins to take up space, requires maintenance/ record keeping, and freezes up a good portion of liquid assets.
• Transportation and Logistics – When creating shorter cycle times, a good place to start is the transportation segments of the value stream. Any time you have materials, parts or finished goods in transit, there is potential for enormous waste because the parts and goods are sitting in a container creating no value.
• Excess Motion – Similar to transportation, motion creates waste when materials, products, equipment and people are used inefficiently. Excessive movement should be automated where applicable or eliminated altogether so that product cycle times may be reduced.
• Design/Engineering – Products should only carry the value that is perceived, needed or appreciated by the customer. If customers cannot see the value in a particular product feature or understand its purpose, then there is no reason to include it in the first place. This kind of waste is often present in product development areas, such as design and engineering.
• Excessive Waiting – A byproduct of poor process design, waiting time creates lags in the system and interrupts efficient flow, which not only affects that particular phase of the operation, but also the ones that come before and after as well. This "bullwhip" effect is a common occurrence that creates many capital and risk issues.
• Errors – As is commonly known, the expense and effort involved in repairing damage or defects, and handling scrap, is typically more than the cost and labor required to prevent them. Taking preventive measures and focusing on creating an error-free production process will lead to higher productivity and a smoother experience for everyone involved, including the customer.

Clearly, the application of Lean principles and best practices, coupled with advanced technology solutions, can help manufacturers eliminate or minimize waste in all of these areas. Many organizations that have already implemented a Lean approach have reported significant benefits- including lower operating costs, faster and smoother workflow, rapid return on investment, and high levels of customer service.

Glovia Services, Inc. is a wholly owned subsidiary of Glovia International, Inc., a subsidiary of Fujitsu Limited (Tokyo Stock Exchange: 6702), one of the world's most experienced and solidly backed providers of extended ERP solutions for businesses of any size-from small and midsized companies to global enterprises. Glovia Services offers GSInnovate web-based manufacturing software from pluggable point solutions to a comprehensive on-demand ERP suite that provides for the unique needs of engineer-to-order, make-to-order, high volume and mixed-mode manufacturing environments through comprehensive, end-to-end functionality for the entire product life-cycle. Headquartered in El Segundo, California, Glovia Services has helped manufacturers to cut costs, improve productivity, and meet customer demands for over 30 years. For more information please visit www.gsinnovate.com, or call 310-563-8700 or 877-474-8896 (toll free).

Fujitsu is a leading provider of IT-based business solutions for the global marketplace. With approximately 160,000 employees supporting customers in 70 countries, Fujitsu combines a worldwide corps of systems and services experts with highly reliable computing and communications products and advanced microelectronics to deliver added value to customers. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 5.3 trillion yen (US$53 billion) for the fiscal year ended March 31, 2008. For more information, please see: www.fujitsu.com.

Glovia Services strives to equip manufacturers with the expert knowledge and best practices gained from our own manufacturing and technology experience. The GSInnovate Industry Insight Series provides manufacturers with the latest resources to effectively manage their business on demand.