Eliminating Muda

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Eliminating Muda

• Jason Cox
• Laura Lewis

2
Presentation Overview

• Muda
• Waste Analyst
• Lean Thinking
• Lean Production

3
What is Muda???

• Muda, in Japanese, means waste
• Elimination of waste is intrinsic to JIT
• Ultimate goal of JIT is to produce a good or
  service without waste

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Waste according to Taiichi Ohno

• Overproduction
• Waiting
• Transportation
• Processing
• Inventory
• Movement
• Defects

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8th type of waste behavioral

• M.L. Emiliani defines behavioral waste as human
  behaviors that add no value and can be
  eliminated.
• The role of investment analyst is to advise the
  CEO on the financial performance of the company
• It has become painfully obvious (Enron) that
  investment analysts work over the numbers until
  they reflect what the stakeholders demand (which
  doesnt add value)

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Waste Analyst

• In order to add value to the company, investment
  analysts should focus on a companys real
  financial performance
• For this reason Emiliani recommends that
  companies convert the position of investment
  analyst to waste analyst
• What costs a company the most? MUDA!

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Waste Analyst, cont.

• Waste analyst should focus on
• finding and eliminating waste
• Understanding processes
• Muda is eliminated only by first understanding
  precisely how business processes are performed

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Waste Analyst, cont.

• Waste Analyst must take a fresh approach to
  traditional problems
• How to reduce costs? Not by layoffs or budget
  cuts, but through eliminating waste!
• Dont limit designs involvement (gt70 of cost is
  in design)
• Reduce lead times through set-up reductions and
  standardization as well as waste elimination

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Waste Analyst pros and cons

• Would have to show immediate financial benefits
  (not proven position)
• Difficult for a person educated to be investment
  analyst to switch hats and become waste analyst
• Processes considered not just eliminating waste

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Lean Thinking

• Womack and Jones book Lean Thinking
• Try to eliminate waste
• Focus on converting waste into something that
  adds value

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Lean Thinking cont.

• Benefits of Lean Thinking according to authors
• New jobs are created resulting in
• Greater productivity in less space
• Using less equipment
• Taking less time
• While expending less effort

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Lean Thinking pros and cons

• Awesome if possible
• Could promote waste
• Possibly counterproductive (finding ways to use
  waste instead of eliminating waste)

13
Lean Production

• According to Mike Joyce, VP of Lockheed Martin
  21st Century
• Goal of lean production is to achieve waste-free
  products and defect-free processes that deliver
  sustained, increased earnings and customer
  loyalty.

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Lean Production, cont.

• First termed in early 1990s by MIT researchers
• Around long before thanks to Toyota
• Eiji Toyoda visited Ford in 1950s
• At the time Toyota was producing 40 units per day
  while Ford was producing 8000 units.
• Hired Taiichi Ohno (seven types of waste)

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Lean Production, cont.

• Minimize muda systematically over time.
• Aggregate processes rather than focus on
  individual parts
• Individual processes may look profitable but may
  actually be stifling potential value of
  organization as whole

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Lean Production, cont.

• Essential principles and practices embraced by
  lean production
• Focus on customer value stream
• Understand current conditions
• Evaluate the options
• Test to confirm improvements
• Etc.

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Lean Production pros and cons

• Most realistic of three methods
• Eliminate muda AND add value to processes
• Aggregating processes could lead to oversights

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Eliminate Muda

• Process Reengineering (Michael Hammer)
• The fundamental rethinking and radical redesign
  of business processes
• Kaikaku
• Radical Improvements (bandage theory)
• Kaizen
• Continuous quality improvement with work-based
  adult learning

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Which method is for you?

• There are advantages in each of these
  waste-removing methods
• Waste Analyst (or team of employees)
• Lean Thinking Convert waste to value (only if
  waste can not be eradicated)
• Lean Production encompasses the previous two and
  adds more

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Conclusion

• Muda is costing US companies dearly
• Must be addressed especially in current
  economic climate
• Start small.
• Take baby steps
• Just start!