Waste (Muda) = Activities without value adding effect

What is Waste?

Waste can be defined as any production activity that utilizes resources but does not add any value for the customer.  Since these wastes add to the cost of products, they either reduce the profit the manufacturer makes or inflate the price that the customer needs to pay. In general, customers are not willing to pay for these activities because they do not benefit from them.  Therefore, eliminating waste presents a great opportunity for businesses to cut costs and improve efficiency.  When speaking about waste, lean experts usually refer to seven specifically. These include: transportation, inventory, motion, waiting, over processing, overproduction, and defects.  Elimination of these seven kinds of waste can help companies reduce costs, increase employee engagement and customer happiness, and increase profits.  The lean management and continuous improvement philosophy (Kaizen) attempt to decrease as much waste as possible.

7 Types of Waste

Type of waste Example
  • Movement of materials from one location to another
  • Avoid unnecessary steps in between processes
  • Every piece of product tied up in raw material, work in progress or finished good costs money until its sold
  • Do not store extra materials
  • Unnecessary motions are movements of machines or employees that are not as small or as easy to achieve as possible
  • Make the motions in between processes easier
  • Any idle time produced when two interdependent processes are not completely synchronized
  • Connect processes well, so no time is wasted
  • Put more into the product than is valued by the customer
  • Do not do more than what customers want
  • Results from producing more or faster than required
  • Do not produce more than what customers need
  • Errors that require time to fix
  • Avoid mistakes or the production of bad quality goods

What is Kaizen?

Kaizen comes from the Japanese word for “improvement.”  It has become synonymous with a philosophy made famous by Japanese manufacturers such as Toyota.  Kaizen suggests that big results come from many small changes accumulated over time.  It is a method of involving the entire workforce to come up with many ideas for improvement.  Each employee is expected to come up with and implement 3-5 improvement ideas per month.

In the 1950s, Kaizen philosophy intersected with the auto industry.  After World War 2, Taiichi Ohno was assigned to set up machine shops for Toyota.  Before setting up the shops in Japan, he visited the US in order to view Henry Ford’s assembly lines.  Ohno realized that while the Ford assembly lines worked, the process contained a lot of waste.  For example, some parts of the factory had to much inventory while others did not have enough.  While in the US he also witnessed American supermarkets and was impressed how the stores only ordered what they needed.  Ohno combined these 2 observations and applied the principles of Kaizen to Japanese auto manufacturing.  Due to his implementation of Kaizen philosophy, Toyota is still known today as a producer of quality and reliable cars.

Both Ford and Porsche automobile companies also implemented Kaizen, in order to potentially decrease costs and increase profits.  For example, up until the late 1990s, Ford Motor Co. was largely known for producing poor quality vehicles such as the Pinto.  In order to change their reputation, the new CEO Alan Mulally implemented Kaizen into Ford in 2006.  After 9 years of incremental improvements, Mulally took Ford from the verge of bankruptcy to one of the leading US automobile companies.

On the other hand, in 1992, Porsche was also close to bankruptcy.  Their costs were extremely high and a recession had crippled sales.  Therefore, Wendelin Wiedeking (Porsche’s new CEO) brought Japanese Kaizen experts from Toyota to German Porsche production facilities.  Today, after implementing Kaizen, Porsche produces cars faster with fewer people and does not lose technical sophistication.  For example, Porsche has reduced the assembly time for one of its speedsters from 120 to 72 hours, the number of errors per car has fallen by 50%, the work force has shrunk by 19%, and inventory has decreased so extensively that factory space has been reduced by 30%.

What is “Muda” and what does it mean?

The term “Muda” is a traditional general Japanese term that references an activity that is wasteful or does not add value.  In English Muda means “uselessness or wastefulness.” The use of this term in regards to lean management originates from the Toyota Production System as one of the three types of deviation from the optimal allocation of resources.  The other two include mura (unevenness) and muri (overburden). Toyota adopted these words beginning with mu- because this prefix is widely recognized in Japan as a reference to a product improvement process. Waste reduction is an effective way for companies to increase profits.

There are two types of Muda, Type 1 and Type 2:

While both Type 1 and 2 do not add value to the end customer, Type 1 is more difficult to eliminate because it is sometimes necessary.  As a result, companies should attempt to eliminate both but focus mainly on eliminating Type 2 wastes in order to decrease costs and increase profits.

Real-Life Examples of the 7 Kinds of Wastes

  • Mistakes that require fixing (defects)
  • Production of items that do not sell, so inventory begins to pile up (inventory)
  • Movement of employees or the transport of goods from one place to another with no purpose (motion)
  • Employees forced to wait because another activity has not been delivered on time (waiting)
  • Printing and filing of unnecessary documents (overprocessing)

How to Eliminate the 7 Kinds of Waste

Companies can eliminate the 7 Kinds of Wastes by implementing lean management and continuous improvement philosophies and tools.  However, when implementing these ideas and tools, companies should not immediately focus on removing waste.  Instead, companies should utilize the principles of lean and continuous improvement to identify value according to the customer.  In doing so, value-added processes become more efficient and waste across the company is eliminated.