Post World War II, Toyota was a struggling car company. It did not have anything close to the resources of GM, Ford or Chrysler. Notably, Toyota lacked space and capital. They had no place to build long assembly lines, nor did they have the money to build dedicated machines for each operation. In the U.S. and in Japan, they were struggling to compete.
Taiichi Ohno, an executive with Toyota at the time, developed a totally new way of thinking about making cars. It was the antithesis of mass production; he called it “Lean Manufacturing.” Going Lean - essentially eliminating waste - required less space and money. This transformation allowed Toyota to begin to compete with the Big Three. Sixty years later, we all know the result of Ohno's efforts. Toyota cars have a reputation for quality, and their cost per manufactured car is significantly lower than any U.S. or European car manufacturer. In a few years, Toyota will overtake GM as the largest automobile manufacturer in the world.
In mass production, the only waste that is quickly identified is poor quality. The product is rejected in final inspection. In developing his Lean philosophy, Ohno identified seven types of muda. Later he added an eighth type of muda - people.
These eight wastes are not unique to manufacturing facilities, but occur in all companies. They are:
1. Waiting
2. Inventory
3. Transportation
4. Over-production
5. Over-processing
6. Motion
7. Errors/Defects
8. People
1. Waiting:
The waste of Waiting happens all over your PVF supply house. Look around. Every day you see or hear of employees “waiting.” They are waiting for a vendor's call, for a manager's approval, for verification from the warehouse, for a customer to send a PO, for a fax to arrive, etc.
It is simple: any time employees are waiting for something, they are not producing anything, yet they are costing your company money. Not only is your labor cost higher, but when employees are waiting then your machinery is idle, too. The trucks stand still while drivers wait for shipping information; forklifts are waiting for incoming shipments; your computers are idle, too, waiting for information to input.
2. Inventory:
The waste of Inventory is one of the largest. In the PVF world, Inventory waste comes from overstocking materials, and from materials packed and ready to ship awaiting back-ordered items (more waiting!). Inventory costs money to purchase - and you don't see any return on that money until much later. Sometimes never. Inventory does become obsolete.
Money spent buying excess inventory could be used for things that are more important. Inventory eats up warehouse space, which also costs money. Inventory piled up all over the place causes inefficient operations. (Think of how often you see a big box of inventory blocking an aisle or impeding access to other materials.) To be sure, inventory is the lifeblood of a PVF distributor. However, most PVF warehouses suffer from too much of a good thing. More is not better, more is muda.
3. Transportation:
The waste of Transportation is huge in most warehouses. Map the movement of a valve through your warehouse from the moment it arrives to the instant it is shipped. I bet it goes something like this:
The vendor's delivery truck drops it off at the receiving dock. Later, the valve is brought into the warehouse. Then the valve is stocked. When the material is needed for an order, it is picked, brought to a staging area and eventually packed. The packed box is then moved to the shipping area and ultimately put on the truck. Try the same exercise with the flow of paper through your office. Paper and products are transported many more times than necessary.
