Muda in Lean Six Sigma speak is waste (as with many Lean Six Sigma things, it’s the Japanese word for waste). They are the 7 deadly sins of Lean, and the whole point of Lean is to get rid of as much waste as possible. There is muda / waste in everything we do, whether it’s excess material which gets cut off, poor product being thrown in the bin or even just more walking around than is required.
- Transportation – moving goods / people between different locations
- Inventory – having more stock than is required, tying up money which could be used better, getting in the way and potentially decreasing in value
- Motion – more activity in a process than adds value
- Waiting – time when goods are not being worked on and people are not creating value
- Overproduction – producing more end product than is required
- Overprocessing – processing that doesn’t add value that the customer needs
- Defects – costs from unusable products, or rework costs
They are sometimes remembered by their acronym TIMWOOD (or ‘who is TIM WOOD?’), or ‘SWIM TOO’ (where Defects is replaced by Scrap).
There is an optional 8th waste, which won’t be included on all courses, but you may want to consider it when looking at your processes, which is:
- Potential / Skills – staff working below their maximum capacity
By removing these wastes from your processes when designing your procedures, you can greatly improve the outcomes of your Six Sigma projects.
Excessive movement of goods, people etc. between processes. I’ve seen many examples where a facility involves moving people and goods all over a factory and back again. You can often cut this out through efficient planning of the layout of your factory / office (offices are far from exempt – I’ve worked places where paperwork is regularly sent by post between two distant offices for no huge gains).
Issues with Transportation waste:
- Transportation costs (Vehicle wear and tear, driver wages, fuel, insurance etc) moving the stock.
- Working capital being moved isn’t being worked on, leading to excess stock (see ‘Inventory’ waste)
This is storing more stock (raw material, finished goods, brochures, or anything else of value) at higher levels or for longer than is required.
Issues with Inventory waste:
- Stock costs money, which could be invested elsewhere or earning you (or not costing you) interest
- If your product lines change, any stock you have of a particular type can easily become obsolete (and so worthless)
- More stock needs a larger premises, which can mean more rent, business rates and even external storage costs
- Inventory may deteriorate over time, leading to stock loss or increased defects
This is like transportation, but within a process. If for a process, you need to do lots of bending / walking / move products around, this is potentially wasted effort.
Issues with Motion waste:
- Jobs will take longer than they need to, leading to excess stock and excess wages
- Excess machine motion leads to wear and tear and electricity costs
This again can be people or product waiting for the next stage, such as due to bottlenecks in a part of the process, uneneven workloads, uneven production levels, waiting for a machine to finish etc. Again, there are many office based examples – I’ve seen staff waiting at their computer for a 20 minute long report to run on their computer.
Issues with Waiting waste:
- Product waiting for the next step in the process leads to more inventory than is needed (see inventory waste)
- People waiting has a direct payroll cost which can add up very quickly
This is making more finished goods than is required for current usage.
Issues with Overproduction waste:
- Overproducing leads to a build up of excess finished goods stock (see ‘Inventory’
- Making overly large batches will delay later batches, harming customer goodwill who will have to wait later for their shipments
- Overproducing unrequested goods significantly increases your risk of obsolete stock
This is a counterintuitive one, as you’re regularly taught to exceed customer expectations. This however is a waste, as it’s added ‘value’ where you see it as value but the customer doesn’t. Overprocessing is any effort put into meeting a standard above which the customer requires, where the customer is not willing to reward it (through higher prices or increased loyalty / sales).
Issues with Overprocessing waste:
- By its very definition, overprocessing is putting in resources (labour time (wages), goods, that you won’t recover from the customer
This is the ‘cost of quality’, or more accurately, the cost of poor quality, and a key overlap area between ‘Lean’ and ‘Six Sigma’; it is sometimes referred to as ‘Scrap’ or ‘Re-Work’. This can be one of the hardest wastes to remove, but if it remains, can easily take down your company, as the costs can be high.
Risks of Defects waste:
- If the defects get through to the customer, you can lose customer goodwill, leading to lower future revenue and / or more management time to improve relationship
- Lost product in defective items (stock purchase cost)
- Urgent restocking costs (air freight, small batch charges) where critical stock has been lost to defects
- Management time fixing issues (payroll costs and opportunity cost of working on other projects)
Skills / Potential – the eighth sin
Whether you consider your staff to be your greatest asset or your greatest cost, they have the capacity to either rise above all competition or go bankrupt. Staff often are underutilised, causing the benefit / cost ratio of your staff to reduce greatly.
This could be down to poor training, leading to lower efficiency work (or causing the wastes above to end up in their work, even if the process doesn’t have them). It could also be where you have staff members who are fulfilling their role but due to their intelligence / experience / attitude could be contributing a lot more to your company – that opportunity cost is costing you money! It could even be just poor management leading to poor morale and direction, so they don’t want to help your company increase production and reduce waste.
Risks of Skills waste:
Payroll costs where more staff are used rather than using staff more effectively
Poorly trained staff can lead to increased defects (see defect waste above)
Opportunity costs of the improvements the staff can bring to the company if working to their full effectiveness
Defeating the 7 (or 8) sins
The whole point of Lean is to remove these evils from your company, and by using the tools correctly, you can over time significantly increase the ‘leanness’, efficiency, profitability and competitiveness of your company