The 7 elements that reduce
your company's effectiveness


Which elements reduce the efficiency of your company?

In all companies there are misalignments that go unnoticed and reduce efficiency. Among the different departments that can be identified in a company, this article will focus specifically on the production area, where mismatches such as unnecessary movements, waiting times, defects, etc. can occur, leading to economic losses in the manufacturing processes and, as a consequence, reducing their value.

In order to obtain cost reduction and add value to the different processes, there are different methodologies. Among them is the “Lean Manufacturing” philosophy, which seeks continuous improvement, trying to eliminate or reduce activities that do not add value, which it calls “muda”, and dominate those with added value.

This philosophy, applicable to any type of process, was born in Japan in the 1950s by Taiichi Ohno. During the Second World War, Ohno began working at the Toyota Motor Company, where he became director in 1954.  It was at this automotive company that he began to realise the wastefulness that was taking place, which was driving up production costs as a result. His main principle is the “Just In Time” philosophy, aimed at putting only the necessary products or services on the market, in the right quantity, with the required quality, at the right time and at the lowest cost, with the objective of harmonising production and demand.

How to apply the Lean manufactoring philosophy?

The first thing to be done is a diagnosis of the current situation, the main task being the identification of unnecessary costs throughout the production process. This philosophy identifies a total of 7 mudas:

  • Overproduction: when production does not match demand, it is common to produce a greater quantity than immediately necessary, unnecessarily allocating resources and personnel to the production of these tasks.
  • Defects: defects are a waste of materials, time, labour …. To prevent them, it is essential to demand quality throughout the supply chain and not to live with the problems, but to detect them, correct them and verify that they do not recur.
  • Transport: the transport of people, documents, materials, etc. is an activity that does not add any type of value to the process and, therefore, must be minimised. To this end, it is essential to design efficient routes to reduce the use of equipment, fuel and manpower, as well as a correct distribution in the plant to optimise these routes.
  • Inventory: it is very common to find accumulated stock, obsolete parts or an excessive amount of raw materials in a warehouse. The ideal would be to have the material necessary to cover immediate needs, thus reducing both the space occupied and the cost of material acquisition/production.
  • Over-processing: when a process is not properly reviewed, unnecessary actions are repeated. In this case the “just in case” logic is very common, doing something just in case, however, does not add any value, quite the contrary. To prevent over-processing, standardisation of operations is used, eliminating everything that does not add value to the product.
  • Waiting: idle times of both personnel and machinery are not generating any value. This is where “bottlenecks” occur, which may be due to unplanned maintenance, asynchrony with suppliers, quality problems, etc. Hence the importance of good preventive maintenance and timing between each process.
  • Unnecessary movements: when a worker walks unnecessarily, bends down, looks for the necessary material… in addition to the appearance of ailments or tiredness, he/she is reducing work time without generating any value. Organisation, order and cleanliness are essential in the workspace to avoid these situations.

The identification of mudas must be accompanied by the quantification of data, indicators, information and the establishment of quantifiable objectives. In order to do this, it is necessary to know what is happening, which is why control must be carried out by establishing data collection mechanisms.

In short, by identifying mudas and implementing different methodologies to prevent their occurrence, a significant reduction in costs can be achieved. However, it is not enough to apply this philosophy sporadically or when a failure is detected; it must become a habit. Moreover, it is a company philosophy, and therefore requires the coordination of the activities of all areas/departments for it to work properly.

At Euro-Funding we work by identifying opportunities and elaborating proposals for productive improvements, adding value throughout the entire life cycle of purchasing and procurement. Thanks to the methodology we use during the project management process, we manage to increase the market share and profitability of our clients.



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