- Where should the loss and waste analysis be focused and how do you define the scope? In other words, where do I start?
At the outset of the analysis, you need to determine where the primary emphasis will be. Consider the following:
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- If you have a capacity constrained process, the primary focus will be on bottleneck operations and complete asset utilization, whilst also assessing the key cost drivers
- If you’re focused on competitive pricing challenges or your costing within a network, hence a cost-out focus, this tends to require a much deeper look at the primary cost drivers and they’re affected by reliability, and process flow and control
- If it’s orientated toward service levels, you’ll need to look at flexibility and material flow predictability
Finally, quality usually always features, whereas labor productivity is seldom a focus area. That said, labor productivity is usually an upside of the above focus areas.
Download the Waste Walk Guide to learn more about the types of waste to look out for during your waste walk.
The different levels of a loss and waste analysis
To define the scope, it’s important to understand the different levels of an LWA. I’ve purposely listed them from Line to Network level to illustrate the thinking.
| Level: Line | ||
|---|---|---|
| High flex | ||
| Primary focus | Typical deep dive (example) | Typical actions (example) |
| Fast changeover
Right first time Plan adherence |
Setup standards
Equipment reliability Changeover waste |
Skills
SMED Equipment reliability Planning wheel |
| Long runs | ||
| Primary focus | Typical deep dive (example) | Typical actions (example) |
| Stop the stops
Cost Unit conformance |
OEE
Process capability SPC SKU variation Material losses |
Key variation
Checkweigher feedback loops Cp, Cpk rapid actions Reliability Centered Maintenance (RCM) |
| Continuous process | ||
| Primary focus | Typical deep dive (example) | Typical actions (example) |
| Mass balance
All stoppages Process Standards |
Process consistency
Correlations analysis Maintenance practices Process constraints |
Process conditions, predictive adjustments
RCM Short interval control on constraints |
| Batch process | ||
| Primary focus | Typical deep dive (example) | Typical actions (example) |
| CIP
Yield Process batch limits |
Time losses
All process consistency and constraints Maintenance practices Material yield |
Planning wheel
RCM Operating standards and controls |
| Level: Plant(s) | ||
|---|---|---|
| Make only | ||
| Primary focus | Typical deep dive (example) | Typical actions (example) |
| E2E material flow
Cost Capacity |
VSM
Planning Capacity design and utilization |
All causes of downtime
Material yield Daily Operational Reviews (DORs) Planning interfaces Supplier performance |
| Regional hub | ||
| Primary focus | Typical deep dive (example) | Typical actions (example) |
| Service commitment
Customer, cash, cost balance |
Network interfaces
Inventory levels (push/pull) Loading, plan stability and reliability |
Responsiveness and agility
New product launch Make effectiveness Inventory optimization |
| Level: Network | ||
|---|---|---|
| Demand-driven Network | ||
| Primary focus | Typical deep dive (example) | Typical actions (example) |
| Cost to Serve
Availability to Promise Competitive positioning |
Integrated Business Planning (IBP) cascade
Transport utilization Service levels ABCD Supplier performance 3rd party logistics Note: We do not do network analytics in the LWA |
Market/Product consolidations
ABCD process standards and routines “Should be” variation IBP cascade |
- Is there a standard methodology or approach?
In the Make environment, we look end to end, or E2E (from inbound materials to outbound materials, excluding purchase price and some of the Distribution Requirement Planning (DRP) – but one should look at all aspects that influence the conversion efficiency related to the process type and competitive needs. And because the LWA is designed to drive an actionable outcome, we ask two primary questions: Is it capacity/service constrained, or cost-out focus? Asking these questions will help direct the analytical effort. We also look at all waste as defined by traditional Lean methodology, and loss from a zero-base.
By defining the high-level waste potential, we can drill deeper to understand the specific losses and wastes to a greater extent, or identify hidden waste in the case where data has perhaps under-reported losses. An example of this would be material yield allowances, allowances in production run rates, and planning factors. Various tools and data extracts are used to get to causality.
Where time allows, causality can then be further investigated and validated through observations, focus discussions or even controlled experiments.
- What data should be used, and what happens when the data is not available or trustworthy?
Data is often an issue, but line observations, supported by high-level data and extrapolations can help. This can be supplemented by introducing measurement to build a data set over a few weeks. In terms of ongoing daily metrics and visual management for the teams to gain better insight and control of a process, a measurement system must be installed.
In my opinion, low-tech does not mean inaccurate; manual data will usually give indications of priority focus areas. Digital tools or measurement simplify these manual entries and may give more granularity and insight. However, when coaching teams to interpret automated metrics, understanding must be built upon understanding data sources. You’ll find that it might still heavily rely on human entry and defined process conditions, and interpretation must not be reliant on a “black box” mentality.
Wherever digital metrics, mass balance, check weights, PLC extracts, and so on are used, coaching is key to understanding. When they’re used in conjunction with other manual entry tools, discrepancies must be coached in order to improve data integrity.
- What happens after the loss and waste analysis?
It’s advisable that the LWA be followed by structured improvement initiatives (such as rapid and standard deployment) to drive corrective action. These actions must be actively managed and always contain a mix of short-, medium- and long-term actions. Due to the nature of the LWA, the emphasis is often on the short- and medium-term actions. Longer-term actions will, of course, be actioned through the policy deployment process with LWA being an input to the process.
Do not confuse an LWA with a benchmarking exercise that can be done by a couple of bright kids using comparative data sets. When performing an LWA, you’re engaging with people, visible on the shop floor, seeing the real processes in action, asking questions and raising awareness that what is being done could potentially be done better and jointly, by harnessing knowledge at all levels. There’s an expectation of an outcome.
But it’s also important to remember that it is just an analysis; a “size of the prize” initiative if you will. It’s what you do afterwards that’s critical and where you’ll start to realize the benefits of a focused improvement effort.
A loss and waste analysis merely steers you in the right direction and sets you on a path to engage your team around a focused improvement drive with clear objectives. Remember, nothing breeds success like success.
About Carl Loubser
Carl Loubser is a Senior Advisor at CCi. He has spent almost 30 years helping leading manufacturing and supply chain organizations improve operating effectiveness. Carl specializes in transforming supply chains through operationalizing strategy, identifying areas of opportunity, and leading internal teams to deliver these strategies and sustain improvement. Key to his success is his ability to credibly challenge existing methods and results, and work with multifunctional teams to implement new work standards and controls. He has experience in all aspects of the value chain, and has led in excess of 100 projects.
Learn more about Carl’s expertise and connect with him on LinkedIn here.