Most of the material you purchase eventually goes (hopefully) to the customer. Some will be waste, others may be scrap. Yet a small part is also likely to be stolen, probably by your own employees.
In this post I will look at the effects of theft and give you some industry examples.
A few weeks ago I wrote an article on the Cuban economy, focusing on commerce (See How a Planned Economy Can Screw Up an Entire Country – Analogy between Cuba’s Communist Economy and Push Systems). On the same visit I not only saw supermarkets, but I also had a look at industry. Unfortunately there are no visitors allowed in their government factories. Nevertheless, I was able to catch some glimpses of different industries.
One popular and well-known concept of the Toyota Production System is the elimination of waste, in Japanese also called muda (無駄). It is one of the three evils of manufacturing systems, the others being unevenness (mura, 斑) and overburden (muri, 無理). In this post I would like to go through the details of waste with you. This includes the traditional seven types of waste – of which I am a big fan. For completeness sake I also included a lot more types of waste I have come across in industry. However, you have to decide yourself if these additional wastes are not themselves a waste.
Over Christmas I escaped the cold weather in Germany and relaxed on the warm beaches in Cuba. Of course, being a lean expert, I was also interested in the Cuban economy. As a communist economy (or more precisely, a socialist economy), it is based on centralized planning. In comparison, the capitalist system of the US (and most of the rest of the world) leaves most business decisions to individual entrepreneurs. This is somewhat similar to push and pull in manufacturing. Push systems also rely on centralized planning, while pull systems have their signal from inside the system to match the customer demand. As capitalism outperforms communism, pull usually outperforms push. Hence, in this post I would like to show you the shenanigans that happen in Cuba due to the effects of centralized planning. Warning: Lots of images ahead!
Inventory is one of the seven types of waste. There is usually quite a significant cost associated with having inventory, usually much more than what traditional bookkeeping accounts for. Between 30% and 65% of the value of your inventory is spent every year as inventory-related costs! This post looks into more detail at the cost of this inventory.
The Overall Equipment Effectiveness (OEE) is by far and wide the most lied-about and fudged measurement on the shop floor, both intentionally or by accident. This post tells you the top three different ways how an OEE is fudged, so you know which OEE to trust and which one not.
There is quite a difference between knowing in theory how to measure an Overall Equipment Effectiveness (OEE), and actually measuring it in practice. This post will give crucial tips and points on how to measure the OEE on a real shop floor.
OEE, the abbreviation for Overall Equipment Effectiveness (or sometimes Overall Equipment Efficiency), is a measure of the utilization of a machine. It is frequently used on the shop floor, often determines part of the performance-based compensation of the managers, and is by far and wide the most lied-about and fudged measurement on the shop floor.