Improving Waste in Your Business
Waste in Your Business?
How to Hold a Waste Reduction Whiteboard Session
Last month’s Route to Profits® helped you identify seven potential areas of waste in your business: Overproduction, Waiting, Transport, Inappropriate Processing, Inventory, Motion & Process Improvement, and Defects.
Now it is time to develop a plan to reduce and/or eliminate the waste in your company. As is the case with most improvement initiatives, the first step is to gather your management team and hold a “whiteboard” session. Your management team will have a good feel for where waste is occurring in your business.
Identify Areas of Waste
Start your waste audit by writing down the seven areas of waste identified in the May 2009 Route to Profits® and noted above. Discuss where the company is experiencing waste in each of these critical areas. Explain that this is not a “witch hunt” and that you are looking for breakdowns in the systems that enable defects to occur. This is an important distinction, because too many organizations try to associate defects with the poor performance of individuals before they look at the processes contributing to these defects.
Ideas to Eliminate Waste
Brainstorm as many ideas as possible (at least three per area) about what can be done to eliminate waste. At this point, this is a wish list; do not think about time or cost considerations. Those will come next.
When you have a good list of waste reduction ideas on the white board, rank the ideas to determine your starting point.
Obviously you cannot address all of the areas at one time. However, you should tackle the idea that will make the biggest financial impact and will be easiest to implement.
How Much are you Spending in Waste?
Begin by estimating how much money the company is spending or losing because of each area of waste. This does not have to be a “to the penny” exercise; simply assign each area an amount based on the group’s best guess. If the numbers are significant, a more exact figure can be provided by your controller or accountant at a later date. There should be at least 21 ideas with dollar amounts representing an estimate of how much money the company is currently losing because of a waste area or broken process.
Next, rank each idea based on how easy you think each waste would be to remove. Mark this in the “Ease of Removal” column of the Waste Reduction Whiteboard (see diagram), with-5 as the most difficult to remove and +5 as the easiest to remove. Again, this should be an educated guess by the group. At the end of this process, it will be easy to identify the ideas that will have the highest value with the easiest im¬plementation. This should be the starting point for attacking waste in your business.
Document the Plan
Last, but certainly not least, document your work. Complete a One-Page-Plan (Route To Profits® December 2008 – pkftexas.com/RTP) for the company with regard to your waste reduction projects. Give the company a deadline for completion of the project. Have each member of the management team complete a one-page-plan identifying their individual strategy, objective, and when they will complete their portion of the project. It is essential that you set the stage with your employees. This last step is critical for any improvement objective in your organization.
One-page-plans are easily updated and disseminated to your employees and provide a road map to ensure that the improvement plan is completed.
Starting with the easiest, most valuable idea first, will help you transition into the ongoing waste reduction process for your business. And yes, this is like an exercise program you don’t just do it once and you are finished. The waste reduction process will continue to pay you dividends year after year.
So what are you waiting for? Get the waste out of your business!
Byron Hebert, CPA, CTP, is a director at PKF Texas and practice leader for the Entrepreneurial Advisory Services group. PKF Texas can provide assistance to companies looking to implement the techniques detailed in this issue.
- Byron Hebert: 713-860-1455, firstname.lastname@example.org
- Karen Love, Director, Practice Growth: 713-860-1459, email@example.com
- For archived issues of Route to Profits®, visit pkftexas.com/RTP
- To listen to PKF Texas – The Entrepreneur’s Playbook® tips go to pkftexas.com/ep.