Wastage, the Enemy of Lean (1/2)

We hear so much these days that suggests that we must ‘Lean’ our processes to eliminate waste and improve performance. Easy enough to say but not so easy to achieve and sustain, as many have found to their cost.

Waste is an unfortunate consequence of production and therefore cannot be eliminated. It is also a function of variation. Consequently, the more variation we have in our processes and the greater the variety of our product range, the more waste we should expect. That’s not to say that waste cannot be reduced, it can, and we should obviously use every opportunity to reduce wastage wherever it rears its ugly head.

One of the problems in tackling waste, within the FMCG industry, is that it is not always easy to see. Secondly, waste in so many manufacturing companies has been around for so long that, in spite of its long-standing presence, it just isn’t seen. It’s become ‘invisible’

A few years ago I was carrying out a trial at a well-known coffee packer. Though the trial was focussed upon weight control and reducing giveaway (Average Quantity Law) with a few related quality checks, I couldn’t help noticing the number of scrapped metallised vacuum packs an hour into the start of the shift – several hundred of them.

In asking why, I was initially told “underweights”, so I checked a few from the reject bin to find that most were within tolerance. I then asked why these ‘in spec’ packs had been thrown in the bin, when.

“Ah!” said my experienced operator, “they would be from the first half hour of production when they all get rejected.” “Why?” “If you look closely”, said my operator, “you will notice that on the later produced packs there is a well embossed best before date code, but those you have picked out of the reject bin don’t have the code fully embossed”. “Why?” “Because the hot foil head will not be hot enough until it’s been on for a while”. “So”, I naively asked, “why not wait until you know the code will be properly embossed before you run the line?” My patient operator, now becoming exasperated because he felt that I didn’t understand his business said “Management won’t allow it. We have to start running the line as soon as we begin our shift.” “Why don’t they bring someone in half an hour earlier to switch on the hot foil heater?” I asked. “Because they won’t pay the overtime for someone to come in early. In any case, we have always done it this way” came the reply.

By this time, I needed a coffee so hot footed it to the canteen. On the noticeboard there, was a large notice to all operational personnel which stated ‘Don’t waste metallised vacuum packs, they cost us 5p each’. That cost would doubtless be a lot higher now.

When back at the sanctuary of my office base, I phoned the Technical Director who had asked us to perform the trial in the first place and explained what I had found, adding that the cost of wastage in coffee packs, without doubt, dwarfed any potential savings in potential overfill reduction.

Shoot the Messenger

His reaction surprised me. He said that I must have been mistaken as none of his operators would behave in such an irresponsible manner and if they did, they would be severely disciplined, even dismissed. Sadly, we didn’t win any friends that day and they didn’t act upon our revelation.

A great example of the three states of management mentioned in my previous article:

What Management would like to be happening
What Management believe is happening
What is actually happening

During my long career, within the food and drink industry, I have experienced hundreds of similar examples, too numerous to mention here but, equally unbelievable.

When such problems occur (easy to see through fresh eyes) embarrassment usually follows disbelief, followed by the blame game. Operators blame management and management blame operators.

Edwards Deming, the founding father of statistical process control and performance improvement, determined that up to 35% of turnover was lost through wastage. As such levels of wastage directly impact the bottom line, it is easy to see why net profits within the food industry have historically been low and why there is now greater focus on wastage reduction.

A Changing Environment

Fortunately, there are signs that this is changing. Far more companies are now interested in, and talking about, such tools as SPC, Six Sigma, SMED, OEE, Right First Time Quality and more, in their efforts to create a optimise performance. Some companies have made enormous improvements whilst others, deploying similar tools haven’t done so well.

In our experience, the creation of a lean environment is far more difficult, and fraught with the prospect of failure, than some would like to admit, giving truth to the statistic that more than 70% of computerised performance improvement projects fail to achieve their objectives.

We believe that where projects fail, it can often be because management acted in desperation to fix a problem but didn’t put in the time and effort necessary to ensure that the whole team were on board with the new objectives. Management sometimes even try to minimise operator input through automation, whilst operators fail to engage through suspicion and fear.

“It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than a new system. For the initiator has the enmity of all who would profit by the preservation of the old institution and merely lukewarm defenders in those who gain by the new ones.”
Niccolo Machiavelli

When Machiavelli made this quote, around 1500, he clearly wasn’t referring to the computer systems that we enlist today to help us reduce wastage and improve performance, but he certainly knew a thing or two about the human attitude towards the implementation of change.

In Part 2 we will discuss ways in which we help companies reduce wastage and bring about lasting beneficial change.