This article originally appeared on Motor.com on March 22 2023, and was written by Incito CEO, Izzy Galicia. Companies like Toyota, Intel and Nike have leveraged the principles of lean manufacturing to maximize their productivity. Here’s how to follow in their footsteps. Maximizing manufacturing productivity starts with measuring. In order to maximize a process, you need to measure and assess its current performance. As management guru Peter Drucker said, “You can’t improve what you can’t measure.” In the age of digitalization, we are not lacking for measurements—most organizations are drowning in data derived from measurements. We know how people, platforms and processes are performing in real-time on a minute-by-minute basis. Our challenge is knowing which measurements matter. One approach to maximizing productivity that has recently increased in popularity is lean manufacturing, a method that seeks to increase productivity by decreasing waste. The key measurement in lean manufacturing is the amount of resources that companies are wasting. Companies like Toyota, Intel and Nike have leveraged the principles of lean manufacturing to maximize their productivity. For those who would follow in their footsteps, here are some key waste areas that should be measured, assessed and optimized. Reducing waste by minimizing defects Defects, which result from a general lack of quality control, can have a significant negative impact on productivity. They flow from inadequate training, poor machine repair or high levels of inventory. If not addressed, waste from defects results in extra costs, loss of resources and customer dissatisfaction. To eliminate this type of waste, companies must design processes focused on defect detection. Ideally, this will involve formalized document control and ensuring the use of qualitative methods. As the quality of work increases, waste from defects will decrease and overall productivity will improve. Reducing waste by resisting overproduction Producing goods faster, or in higher quantities than what is needed, results in overproduction waste. This typically results from low uptime, over-prioritizing local optimization, or a lack of proper planning and communication. The failure to optimize supply chains can also increase overproduction waste. Overproduction is arguably the type of waste that organizations can experience since it results in large amounts of unsold goods. It also requires that those goods be handled in some way, which increases labor and logistics costs. By improving planning and forecasting, companies can shift to a made-to-order philosophy that reduces overproduction waste. Reducing waste by resisting overproduction Producing goods faster, or in higher quantities than what is needed, results in overproduction waste. This typically results from low uptime, over-prioritizing local optimization, or a lack of proper planning and communication. The failure to optimize supply chains can also increase overproduction waste. Overproduction is arguably the type of waste that organizations can experience since it results in large amounts of unsold goods. It also requires that those goods be handled in some way, which increases labor and logistics costs. By improving planning and forecasting, companies can shift to a made-to-order philosophy that reduces overproduction waste. Reducing waste through better inventory management Unprocessed inventory is a type of waste that can include work in progress, raw materials or finished goods that are unsold. This type of waste generally stems from poor forecasting, poor management and over-purchasing. When not addressed, it can end in losses resulting from inefficient deliveries and damaged production materials. To address inventory waste, companies must modify processes to ensure that the correct quantities of materials are purchased and that those purchases are made only when materials are needed. Careful planning and forecasting are essential in this area. Ordering raw materials in small batches can also help to reduce inventory waste. Reducing waste by reducing waiting Moving from phase to phase in the manufacturing process usually requires some waiting during which machinery or workers are idle. This can involve the time required for moving raw materials to a plant, transitioning a work in progress to a new station or shifting a finished product to a warehouse. When these movements are not optimized, it results in waiting waste. Issues that can lead to excess waiting waste include: Defective equipment Poor machinery Lack of necessary skills Absent workers Inefficient work methods Longer than necessary setup times Companies can reduce waiting waste by balancing workloads, which requires providing proper instruction and ensuring that skilled workers are available to meet production demands. Improving communications can also reduce this type of waste. Some companies address waiting waste by adopting processes that incorporate takt time. Reducing waste by eliminating unnecessary motion Motion that does not add any value to the manufacturing process is waste. This can include a wide range of unnecessary activities, such as lifting, searching for documents or inventory and re-adjusting machinery components after they have been installed. In addition to slowing down processes and adding avoidable costs, motion waste can also result in injuries to personnel. Eliminating motion waste can be as simple as redesigning workspaces for optimal efficiency or organizing warehouses in a way that acknowledges workflows. At the least, materials should be kept in a way that reduces strain on the staff that must use them. Process mapping can be a powerful tool for reducing motion waste. Reducing waste by optimizing transportation Transportation waste results from relocating or otherwise handling a product unnecessarily. Processes that involve long-distance operations, excess production and multiple storage facilities can easily suffer from this type of waste. Without proper planning, companies can incur increased transportation and labor costs as a result of transportation waste. When transportation waste is not addressed, it can cause a ripple effect that results in other types of waste. This can include waiting waste, which results from the time spent idle while raw materials or works in progress are transported unnecessarily. Transportation waste can also result in motion waste. Reducing waste through proper utilization of talent There are a number of scenarios that can lead to waste when it comes to the utilization of talent. In some cases, it involves giving employees tasks for which they have not been properly trained. However, talent waste can also result from not taking full advantage of employees’ talents. This can result from management overlooking talent or undervaluing it. A lack of communication or poor team organization can also result in talent being wasted. Moving toward a lean manufacturing model can involve a radical paradigm shift for companies, but it has become a proven model for bringing about improvements in manufacturing and beyond. Simply acknowledging, identifying and addressing waste in any of these areas can rapidly increase effectiveness and efficiency in any organization and set the stage for achieving maximum productivity. Isidro “Izzy” Galicia, President and CEO of Incito Consulting Group, is the recipient of the distinguished Shingo Prize, The National Association of Manufacturers Award, and the JD Powers Gold Award. He is also a certified Six Sigma Master Black Belt. Want to learn more? Schedule a consultation. About how Incito can help transform your business and tackle your most important strategic challenges.