Developing Business by Implementing Muda
By: Bondan Ibnu Samfebrian
Tags: Business Strategy, Industrial Engineering, Business Development

In the rush to focus on revenue, many businesses forget to consider the importance of business process and production process, specifically on the effects of waste. Put another way, businesses that strive to remain streamlined and well-organized have a significant advantage over those that lack efficiency.

For decades, leading Japanese companies directed their cost management efforts toward muda, or known as waste elimination. Western companies mirrored the success of this ‘Japanese Miracle’ of the 1970s and 1980s. Concepts of just in time (JIT) and waste elimination meant that new terms, such as process analysis, process mapping and re-engineering, became part of the business lexicon. The idea of process analysis is to think of business activities as a chain of events, perhaps from the beginning of the manufacturing process through to the end, and to break down the chain of activities into very discrete, yet identifiable tasks.

Following difficulties in the 1970s, senior managers at Harley-Davidson visited Honda’s motorcycle facility at Marysville, Ohio. The difference between Honda’s facility and Harley-Davidson’s was dramatic in terms of layout, production flow, efficiency and inventory management. The managers decided that Harley-Davidson needed to introduce a business-wide JIT manufacturing initiative called MAN (Materials As Needed). Production-Operations were brought together, reducing the amount of resources required for material handling. Harley-Davidson reduced both the amount of suppliers received too early and the inventory produced too early. This also reduced the space required for manufacturing, which liberated additional space to increase production. Another similar experience is Caterpillar, a leading manufacturer of agricultural and construction machinery. During the 1980s, Caterpillar’s cost structure was significantly higher than its principal competitor — the japanese firm, Komatsu. Caterpillar concluded that Komatsu’s flow process was more efficient than Caterpillar’s method of moving parts and partially finished products through the production process. It undertook a significant plant rearrangement initiative called PWAF or Plant With A Future. The new flow process reduced the distances between operations, which improved material handling expenses, inventory levels and cycle time to make each product. In some cases, cycle time was reduced by as much as 80%.

Here are some insights that we can implement on eliminating waste:

It’s a good idea to remind ourselves of the first two stages of lean. This is when you are defining value and mapping the value stream, and is where Muda would be first introduced.

First Stage, defining value is where you decide what value your product or service brings to your target customer. Second stage, mapping the value stream — is where you identify the processes and activities behind the product or service, and figure out whether each one adds value to the defined value (the figure you worked out previously). This is where you identify specific areas of Muda — the activities that do not bring value.

Then, identify who is responsible on inefficiency areas, and appreciate its size and magnitude. Waste that is not seen cannot be eliminated. When something is denied as waste, it also cannot be stopped. When we refuse to accept responsibility for the waste, then we will not eliminate it. Of course, when the waste is not measured, we will not be motivated to stop it. What is not measured, is not improved.

Create a clear, workable plan for reducing areas of inefficiency and replacing them with streamlined operations.

Be cautious when introducing the new plan. Changes to any process can have unforseen consequences, be aware ofthese possible problems and be ready to make adjustments to compensate for them.

“Even a small improvement is still called improvement. Step by step”, Anonymous

Dedicated to: Jeremy Koourdi & Erwin Michiels