by The HLH Team
Overproduction is what happens when idealism runs amuck. You have the orders coming in, and see no reason why they shouldn’t keep coming in and increasing, so you charge full-speed ahead.
Our hubris swells watching our finished widgets roll off the line. So much so, that it becomes easy to forget that sometimes they aren’t sold yet, and their production is a leap of faith. A leap that could, should customers not come through, leave you without a parachute.
This is the king of the Deadly Wastes. It’s the most dangerous. It not only ties up your cash flow, but makes you vulnerable to market changes, leaving you blind to other Wastes happening around you. When we’re overproducing, it’s harder to keep a rational distance to see other Wastes eroding your bottom line.
Just-in-Time:
It’s a prevailing myth that it costs more to shut down an assembly line than to just keep producing. This is the deceitful heart of Overproduction. In Lean manufacturing, if you don’t have the orders, you don’t make the widgets. Period.
Just-in-Time (JIT) is a key pillar of Lean and, for businesses serious about cutting costs, a central goal. It’s elegantly simple:
- You carry just enough inventory to cover the bare minimum of expected orders;
- Build flexibility into your supply logistics; and
- When you get the order, you make the widgets. No more, no less.
JIT operates on a “pull” philosophy: the customer’s order pulls the product through the assembly line for delivery. Overproduction is the opposite: we push the product through the assembly line to pile up in hopes that if we build it, the customers will come.
Inventory:
Overproduction doesn’t act alone, it spawns over-inventory. Together, these two Wastes cripple your cash flow, clog your aisles with unsold product, and keep you anxiously wondering how to get rid of it all.
Batch Sizes:
We overproduce for many reasons and it may be the result of another pernicious myth: that larger batch sizes are always better. Here’s how it works:
- You get too much raw material, and you want to practice efficiency by not storing it. So you pump a ton of money into producing it all, regardless of the orders you have.
- Bigger batches automatically mean saving money (keeping your machines running means you won’t waste time starting them up again), so everything goes into production!
- The product will definitely sell: why wouldn’t it?
This is how a desire for efficiency leads to massive Waste. It happens over and over, and the cycle needs to stop if businesses want to take control of their production again.
Shelf Life:
How long can you sell your product at full price? Once it’s stacked up on those back shelves, its value plummets like driving a car off the lot.
When you can predict obsolescence, like milk expiring, then you can build it into your production process and manage it. But technology, customer expectations, competitors’ tactics, and more can change rapidly and unexpectedly.
With a warehouse full of Overproduction, you forfeit your ability to adapt to market conditions. Instead of being proactive to changes, the value of your outdated product becomes a victim and you’ll have no choice but to discount or discard, the paralysis that Overproduction inflicts.
by The HLH Team
“Opportunities multiply as they are seized.” – Sun Tzu
Making money is hard. It’s damn hard because it’s what everyone else wants to do, too. This leaves you in competition everyday with people who may be smarter, more nimble, have more resources, and are trying to take your customers away from you. Keeping this in mind, if we think about our business more like an army going into battle, we will start to realize some habitual mistakes.
Don’t Compete Against Their Strength:
“An army may be likened to water, for just as flowing water avoids the heights and hastens to the lowlands, so an army avoids strength and strikes weakness.” -Sun Tzu
In battle, you never attack an enemy where he is strongest. If he has more ships, you lure him onto land. If he has a bigger army, you bombard him with ships.
We haven’t caught onto this in the business world, and have a bad habit of attacking our competitors where they’re strongest. We focus on what our competition specializes in and that’s where we tend to compete. Often in doing so, we fail because we’re fighting on their terms.
Where is your competition weakest? What part of their business do they neglect? What product lines are in the most remote areas of their store? What services do you know they offer, but aren’t found on their website?
Where your competitor is weak, you must be stronger. If you aim for the strong center, you’ll both end up wasting your resources in attrition. Find the weak flank, where they haven’t focused their resources and tap into that opportunity. Seizing that market will take less investment and reap higher ROI.
Speed Requires Preparation:
“To rely on rustics and not prepare is the greatest of crimes; to be prepared beforehand for any contingency is the greatest of virtues.” -Sun Tzu
If you march to battle not knowing your destination, the terrain, or having an inkling of where the enemy is, you’ll lose. The same goes for innovations in business.
With new ideas, the first one out of the gate often wins. But if you rush the preparation, and don’t have every variable accounted for, you’ll often make costly mistakes, leaving your competition to pass you in tortoise-and-the-hare style.
Don’t roll out a new product idea until you’ve taken the time you need to prepare properly. Learn what you need to learn, and, mostly importantly, try to anticipate different scenarios. Then, roll it out quickly to crack open and dominate a new market before your competition knows what has happened.
Remain Flexible:
“Avail yourself to any helpful circumstance over and beyond the ordinary rules. According as circumstances are favorable, one should modify one’s plans.” -Sun Tzu
If you need to modify your battle plan to get the high ground, do it. If they get the high ground, withdraw if you must and don’t be stubborn.
We all think we’re flexible, but flexibility isn’t just in our minds. It should be built into the way you run your business. Are you able to react to plunging oil prices, a doubling of demand for your services, or other seismic changes in circumstance?
Your team is the epicentre of your business’s flexibility. If you build a culture of favouring pragmatic decisions over ideological ones, your team should be there to strategically change your plans to always match the conditions.
by The HLH Team
In most industries, a defect waste means repair costs, potential reputational damage, and, if public safety is affected, a potential recall. In healthcare, it means patients stay sick, get sicker, and may even die.
Misdiagnosis:
Misdiagnosis is the granddaddy of all defects, and the consequences can be deadly. On top of the potential cost to your patient’s well-being, your clinic could be sued and a massive blow could be dealt to your reputation.
Here are a few of the most common causes of misdiagnosis:
- Doctor Subjectivity: We’re all human, and sometimes we have built-in judgements when meeting people. If a doctor has any personal feelings toward a patient, positive or negative, they have the potential to cloud judgement. Personal awareness on the doctor’s part (and acceptance that exists with it) is vital.
- Poor Communication: This could be either inadequate doctor-patient communication or incomplete communication between medical professionals. The best way to deal with this is to slow down. Take a breath and make sure that the other party hears you, feels heard, and that both sides have a chance to synthesize the information before hustling onwards. Everyone is busy, but making sure we understand the facts is one of the most important jobs in medicine.
- No Fault Errors: This is when a patient deliberately undermines the diagnostic process, likely by providing false information. Motives vary, but keeping vigorous notes is the best defense.
- System Related: This could be due to a number of things, from a faulty test (human-caused or otherwise), incomplete medical training, or an organizational failure. Audit these processes one by one to make sure they’re appropriate.
- Incomplete Judgement: Like communication, this is largely caused by rushing. Unlike communication, it concerns only the doctor. Every patient presents a puzzle and the Doctor doesn’t know how important each piece is until they’re together. Family history, test results, and, of course, current conditions all play their part. If the doctor rushes when putting the puzzle together, he or she may miss the significance of an important piece. The key here is to give your doctors the breathing room they need to be able to make the right decision.
Data Entry:
Healthcare has its share of administrative defects. Some of these, like typos from entering handwritten intake forms, are low hanging fruit.
Have a tablet available for those willing and comfortable to fill out their form. Every time data passes through human hands especially when interpreting handwriting, the chance for defects increases. Eliminate the extra step and you’ll trim waste.
Prescriptions:
Closely related to misdiagnosis, writing the wrong prescription or issuing the wrong medicine at the pharmacy can have the same deadly results. Luckily, these instances are rare; more often, the defect at the pharmaceutical level is the pharmacy technician miscounting pills.
Give them permission to slow down and count again. Remember, if a patient calls claiming that they got 88 pills instead of 90, the worst thing you can do is call them a liar. Treat them with respect and, once you’ve dealt with their issue, chat with the pharmacy technician in a respectful way to see if it was a one-time accident or if there may be issues of fatigue or personal stress at play.
by The HLH Team
Construction Defects can be crippling, and what makes it worse is how avoidable they are. This Waste is closely linked to Talent, because the key to catching them early is empowering your workers to monitor and speak up.
If the inspector finds a Defect, it’s costly to fix. If the customer finds it after the job is completed, it can be devastating both to cash flow and, more importantly, reputation. Train your foreman and all workers to be vigilant. Have them take the extra 20 minutes at the end of a task to inspect their work before moving on.
Catch it Early:
Construction Defects could be anywhere from annoying to catastrophic, and the difference often hinges on how early you catch it. A flaw in the foundation that only manifests after completion is far costlier than noticing it during the pour.
You can’t do it all yourself. Train every worker with basic leadership skills so they feel empowered to look for and report any possible defects.
Don’t create an atmosphere of fear. If a worker thinks they’ll take the blame and the penalty for something, they’re less likely to report it. Even if it is their fault, it saves money to have them tell you about it, knowing that you’ll be constructive in helping them to ensure it doesn’t happen again.
Check your Materials:
Hopefully you’re already inspecting all materials as they’re delivered. If they’re new, the process is simple: don’t accept faulty materials. If the lumber is warped or the insulation is damaged, you don’t accept it.
Wastes blur together. If you over-produced one job, and need to flip those materials to the next, you no longer have any recourse for materials that have been shipped, tossed, exposed, and otherwise pummelled. The Defects may be visible or hidden.
Using defective materials is never worth it. Defects will always manifest themselves, whether in an hour or a month, and you’ll be working backwards to fix it. Dump the defective materials, and accept the loss as a hard lesson for avoiding Overproduction next time.
Remove Variation:
Lean tactics often overlap several Wastes. Standardization is key in avoiding Over-processing, but it’s just as useful for tackling Defects. Construction can often feel like herding cats, so a shift to Leaner thinking from all parties needs to be a prerequisite.
There may be several “right” ways to do something, but there’s only one “best” way. The best way is achieved through balancing efficiency (to avoid Over-processing and Time Wastes) with quality (to avoid Defects).
Identify the best way and document it. Train the your workers on it and standardize those practices on your worksite to create predictable results every time.
Lean Thinking:
Lean construction is about putting the value of the project above the needs of the individual stakeholders. It seeks to replace the feudal system of each contractor, looking out for themselves, with a more decentralized model of authority, where each partner takes their commitment to the overall value seriously.
Ultimately, standardizing processes to reduce Defects requires this shift in thinking. If the project managers empower all stakeholders to feel engaged in creating the overall value of the project, so it assumes more meaning than the average work day, they will start to be eyes on the ground, actively watching for Defects to emerge.
by The HLH Team
Defects are the easiest Waste to spot. The trick to this Waste is spotting them before the product goes out your door, into the public eye. By the time you catch a Defect, the lost production cash is often the least of your worries. Loss to reputation, angry customers, and the cost of repairs all trump wasted productions costs. Often, the insult to injury is paying people to throw it away.
Layers of Expensive:
By the time you notice a Defect on a finished product, you’ve already put maximum resources into the product. Like Over-Inventory, that has the effect of freezing your cash into that product. Unlike Over-Inventory, you usually can’t just discount it to sell. You’ll need to put more money into repairs first.
Proactivity is the best defense. The earlier in the process you see a defect happening, whether through a bad part or sloppy process, the better. It becomes more expensive the farther in the process it goes.
Empowering Staff:
Even an engaged manager can’t be on the production floor all the time. Defects happen everywhere, but whether they’re caught or missed depends on how many people are actively monitoring.
Your team needs to care about spotting Defects. They need to be engaged in the process improvement process. To be engaged, they need to know that they won’t be blamed or punished for Defects they point out, and they must want to help improve the company.
Talk to them about their ideas. Formal and scheduled are necessary, but also strive to create a rapport where you can chat informally, wherever you are, and they feel heard.
Reputation:
There’s no such thing as a non-competitive industry. If your product doesn’t meet customer expectations, your competition is an email away. It needs to be right.
Company brand and reputation takes a long time to build, but it can fall apart overnight. If the Defects pile up, even loyal customers will start to suspect that something is internally “off.”
If the Defect is safety related, you could have a recall on your hands. That’s when waste becomes exponential and downright dangerous. Audit how you inspect finished product before it leaves. Is it a visual inspection, or are you performing random checks? If you’re relying on people to check them, formalize that process. Make sure those responsible are trustworthy.
Processes:
Defects can have crippling consequences. But often the very processes that we cut to save money, whether that’s redundant eyes on product or slightly lower-grade raw material, are the things that prevented them.
Before you cut a process, take a step back and ask why this process exists in the first place. It was made for a reason; trace it back to that reason. You may find that the extra spotter is there because defective widgets slipped through before.
Sometimes processes are around so long that their benefits get built in, forgotten, and become invisible. Then, when we get excited about process improvement, we cut them. Be vigilant to prevent cutting necessary processes.
