Page 293 - (DK) The Business Book

DELIVERING THE GOODS 291

See also: Reinventing and adapting 52–57 ■ The value of teams 70–71 ■ Creativity and invention 72–73 ■ Leading the
market 166–69 ■ Maximize customer benefits 288–89 ■ Simplify processes 296–99 ■ Time-based management 326–27

...overproduction.

...inventory.

...movement.

Waste is anything Lean producers
that adds to a company’s try to eliminate
cost which is not ...waiting.
valued by the these wastes to
boost profits.
customer, including...
...transportation.

...overprocessing.

...defects.

visit Ford’s Rouge plant in Detroit, Seven types of waste The second example of muda
MI. Toyoda spent three months Shigeo Shingo, a Japanese is inventory waste. In addition to
studying the mass-production industrial engineer who worked stockpiles of unsold finished goods,
technique pioneered by Ford at the with Toyota in the 1970s, identified many mass producers keep stocks
Rouge. On his return, Eiji reported seven types of waste, or muda. of raw materials and work-in-
that he was impressed by the scale The first type is overproduction. progress to reduce the risk of
of production that Ford achieved— Traditional manufacturers have production being halted. Stocks of
the Rouge was so big that it a tendency to mass produce in raw materials are held in case a
required its own railroad, hospital, advance of sales. These companies supplier fails to make a delivery, or
and several fire stations. However, try to forecast what they think to protect against the possibility
he also believed that the factory demand will be for their product, that some of the raw materials
was riddled with muda—the then they make the goods that they might be defective and unusable.
Japanese term for wasted effort, expect to sell. The main problem Stocks of work-in-progress, or semi-
materials, and time. Toyoda and his with this system of manufacturing, completed products, are held just in
colleagues set about developing a however, is that it relies on accurate case a machine on the production
new production system that sought forecasting of demand. If the line breaks down. These can then
to replicate the output and forecast does not accurately match be inserted into the process to
economies of scale achieved by demand, the company could be left ensure that production continues.
Ford, but in a less wasteful manner. with mountains of unsold stock. However, holding stocks of raw ❯❯