1. Waste not, Want not
First published in Supply Chain Review Dec 2008
As the saying goes there is no time like the present. And while the present is filled with
images of a global economy gone “wrong” these are the times when there is great
In Brief: opportunity for the astute, let me show you why.
Before concerning You might remember from high school physics that Newton said something like “a body
ourselves with the will remain at rest or in uniform motion until acted upon by an external force”. Well I put it
Global Financial Crisis, to you that often a business or economy will remain in a state of rest or uniform motion
take the time to look at unless some thing rattles it’s cage. And globally we are seeing quite a cage rattle.
your operations and
how you can capitalize So philosophy can take a back seat for a moment and lets look at what opportunities
on this opportunity to there are in times like these. And will do so by reviewing two hypothetical organization
remove waste. responses to these times. (any similarity between he below described companies and
any real company is coincidence and either a hue concern or a great relief, depending
Remove waste from on… well you’ll see)
your peoples processes,
this provides your Organization 1 may look out the window and fearing the worst continue to do what they
people with the have done for the last 5 to 10 years. Maybe tighten a few purse strings and cut out some
opportunity for creative “unnecessary expenses” (that which appears and that which may be unnecessary are
value add to your often two different things). At the end of the day though doing things the same old way
business. put us where we are today, history only repeats lessons not yet learnt.
In the interests of the reader who may be concerned with where this is taking us let me say clearly, I don’t advocate
unproven, radical change, in fact I am one of the most risk averse people that I know; it’s just that from time to time it’s
worth challenging the status quo and questioning the “norm”. So with that done on with the show…
Organization 2 may look out the window and see the environment for what it is, an opportunity for change. There is no
better time to slow down, take a deep breath and look take a long hard look at our own organizations, and any areas of
waste. Now for Newton’s first law to come back into play for our advantage, before waste can be removed it first must
be recognized. The change agent within your organization will thrive in this environment because waste can be seen
for what it is, a parasite that sucks the life blood out of a company. (you may have guessed I am passionate about
waste).
So as to the practical steps, a couple of areas that immediately spring to mind,
Inventory Management practices. As most manufacturing companies know inventory is about half their costs, (you can
check your company’s cost structure by using a variety of ratios use whichever you like and means the most to you; my
motto, understand the ratio and simple is good) So if inventory is part of your business you need to know if you are
managing it efficiently (here inventory turn, or inventory days are a good place to start) It makes cents (or dollars) then
to look at how you manage your inventory, is there excess that can be cut out. Are you leveraging your ERP system,
MRP done well is one sure fire way to remove costs.
The other major cost I see in business is time. Yes time. Time wasted is lost and it costs dearly. Consider any one of
the processes within your organization, is every step of this process value adding, is there any “down time” where your
people are not adding value they are creating waste (but before you blame the people, ask yourself were you the
leader who took them there). If you can eliminate waste in process you save time, and while the short sighted manager
may see headcount reduction, I personally see an opportunity to free up creative resources for more value added
activity.
So I will leave you with this thought, the economy and the world of business seeks to make profit and to do so desires
to eradicate waste. The global economic conditions that we are travelling through are removing waste right now. Which
way this will affect your company is up to you.
If you would like a copy of my free e-book “Operations Control. A guide to delivering improved Planning and Inventory
control.” email me at info@operationscontrol.com with the subject “Operations Control e-book”
info@operationscontrol.com
Prepared by Jonathan Grigg