SM4.1 Eight Types of Waste

The well-known Toyota car company identified seven types of waste that had an impact on Productivity and Profit.  An eighth has been added more recently.  By gradually reducing these wastes, you can improve the Productivity and Profit of your business.  In Japanese, this is referred to as reducing “muda” (pronounced Moo-da).  This article discusses how these types of waste might show up in your business; and what to do about them.  Waste reduction is an ongoing and probably never ending process.  This article gives lots of examples of waste in each of the categories.   To be most effective, you should tackle the largest waste items first so as to make the largest gains first. Waste reduction is a team effort ideally as those on the front-line probably already know what is wasteful; they are just not empowered and trained to combat waste.

Read this if: you are working on making your business operate more efficiently

Relates to: 80/20 Rule for finding the biggest issues, Kaizen for incremental improvement, Constraints and bottlenecks.  Our Profit Acceleration optimization toolkits; Double Profit in 100 Days and Double Growth and Profit in 365 Days.

Audio/visual Materials: none

Degree of Difficulty: Yellow (entry level) .  Not hard to do but requires perseverance.  It is the first article in a series on managing waste to improve your profit

C2.5.2 Increase Revenue – Improve Cashflow

Be mindful of the old adage; “Revenue is vanity, Profit is sanity and Cash is king!“. There are a couple of quick boosts to your Cashflow that will help to give you Working Capital for use in tuning other parts of your business. Contents List:Surplus InventoryAccounts ReceivableAccounts Payable Surplus Inventory By the time you have […]

C2.5.3 Increase Revenue – Sales Revenue

Another long lasting boost to your business can be a growth in Sales.  In this section, we outline how such Sales Revenue growth might be speedily achieved. Contents List: Focus on the Best Customers First Pricing Improve Sales Funnel Flow Over and Under Stocking By the time you reach this point in the Optimise100 Campaign, […]

C2.3.5 Optimise100: Task Management

As you work through the plan for optimising your existing business en route to increasing Profits, you will be generating a large number of tasks as an outcome. Learn how to distribute these tasks and delegate them to your team. These tasks can rapidly become difficult to keep in your head and/or manage the process of […]

C2.4.10 Cost Reduction – Reduce Staff Cost

Earlier on we wrote about the importance of having “the right people on the bus”. It is crucial to reduce Staff Cost to boost your Profit. At this point in the project you have decided: What products and what locations you want to retain What products and locations that you no longer need. There are […]

C2.4.8 Cost Reduction – Reduce Fixed Costs

Fixed Cost or Overhead Cost are those that will exist even if the business does not hypothetically produce anything. Alternatively, they can be thought of as costs that do not vary directly with production output. They include things like office and factory space, furniture & fittings and realistically speaking include all labour other than casual labour. […]

C2.4.7 Cost Reduction – Reduce Inventory Cost

Does your business rely on inventory? Then there are quite substantial savings to be made with improved inventory management. Reduce inventory cost and reap the benefits. This comes from two directions: Reduce the total Inventory you hold. Thereby reducing the amount of Working Capital tied up in Inventory. Reduce your debt and associated interest charges. […]

C2.4.6 Cost Reduction – Supplier Relationship

One of the easiest, and least painful, places to start a cost cutting exercise is by looking at your supplier relationships. Any activity in this area can have good pay offs. Example: Assume that about half of your expenditure is on products purchased from suppliers. These could be: Manufacture: Variable Costs Retail: Cost of Goods […]

C2.4.5 Optimise100 – Zero Based Budget

One discipline applied to costs by high performing organisations is known as “Zero-based Budgeting”. Zero-based Budgets are built from the ground up each year instead of taking last year’s budget as a starting point. Start from the ground up instead of adding a little or taking a little away. Cost Centre Managers – Zero Based […]

C2.4.4 Cost Reduction – Locations to Abandon

You want to decrease costs but you do not know where to start. Have you built up a number of locations from which you operate? Do these locations vary in profitability? This can depend on the same criteria as mentioned for products to discard. Ones where the market is saturated and ones that still have […]

error: Content is protected !!