MUDA: HOW ELIMINATING BUSINESS WASTE IMPROVES EFFICIENCY
Written by Jessica Murray
I like to think of myself as a lifelong learner. Expanding my knowledge helps me solve the diverse challenges business owners face and stay current with emerging trends. Since launching Empower in May, I’ve enhanced my knowledge in several areas. Lately, I’ve been particularly focused on supply chain and logistics. My background hasn’t centered on e-commerce, manufacturing or distribution, but the topics have been on my “learning list,” and they are important aspects of many businesses’ overall operations. I’m taking an online certification course to upskill, and one topic recently introduced in the content stuck with me — the Japanese concept of “muda.”
The word muda translates to “futility,” “wastefulness” or “uselessness.” In supply chain operations, muda is part of lean process thinking, denoting wastefulness in resource allocation. It focuses on identifying activities that don’t add value and eliminating the waste in those business processes. The overarching goal is to increase efficiency.
The seven types of muda (business waste) to address
Muda manifests itself in various ways depending on the aspect of the production process in focus. Below are seven types of waste commonly identified in lean manufacturing:
Transportation waste: Unneeded movement of materials, products or information.
Inventory waste: Unused excess of materials and products.
Motion waste: Unnecessary movement of people and equipment.
Waiting waste: Any time burned associated with waiting for approvals, materials, information, services, etc.
Overproduction waste: Making more than what’s required in the near term.
Defect waste: Delivering products or services that don’t meet quality standards.
Processing waste: Adding steps to a process that don’t create value.
Why muda matters
After reading those seven types of muda, it should be clear how this waste can negatively impact a business. Each of those categories can cost valuable time and dollars that should be invested in value-creating activities.
While I started this post talking about heavy supply chain logistics and manufacturing businesses, muda is relevant for any business type. There’s a value chain to delivering any product or service, and muda can surface anywhere. As one example, a local specialty grocer could build up inventory waste, which could prove more harmful if the products have short shelf lives. For a second example, consider a boutique law firm grappling with defect waste because the work product delivered to clients contains errors and lacks high-quality standards.
I always say that focusing on back-end operations may not be the most glamorous part of running a business, but ignoring the excess can be detrimental, particularly in today’s market environment. Last week, I referenced a PwC piece about the “global sludge tax” (i.e. obstacles that slow efficiency). The report indicated the estimated annual cost of lost productivity could be as high as $10 trillion. There’s a lot of opportunity for improvement and optimization in that number.
Taking steps to reduce business waste can lead to:
Better productivity and output
Cost reduction
A better allocation of resources
Improved quality of products and services
Enhanced customer satisfaction
A more competitive market position
Five practical steps to identify and eliminate muda
In thinking about how to identify and rid yourself of business waste buildup, consider these five approachable steps for your team.
Step 1: Conduct a waste audit. Analyze your value chain, processes, key performance metrics and team feedback.
Step 2: Categorize and prioritize. Outline which form(s) of muda you’re dealing with and then assess the overall impact and ease of removal for each.
Step 3: Develop solutions. This requires understanding the root cause and finding creative ways to reduce as much waste as possible (e.g., improve inventory management systems, introduce better quality control processes, foster more cross-functional engagement).
Step 4: Measure progress. Implement standard metrics to establish a baseline and then evaluate ongoing performance.
Step 5: Instill a culture of continuous improvement. Eliminating waste once isn’t enough — more can always surface. Nurture a culture of learning, encourage feedback and regularly review, audit and amend strategies based on results.
If you’re stretched thin, consider bringing in an outside partner to help with this assessment and/or implementation. If this sounds like your situation, take a look at Empower’s offerings and contact us to chat.
Closing thoughts
Much of what I’ve discussed here involves eliminating waste and “taking things away.” But the real power of focusing on muda is that you’ll deliver more value to your customers while maximizing the effectiveness of your resources.
Think of it as addition by subtraction.