Sep 16, 2008

7 wastes - Over-production

In lean manufacturing concepts, the top waste of the seven wastes is "over-production", but I consider the term of "over-production" was relatively closed to manufacturing industries, so I like to use the term of "Overabundance" to represent the true meaning of the stated waste. "Overabundance" is meaning that the supply is more than demand. This is the other end of JIT manufacturing where products are manufactured when a specified quantities required. Below, I listed out some questions for you to think about in different cases.

For product development, I called it in "over-design",

For Mobile phone, how many features of your owned mobile were never used?
For Software (CAD or office), how many functions of the software were never used in working?
For Digital Camera, how many features of your owned camera were never used?

All the cases above were in the same concept, "over-design"! Let us think one more question for the above cases, if we calculate the un-used features or functions in percentage, how much money we pay for the non-value-added features? Nowaday, total cost leading is a most important marketing strategy in commercial world. If a company is still suppling the product in over-design, it is no doubt that the cost of the product development was claimed on the expense of consumer, what is the affect of her competitive force?

For manufacturing, we called it in "over-production",

Why discount promotion was always found at the end of season in retail?
Why we need to write off the inventory when product change or at the end of product life cycle?
Why we have to handle many WIPs everytime when we change the product line?

When goods are manufactured without real demand for them the work in progress and inventory levels goes high. This ties up capital since the goods are in stock not making cash. If the manufacturer does not have the demand, they have to create it. This involves cost in the form of advertising costs, costs of discounts etc. on the other hand over production greatly reduces the flexibility of the system. If one process has manufactured extra items generally manufacturing needs to be carried out until the stock is over. This takes time and hence it is difficult to change from one to another product quickly. Problems of the system are hidden in inventory. Problems will never get highlighted and hence will never get removed from the system.

For services, we called it in "over-service",
How many channel you never watch in the package of cable TV program?
How many features you never use in the package of mobile service combination?

Nowaday, the service provider are always using the embedded service package to attract their customer. In a normal package of service, they covered all basic features no matter in mobile service or cable TV programme service. The most important point is that they counted all cost of the different features no matter you used or not. We have to pay on them once we signed the contract. I am sure that we can not 100% uitilize all the services and meant it caused waste in our payment. You can give them the basic service they are looking for and then if they are interested can provide the additional services. In this case there is no need for the service provider to be ready with all the possible services at any given time. They can call for the expertise when the customer wants it. Here you will save your money since you are not going to invest in something there is no real requirement. On the other hand customer will pay for what he is actually using.