16 December 2009

The Seven Wastes - Oh No!

According to this article, Toyota's Chief Engineer Taiichi Ohno "created the seven wastes." Sort of makes him sound like the evil character in a fairy tale. ("And then, the hero had to cross the Seven Wastes."). The writer probably should have gone with "identified" instead of "created," but maybe that's just me. And because I'm still a 12-year-old in my head, I giggle a little bit every time they talk about the importance of "eliminating waste." (he he he).

Ok, I do have a point, so let's get to it. One of the seven deadly wastes is "transporting." Apparently, according to this Lean approach, "moving your product from one location adds no value to your product."

Really? To quote a source of wisdom far more ancient than the Lean Oracles, "a bird in the hand is worth two in the bush." I think this old English proverb means, among other things, that location matters. We might even say that location adds value. Sure, I like to get free shipping when I order stuff, but I am willing to pay for shipping when I need to, because the right thing in the wrong location is of very little value to me.

How about an example? I'd pay more for a pizza that's in front of me than a pizza that's a hundred miles away. And whoever moved that pizza from far away to a location within arm's reach has increased the value of said pizza. Hey, when's lunch?

Am I missing something here? Sure, transportation of materials from point A to B and then back to A might be wasteful, but just because some movements do not add value doesn't mean all movements add no value. Seems like someone's fallen for a logical fallacy to me. I just don't see the evidence that moving a product never increases the product's value. In fact, I'm pretty sure location is the ultimate value. So transportation not only creates value, it unleashed all other sources of value. We might almost say transportation is the source of all value.

I'm hoping someone (Mark?) will enlighten me as to this particular aspect of waste. Did I misstate the case? Or did the article I referenced miss the boat? I look forward to hearing your thoughts.


Mark said...

Really? I thought transportation was one of the more obvious wastes...

So here's what I see:
Dan: "Location matters. Near me is better than far away from me."

Lean: "Location matters. Near me is better than far away from me, *because* if it is far away then I have to pay to have it transported to me where I need it. Paying for that transportation is a waste that I would like to minimize. It would be better (cheaper overall) if it started off closer to me, and didn't have to be transported as far."

So I think you and Mr. Ohno are on the same page! (again!)

Back to your pizza analogy...

A pizza on the dinner table is worth two at the pizza-maker.

When you order a delivery pizza (Domino's, for example) you don't call a shop 200 miles away, right? If transportation creates value, then you would seem to prefer a long-distance pizza over one from a block away?

More to come on this topic... but first I have to go "add value" at a meeting. :)

The Dan Ward said...

Ah, I think we're talking about two different things here.

As I see it, it's good to minimize the cost of transportation. In the same way, it's good to reduce the cost of many things that increases the item's cost. But just because we'd like to reduce the cost doesn't mean we don't want the thing.

Some expense-inducing activities add value to the item. Using real cheese instead of glue, for example. I'm willing to pay for the good cheese, because it makes a better pizza. I'd like to not pay too much, but adding cheese does create value.

I contend that moving the thing to the right location increases its value in precisely the same way as using quality ingredients. I might almost say that location IS an ingredient.

I don't call the pizza shop that's 200-mile away. I also don't ask for 200lbs of cheese.

So I go back to my statement: "Near me is better than far away from me." I now add: "The guy who moved the item near to me increased its value. I would not call his activity 'waste.'"

Mark said...

Ok, we can definitely agree that adding cheese creates value - it is part of what makes a pizza a pizza.

But what about the process of adding cheese (at the pizzeria)? If the chef has to go to the back room, get a bag of cheese, and *transport* it to the kitchen, that transportation is a waste of time. It would be better (faster) for you, the customer, if the chef had the cheese right where he needed it. The chef does not add value by bringing the cheese from the back room to the kitchen, but only by putting the cheese on the pizza. This is a clearer example of the "waste of transportation". A very simple way to minimize this waste is to have the right amount of cheese for the chef right there at the kitchen - not too much (it would take up too much space and spoil if he doesn't use it all) and not too little (he wouldn't be able to make all the pizzas you keep ordering without constantly transporting more cheese).

So can we agree on that aspect of transportation as waste? Of course, *some* transportation of cheese is probably required, unless the chef has a Cheese Tree growing right there at the kitchen table, but the point is to minimize the amount as much as possible.

Now, on to the point you are making - if I may paraphrase it as "delivering the pizza to me is as valuable as the cheese, perhaps even more so since without delivery there is no pizza."

I get what you are saying. But I still contend that the delivery cost is a waste to be minimized (ideally to zero, though that is fairly hypothetical). By not choosing a pizzeria 200 miles away, you are supporting my point. I suppose if it was some *really* good pizza you could imagine a scenario where you would in fact order one from that far away. But you would pay a much higher price for it than someone who lives near that shop. And/or it would arrive cold, stale, soggy, etc.

In fact, you probably have bought pizza from hundreds or thousands of miles away. There's plenty of them in the freezer section at the grocery store. And surprise - they are usually cheaper than a fresh one from a local shop! Here we find an indirect effect of the waste of transportation...

See, an individual frozen pizza would have a relatively high shipping cost if it was shipped by itself. So what happens? The pizza factory churns out a truckload of them at a time, to minimize the per-unit shipping cost. Now they have traded the waste of transportation for a worse one: Overproduction (the worst of them all [shudder]). I'll save that one for another day, but for now suffice it to say that overproduction tends to cause and/or hide all the other wastes, and stretches out the time between when the factory spends money and when they can get money from the customer. With such a strain on their cash flow, now the pizza company is forced to minimize other costs - cheaper ingredients, etc. And that's how cardboard, ketchup, and glue came to be known as "pizza".

But I digress...

Is delivery of the product to the customer waste or not? I'm sticking with YES. But don't get too hung up on the term "waste" - it doesn't mean you shouldn't tip the delivery guy. It just means that you'll enjoy your pizza much more (sooner, fresher/hotter, and cheaper for you) if you minimize the transportation required to get the pizza to you. Less transportation = less waste = more value for you. Yum!

Mark said...

One more thought, on re-reading your last post, Dan: "The guy who moved the item near to me increased its value."

I would argue that the pizza is at its best (most valuable to me) right out of the oven. The guy who delivers it to me 10 minutes later makes it worse, not better. Not through any direct fault of his own, but because of the time it takes to cover the distance between here and there. So perhaps a better term for this waste is Distance?

Craig Brown said...

Speking of location; I'd rather a bottle in front of me than...

The Dan Ward said...

@Craig - you crack me up.

@Mark - Good stuff as always, Marko. Thanks for the primer & info. I'm open to the idea of describing Distance as a waste, but I think there's value (ahem) in describing transportation as a cost instead of a waste.

Sure, moving a hot pizza from A to B turns it into a cold pizza if the distance between A and B is large enough. But while positioning an item (pizza, car, set of fuzzy dice, etc) at just the right place conveys a cost and might decrease its quality, I still think smart movement has the potential to increase an object's value. Location, location, location, right?

I guess I'm hung up on the global use of the term "waste" to describe an activity that sometimes isn't wasteful.