Tools for Analyzing Soft Cost Reductions Part 2: 7 Forms of Waste

tools solar soft cost reduction

The 7 Forms of Waste is a framework used in proven cost reduction methodologies from the Toyota Production System (TPS), now commonly referred to as “Lean Production” or simply Lean. Using this framework, you can begin to reframe your operations in the language of what your customer considers valuable. By classifying all process activities into these two categories of “value added” and “non value-added” activities, you can begin to take action improving valuable parts and removing or reducing non value-added waste.

7 Forms of Waste and Common Residential Solar Examples

Now that you understand how to identify your internal and external customers and know how to identify value-added and non value-added activities, let’s look at the 7 Forms of Waste: What they are, what they means, and an example of each one so you can learn how to see them in your own company.

Transport

The unnecessary motion or movement of materials or information, including work-in-process, from one operation to another. This adds time to the process during which no one adds value.

Example:Ordering from a vendor that cannot drop ship directly to the customer site or to your warehouse, hence product must move through several channels, adding time and potential for loss or damage in the process which could further delay the project.

Inventory

This refers to inventory that is not directly required to fulfill current Customer orders. Inventory includes raw materials, work-in-process and finished goods. Inventory all requires additional handling and space. Inventory is often closely associated with Waiting and Over-Production.

Example: Ordering more rails, mid-clamps, and wire than is necessary for the amount of projects currently in progress and run rate of equipment. This thinking compounds and causes company capital to become tied up unavailable for other uses and causes warehousing space to become crowded which can lead to demand to expand.

Motion

Built-in extra steps taken by employees to accommodate inefficient process, rework, reprocessing, overproduction or excess inventory.

Example: Developing and automating queues for plan set rework instead of reducing or eliminating the need for rework.

Waiting

This refers to downstream inactivity that occurs because previous activities are not delivered on time. Idle downstream resources are then often used in activities that either don’t add value or result in overproduction.

Example: Installers cannot perform installations because plan sets are not completed fast enough to pull permits and schedule jobs. These installers are then sent out on site evaluations or given warehouse “housekeeping” tasks.

Over-Production

Overproduction occurs when an operation continues after it should have stopped.

Example: Plan set is “overproduced” -- it includes additional sheets, viewports, and data points above and beyond what the AHJ or Utility needs to approve the permit or installer needs to build the project.

Over-Processing

This occurs any time employees put more work on a project than required to satisfy the customer. This also includes using components that are more precise, higher quality, or expensive than absolutely required.

Example: A designer spends extra time on a project researching and specifying a non-standard piece of equipment deemed necessary due to site conditions that the customer did not pay extra money for.

Defects

This refers to products or services not conforming to the company’s internal specification or expectation of internal or that of the final Customer thus leading to Customer dissatisfaction.

Example: AHJ redlines and rejects a plan set because design did not follow a local municipal code unknown to or forgotten by the designer. The designer cannot work on a new plans and must now research the issue and schedule rework of old plan set.

Now that you understand how to see the 7 Forms of Waste, you can begin to categorize activities. In our next post, we will build on this understanding to cover the next step in process improvement: understanding the link between people, process improvement, and ultimate value creation.