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The Mythology Behind Labor Waste

March 22, 2011

Shapeshifting according to Wikipedia is a common theme in mythology that describes the ability of one thing to transform into something else, often to elude its predator.

While Wikipedia describes several examples of shapeshifting, one type I didn’t see was labor waste. For Lean champions, chasing this shapeshifting prey is often difficult.  Labor waste has the ability to transform itself into many forms.  Late shipments, customer concessions, premium freight, increased WIP and finished goods inventory are but a couple of common transformations.

For example, tardy arrivals by one or more people either first thing in the morning or even after lunches and breaks might not seem to have a significant impact.  No one else is complaining as they slow down a little while the late person catches up.

It’s only after shapeshifting occurs, that small delays in production result in a premium freight charge to ensure on time delivery.  What makes this so elusive is that by the time premium freight is authorized, it might be weeks since the operator’s tardy arrivals caused the initial delay.

If premium freight charges continue and the linkage is not made to late operator arrivals, a new thought process sets in.  It is probably less expensive to increase safety stock levels than to pay premium freight.  And since no one measures changes in safety stock, labor waste shifts its shape again into inventory carrying costs.

As these safety stock increases collect over time, inventory levels start to rise and red flags start popping up on the many detailed inventory reports.  A directive comes out to reduce inventory levels.  But without eliminating the root cause, the shape shifts again into other unmeasured forms of waste.  This cat and mouse chase of labor waste occurs because it is challenging to tie many individuals’ unproductive labor minutes to more aggregated and readily measured metrics such as inventory levels and premium shipment costs.

ERP systems are often configured to measure labor inputs as a standard cost. Labor variances occur at the cost center level leaving plant accountants and production supervisors to manually chase down the labor losses through paper based variance tracking or Monday morning interrogations.

By sharing the production cost of a lost minute of labor with all employees, everyone understands the cost of the loss as it occurs.  Improving the ability to track highly variable production operations shines a light on labor waste and eliminates its ability to shift shape and elude its predator: The Lean champion.

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