STOP!!

In the manufacturing industry companies obsessively track and try to reduce defects. The worst kind of these are those that repeat. When you are not making a product, defining defects becomes much more difficult. For families, defective products often take the form of bad purchases. Here again the most damning are those that repeat. The key is to STOP when you are doing something wrong. Let's take a look at what I mean.

This happens all of the time in manufacturing. A machine is making ten defects for every one hundred pieces produced (90% good). It will take two hours of downtime to fix the problem, and the production line will lose fifty pieces of production in that time. A short sighted manager would say keep running it, we cannot afford to lose all of that time. Looking deeper however, we find:

Production rate = 50 pieces / 2 hours = 25 pieces per hour

at 90% good: 25 pieces per hour * .90 * 4 hours = 90 good pieces

if we fix the machine:

at 100% good: 25 pieces per hour * 1.00 * 4 hours = 100 good pieces Thus the production chart for overall production looks like this



The circle in the middle shows that you regain the loss within the first day, and thereafter you keep gaining on where you would have been if you had not fixed the problem.


Now lets look at something more interesting. You join a gym. It's a good idea. You could stand to lose a few pounds, right? I applaud you, but they always sign you up for the automatic draft from your checking account these days. Three months in, you have not been through the gym doors for two weeks. You know that you should cancel the membership, but you let it drag on for another month, then another. It is only $40 bucks a month right? Hey, you might go back, and besides they always hassle you to stay when you try to cancel. You don't have the time to deal with that right now. After a year you have shelled out nearly $500 and still have only your guilt to show for it.

They important thing to note in both of these situations is that however painful it might seem, when something is wrong you should STOP! Nagging problems are far more costly than they at first seem.

Saving Time Online

I love the web. Sometimes though I fall down the rabbit hole and cannot even tell how I have gotten wherever it is I am. This is great when you have a relaxing few hours to burn up (and I hate you is this is you), but in general I need to quickly accomplish my online tasks and move on to the next project. This is where two more principles of waste reduction come in. Standard and work and kaizen are core concepts to eliminating wasted time.

Applied to your internet experience, this means getting what you need as efficiently as possible. Standard work is the current best method of performing the task as quickly as possible with the highest quality. Kaizen is a philosophy of continuous improvement in small steps to achieve long term goals. Below is an example from my daily internet use.

On any given day I have six sites that I MUST check to know what is going on in my version of the world. When I first began surfing, I would type all of these into the browser and load them individually to get my daily fix. This took a lot of time. Another problem was my following all of the story links from the main pages, and getting hopelessly sidetracked trying to find the interesting stuff. (Total estimated time 2 hours)

Next I discovered bookmarks (hey this was a long time ago OK?) I could load the page that I wanted from a bookmark, then click the next one when I had finished. I still had to chase down the individual stories from each of the main pages. (Total Estimated time 1 hour 30 minutes).

Then came Firefox and tabbed browsing. Now I could hold control and click all of the bookmarks that I wished then they would load in the background while I was reading the first page to load. If there was no new content however I still had to load the whole page to find out. (Total estimated time 45 minutes)

My current iteration uses RSS live bookmarks in tool bar. With this feature I can click on the RSS feed, read all of the headlines, hold control and only click on the stories that I am interested in or have yet to read, then let them all load while I read the first page. (Total estimated time 3 minutes)

I was performing the same work in each scenario, but over time I made small improvements by learning new ways to accomplish the task with the least wasted time. Now every morning I open the laptop. Click once above the live bookmarks and find maybe five stories that I would like to read from the fifty that are posted.

Of course kaizen philosophy dictates that I can never rest and never be satisfied with what I have.....I just need a new tougher goal to challenge me.

Visualizing the Problem

Waste is a very insidious character. It sneaks up on you then takes every opportunity to camouflage its existence. If you cannot see a problem you can never fix it. Think of all of the produce that has rotted in the bottom drawer of your refrigerator. What about all of the extra money you have spent on new summer or winter clothes, only to find everything you thought lost neatly labeled and stored in the attic. A key offender in the battle against hidden waste is "putting things away". I am all for neatness and organization, but often to achieve a clean look we add cabinets, drawers, and boxes to help everything look tidy. Soon cleaning up involves shoving things into these like a ten year old asked to pick up his room. However cliched, out of sight, out of mind succinctly summarizes this phenomenon.

I often suggest that people remove the doors from all of their cabinets. In this way everything contained within is readily visible, be it sixteen cans of pears bought on sale two years ago or a tangle of electronics cords, 90% of which you no longer need. There is the added advantage that you have just eliminated a step to accessing anything contained within. Finally whether making a grocery list or searching for a 1/4-20 socket head cap screw everything is easily seen.

Visualization of problems can be applied in other areas as well. If you have ever looked down at the last square of toilet paper on a roll and reached for a new one only to find an empty cabinet, you will understand the benefits of this next suggestion. For critical items (yes TP qualifies) it is not difficult to set up a visual system that alerts you before a crisis that action is required. First of all you already have the door off of the bathroom cabinet now right? Now paint the area under the location of the last stored roll bright red and add a label recommending purchasing more. Sounds silly, but it works. I have a friend that set up a system for breakfast cereal. When he empties a box the rule is he tears the top from the box and places it in the drawer with the grocery list so it will not be overlooked during the next trip to the store. This practice is referred to as a kanban system. Kanban is Japanese for card. Japanese companies have used such card systems for years as a visual tool to manage inventories and production.

These are only two examples of how making problems visual can go a long way toward both solving them and preventing recurrence. Give it a try and let me know how it works for you.

Family Values

Value is a very important concept in the quest to eradicate waste. Activities that add no value should be minimized to free up as much of your time as possible. This seems like common sense but often it takes long observation of an activity to identify and eliminate non-value added work. A quick example can be seen in financial transactions. In paying bills the only activity of value is transferring funds from your account to the account of those you must pay. For many years my wife and I took the traditional route when paying bills. We would wait until all of the bills had come in for the month, then sit down to write checks and mail them all out in a large batch. Our bill paying process flow at that time is represented by the diagram below.



Not only is there much non-value added activity in this process, but there are additional costs beyond those of paying the bills. Stamps, envelopes, and gas must be consumed and paid for. Also there is the time required to collect these items and the delays that must be endured before the payment has cleared. Any mistakes may not be detected for some time and penalty fees or credit problems can result.

We have since abandoned this process for online bill pay. With this we receive most of our bills online, pay them immediately without the need for driving, stamps or envelopes, and the funds transfer time is shortened to two days at most. Now the flow chart looks like this:




With this flow we have eliminated all extra expense, as well as limiting our non-value added activity. I am currently working one the next phase of this plan by setting up bills to be automatically paid as they arrive, without the need for me to approve the transactions. If I am able to achieve this there will be no remaining non-value added elements in our bill paying process.

This is only one example of how identifying value can lead to increased free time and simultaneously save you money.

A Fine Line

In attacking waste, there are three criteria that must be satisfied simultaneously. The best quality with the lowest cost in the shortest amount of time is always the goal. We are focusing here on minimizing costs, but these factors are closely interrelated, and must all be considered. In the business world there is always a customer to define the levels of these targets. In our case however, you are your own customer. This means that it is up to you to determine what is necessary in terms of quality, price, and delivery time for any product you purchase. It is important to set precise goals for each, as the final cost is directly related to your specification. Lets take housing as an example.

The full spectrum of quality is always available in housing, but location is also a highly important consideration. Often families choose a neighborhood or a school district before they have decided on a house and only search within that area. The same house may be available for 25-30% less elsewhere, but your quality specifications (a house located in this neighborhood) require the extra expense. Similarly that particular house, within your chosen neighborhood, may not currently be available. In this case you are required to delay your purchase until the home you want hits the market. You could get the cheaper house in another neighborhood immediately, if you are willing to compromise quality. If funds were unlimited, you could easily knock on the door of the house of your choice and keep upping your offer until the owner cannot refuse to sell. In that case you could shorten your wait to zero. This logic applies to all purchases.

Quality, cost, and lead time are always in balance and can never be considered in a vacuum. To minimize cost without compromising the other factors, careful measurement and deliberation is required.

Digital Downsizing?

In a post a little while back I mentioned the advantages of digital products because they have a very short lead time. Another huge advantage is discussed here. With the Kindle2 and its clones looming on the market's horizon, matching the demand for books exactly to their production is becoming possible.

Paying for the Peaks

One of the key components of avoiding wasteful spending is only paying for what you need when you need it. This flys in the face of American cultural convention. As discussed previously buying in bulk is a risky proposition. This does not only apply to food however. There is a strong tendency to load up on everything. Let's focus on the automotive expenses.

The average family has four members, requiring four seats. The roads however are filled with minivans, and massive SUVs that easily seat seven and eight. The average increase in cost per seat is around 30% (according to KBB). Generally the excess room only sees use during excursions with extended family. This means many families are paying up to 60% more for transportation that is rarely needed. Is the inconvenience of driving seperate vehicles worth this cost?

Maintenance also holds costs of over capacity. Would be shade tree mechanics often buy specialized tools, or set up shops that gleam with lack of use. The sad reality is that nearly all of the necessary tools are available to be checked out for free from local parts stores. Not only is the cost of buying these tools to be considered, but the space they require for storage also has a cost.

As an example a ball joint press can be purchased here for $115 and a ball joint separator here for an additional $18. Ball joints are typically only replaced, at most, once in the lifetime of a vehicle. In this case it makes no sense to lay out $133 for something that could be borrowed as needed for no cost at all.

Bulging three car garages and detached sheds are often built to house these unnecessary collections.

Stocking Up

Discomfort is almost unknown in society today. Most people will go to great lengths and costs to avoid having to think or plan. One of the major indicators of this is the excess capacity we regularly build into our lives. From phones to furniture to housing, convenience is the order of the day. It is much easier to buy a mobile phone plan with unlimited minutes than to track their daily use. It seems simpler to keep an extra room for guests than to deal with hotels and arranged visiting times. You can size you furnishings to the grandest party you might throw, then spend all non-celebratory days paying for all of those unused seats. In every case excess capacity can result in hundreds and even thousands of dollars that need not be spent. The next several posts will deal in detail with this theme.