7 Reasons Your Business is Losing Money

If you find your company is losing money, the solution may be in one of the best kept secrets: Lean Six Sigma tools! These tools transcend in excellence and are poised to fix many of today’s maladies, in business — and even in our personal lives.

The Road to Waste is Filled with Good Intentions

Being wasteful wears many disguises. Perhaps you buy extra items you don’t need because it is on sale. So in the guise of saving money, you spend more money.

Now, you may have excess items you have to find space for, causing you to waste more time looking for something you need, because of the excess items you bought. Who knows if you will still use those extra items in the future.

Lean Six Sigma describes waste as anything that does NOT add value to your product or service or life.

7 Categories of Waste in the Value Stream (and 7 Reasons Your Business is Losing Money)

• Transport: Any movement of product or material that isn’t necessary.
• Waiting: For any reason, where a worker’s hands are idle is considered waste.
• Overproduction: Producing more than your customer requires will create an imbalance in inventory as well as production costs.
• Defects: Any corrections, repairs, and rejects that have to be made, because product that does not meet specifications is considered waste.
• Inventory: Any inventory in the value stream is considered waste, because it is not adding value to the actual product.
• Motion or Movement: Any movement of your staff that does not add value to the product’s manufacturing. This is excess walking, bending, twisting, and reaching that wouldn’t be needed if better placement were implemented.
• Extra Processing: That which does NOT add value to the actual product. This would include quality prevention or in-processing protective packaging.

Type Muda 1 & Type Muda 2

Some of these wastes are deemed necessary for other reasons such as regulatory obligations, accounting requirements or just the nature of things. It is for this reason that Lean Six Sigma came up with the two separate categories of wastes: Type 1 Muda and Type 2 Muda.

Type 1 Muda: These are actions that do not add value, but are deemed necessary. This type of waste cannot be eliminated right away.

Type 2 Muda: These are actions that do not add value and are also not necessary, so these would be the first ones we eliminate.

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