Muda: Toyota's Production System

Idea behind the theory

Muda is the Japanese term for waste and is a key concept in the Toyota Production System. The definition of waste is basically anything that does not add value. “Value and waste are opposites. "Value" is what the customer is actually willing to pay for the product or service. Economists define value as the ratio of the usefulness of a product or service to its costs. This includes the product's functions and features and it relates to the whole product, service or both. Costs include the price paid and also the cost in time and hassle in obtaining and using the product or service” (Sowards, 2005). “It is common to find that in a factory less that 5 per cent of activities actually add value, 35 per cent are necessary non-value-adding activities and 60 per cent add no value at all” (Jones, Hines, & Rich, 2006, pg. 154).

To truly be able to eliminate waste from a process you need to know what wastes you are looking for. There are seven wastes that were identified by Toyota’s Chief Engineer, Taiichi Ohno as part of the Toyota Production System.

1. Overproduction. Producing items for which there are no orders, which generates such wastes as overstaffing and storage and transportation costs because of excess inventory. Ohno considered this to be the fundamental waste, since it causes most of the other wastes.

2. Waiting (time on hand). Workers merely serving to watch an automated machine or having to stand around waiting for the next processing step, tool, supply, part, etc., or just plain having no work because of stock outs, lot processing delays, equipment downtime, and capacity bottlenecks.

3. Unnecessary transport or conveyance. Carrying work in process (WIP) long distances, creating inefficient transport, or moving materials, parts, or finished good into or out of or between processes.

4. Over processing or incorrect processing. Taking unneeded steps to process the parts. Inefficiently processing due to poor tool and product design, causing unnecessary motion and producing defects. Waste is generated when providing higher-quality products than is necessary.

5. Excess inventory. Excess raw material, WIP, or finished goods causing longer lead times, obsolescence, damaged goods, transportation and storage costs, and delay. Also, extra inventory hides problems such as production imbalances, late deliveries from suppliers, defects, equipment downtime, and long setup times.

6. Unnecessary Movement. Any wasted motion employees have to perform during the course of their work, such as looking for, reaching for, or stacking parts, tools, etc.