04 January 2015

Why is Overproduction the Worst Muda?

By Xavier Perrin (xperrin@xp-consulting.fr)

It is often said or written that lean is the elimination of wastes, wastes being defined as non-value-added activities (also called muda). For helping teams to implement lean, we teach them the seven wastes and we expect them to identify and eliminate these wastes in their work area.

Considering lean as "elimination of waste" is a damaging shortcut in that it prevents focusing on the ultimate goal. Elimination of waste is not an end in itself.

Taiichi Ohno, the famous TPS initiator, stated "All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect cash. And we are reducing that time line by removing the non-value-added wastes"(1).

Eliminating wastes should be considered from this point of view. The seven wastes which were initially listed by TPS' promoters are the wastes of:

  • Overproducing
  • Time on hand (waiting)
  • Transportation
  • Processing itself
  • Stock on hand (inventory)
  • Movements
  • Making defective products

(See ref 1)

In some companies, mnemonic tricks are used for helping people to memorize the seven wastes. For example, the word TIMWOOD stands for Transportation Inventory Waiting Overproduction Over-processing Defects. Such expressions miss the point of overproducing being the worst muda. Why is overproduction the worst muda?

The reason is that overproduction is the root cause of most of other wastes, as it creates inventories, hides quality problems, and generates transportation and motions... Moreover, if overproduction isn't considered as the worst waste, most supervisors will think that it is better to keep workers producing for avoiding the waste of waiting. This is obviously inconsistent with the JIT principle. Thus, overproduction is worse than waiting. Actually, the waste of waiting should be addressed with line balancing, leveling production (Heijunka), cross training and smart assignment of workers. It should not be addressed by overproducing.

There is also a frequent misunderstanding about the waste of waiting. Sometimes waiting is viewed as idle machines or parts waiting in queues. This is clearly not the meaning given by TPS' promoters. People are the most important resource of a company because it is the only resource with a brain! Ohno said (2): "I had decided not to worry about capacity utilization rates. [...] It means giving higher priority to the utilization rate for our human resources than to the utilization rate of equipment". Shingo also explains (3) that the cost of workers is considerably higher than the cost of a machine: "Given this choice, the machines' operation rates are always sacrificed in order to eliminate the workers' waiting time under the TPS. […] The basic rationale is that machines are cost-free after depreciation, but workers must be paid wages forever with wages tending to increase over time".

Another primary aspect of lean is "respect for people". How can we respect people when expecting them producing parts which are not required from the customer? Considering the priority of high machine utilization means considering machines of higher importance than people. Thus, waiting is a muda because it means under-utilizing the most important resource of the company. Overproduction is the worst because it actually makes you waste your most important resource, that is, people. Reducing waiting fosters kaizen for improving utilization of human resources.

Another lighting word (2) of Michikazu Tanaka who worked with Ohno: "Kanban is a tool for tapping people potential by fostering a creative tension in the workplace. [...] motivation is everything".

In conclusion: beware of shortcuts! Another shortcut would be considering lean as the sole strategy for your company. What is your goal? What are your strengths and weaknesses? Which opportunities and threats are you facing? The lean approach is only one way for reaching your goal.

(1) Toyota Production System – Beyond Large-Scale Production – Taiichi Ohno – Productivity Press – 1988

(2) The Birth of Lean – Koichi Shimokawa and Takahiro Fujimoto – The Lean Enterprise Institute – 2009

(3) Non-Stock Production: The Shingo System for Continuous Improvement – Shigeo Shingo – Productivity Press - 1988

4 comments on “Why is Overproduction the Worst Muda?”

  1. Thanks Xavier for another brilliant contribution.
    I would add that overproduction locks cash earlier than needed, something our friends from Finance would prefer to avoid... Let's get them on our side!

    1. Thanks Hervé. I totally agree with you: all arguments that can let our friends of finance on our side are welcome! It could be helpful for convincing those of them who induce overproducing for high utilization rates and low overhead rates…

  2. Just my five cents:
    Again, a great article by Xavier!
    I totally agree that overproduction (producing too much or too early) is an important source of all other forms of waste. On the other hand, I think that making a "ranking" holds a danger: the mindset might grow that, if you don't overproduce, you won't have waste! Of course, that is not the case!
    Now, some thoughts about why people seem to love overproduction:
    1. How "Lean-educated" are all supervisors, managers, C-levels, etc.? What I mean by this: are they comfortable with the fact that some production is halted for some time because there is no demand at that time? Also goes to the question already cited whether the organisation and the employees have enough flexibility to continue to use the most important resource (people) in a process where the need exists or use the freed time on continuous improvement.
    2. Many organisations, especially in production environments using machinery, use OEE (important factor in TPM). However, in many cases, the original concept of OEE is misused (or not really understood?). OEE is "invented" to show the main factors where improvement is possible (sort of Pareto). What we see in the real world, is that OEE is frequently used as a sort of "show off" where the only aim is to get that final OEE figure up! So: let's produce 24/7 and without interruptions and we get to 100% OEE! Sounds like overproduction? The problem lies in the first factor of OEE; availability! Indeed, the availability factor means (free language): what percentage of time available to run the machine, did it effectively run? In a Lean environment, time available to run needs to be specified as time where there is an actual demand to produce! Therefore, when no demand, this time needs to deduced just as time when factory is closed, etc. If you really want to check versus 24/7, then you calculate TEEP and not OEE.
    Best regards,

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