Eight Areas of Waste
Eight Areas of Waste
of Waste
CHAPTER 7
Waste (Definition)
A situation in which something valuable is not being used or is being used in a
way that is not appropriate or effective (Merriam-Webster Dictionary)
Eight Areas of Waste
Overproduction
Waiting
Transporting
Unnecessary Inventory
Excess Motion
Defects
Underutilized Employees
Overproduction
refers to the production of a given output in excess of what is required.
To address this, organizations perform cycle counts and physical counts, build/rent and use climate-
controlled facilities, implement access controls, and in general build an infrastructure to address
overproduction
Waiting
is the delayed action that happens until some other productive action is done on the item produced
The auditor can help the organization by examining what is happening, where, why, and by whom,
then recommending improvements to the process that will allow production to occur more evenly.
Transporting
refers to the action of moving an item from one location to another
The goal should always be to maintain a balance between the future demand and the inventory on
hand.
Excess Motion
Superfluous activities or additional steps in the required minimum number of steps to achieve a stated purpose and
to deliver a product or service
Use spaghetti diagram to track routing through factories and other types of workplace to identify inefficiency
within the flow of the system
Defects prompt the need to rework the item to correct the error made, so the organization must then
spend additional resources to correct and deliver an acceptable product or service as initially expected.
Internal auditors should ascertain as best they can what the expectations are in the first place, then
comparing the end result to that standard.
Underutilized Employees
Employees are instructed to perform activities beneath their capabilities, or they are prevented from
being employed in positions where their capabilities would be better utilized.
Business leaders should:
i. Perform skill assessments in their organizations to identify the entity’s present and future needs.
ii. Collect information about the skills and competencies of their workers to perform a gap analysis.
iii. The information gathered should inform their training and development programs, their hiring practices,
outsourcing/cosourcing plans, and alignment of strategic plans with resource availability.
Internal auditors should audit employee engagement as it influences productivity, retention, customer
satisfaction, and the quality of internal controls.
Identifying, Assessing, and
Preventing the Occurrence of Muda
I. Identify the auditable universe in the organization.
consists of all auditable entities, accounts, programs, processes, and systems relevant to the organization
II. This audit universe should be reviewed and updated periodically to assess the risk level of each of
these items, which in turn informs the priority that should be given to each of them and to schedule
the review.
- SHIGEO SHINGO