Lean Basics

PrintLogin to download pdfStandard Cost = Hidden Waste [KI]

  • How tolerant are you to waste? Wasted time, wasted materials, wasted energy, wasted movement?
  • How aware are you of the wastes that exist every day in your factory preventing you from improviding productivity?
  • What wastes do you accidentally or deliberately turn a blind eye to?
  • Which of your measures actively hide waste so that you can’t, or don’t have to, see them?

Have you answered something similar to: “Very”, “Totally”, “well none of course”, and “you’re joking right?” to the questions above? I would happily lay a bet that in most factories in the UK that there are losses which are not only ignored, they’re accepted

When my day job involved working full time in a factory i would often be lucky enough to take visitors round the factory on tours. Many of my colleagues would see this as a pain in the rear, taking them away from the day job….especially when it was a tour group of children. Have you ever noticed how kids have an awesome talent for pointed out the obvious?

The joy of stupid questions:

Some of the younger student groups would have a habit of asking ‘really stupid/obvious questions’, like “how do i wear earplugs”, “what is the secret formula of your product”, “do you like hair nets”, “what are the hair nets for”, “if i shaved my head would i need a hair net”…infact a very large number of questions would be related to hair nets and ear plugs. Sometimes, they would also ask questions that would massively supporting our continuous improvement drive: questions like “why is there product on the floor over there”, “should that pipe be dripping”, “doesn’t that man get tired lifting that”, “why does that machine keep stopping” etc.

Blind to your losses

Have you ever found that sometimes the opportunities to improve staring you in the face and yet you can’t see them? I believe that in many cases as we become familiar with an environment we become blind to elements of it that we may want to improve. In many cases we not only become blind to the opportunity, we also build the loss into how we measure our performance, we normalize it and ensure that every new member of the team is trained to ignore it also.

Standard Allocations – prescribed blindness

Whenever I visit a site now if I ever hear the words “standard” and “cost” I know that I’m about to enter into a  challenging conversation because for me “standard cost” = “hidden or accepted waste”.

We may come across “standard waste costs”, “standard speed”, “standard changeover time”, “standard wage allocation”….and usually the key metric is then how many percentage points away from the standard the site is.


My site has 2% waste…..over our standard…..of 15%. THIS IS A TOTAL LOSS OF 17% HIDDEN AS 2% !

My OEE is 83%….excluding changeovers….of 6hr every week.

My changeover was completed in 10min under standard time of 60min. Which means that it’s okay not to improve….but what if a sister line is running the same event in 20min?

So here’s my point = if you have any conversations with involve the words “standard” “allocated” or “budgeted” when referring to waste or output then you’re hiding from the truth. How can you improve if you don’t know how well you’re performing?

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