Direct Relationships and Effects between Waste Reduction / Elimination and Operating Performance Measures

For manufacturing and non-manufacturing operations, waste is an ever present concern that threatens, impairs and inhibits efficiency and productivity while leading to increase in operations cost. To reduce or eliminate waste, organizations need to understand the relationships and effects of waste reduction and elimination (WRE) on operations performance measures (OPM). Understanding these relationships and effects and their potential impact on operations cost will encourage industry leaders to invest the resources required for implementation of performance measures that leads to waste reduction and elimination. The goal of this study was to develop these relationships and their effects.;This was accomplished by exploring the relationships and effects of the traditional seven waste types (overproduction, processing, inventory, transportation, defects, waiting, and motion) and the plant's selected seven types of operations performance measures namely, (throughput, productivity, efficiency, cycle time, work in process, in process quality and leveled and balanced schedules). An operations performance measures and waste reduction and elimination relationship matrix (OPM-WRE) was developed. This matrix was used to quantify that there are relationships between certain types of waste and certain types of operations performance measures.;Assessment questionnaires were developed to allocate both the source of waste and the source of performance measures and differentiate between the levels of waste and levels of operations performance measures. The results from the OPM-WRE matrix and the data from the assessment questionnaires were used to determine the effects of operations performance measures on system waste as well as the effects of waste reduction and elimination on system performance measures.;A t-test was performed to validate the hypothesis of waste effects on operations and operations performance effects on waste. The test showed that the WRE and OPM effects from the empirical data generated from this study were greater than the OPM and WRE effects from actual operations data. OPM and WRE activity based costing methodology was developed. This activity based costing methodology was used to determine the cost impact of OPM on system waste and the cost impact of WRE on operation. The study provides operations managers and experts with tools to enable them to easily identify the sources of waste, differentiate between the waste types and rank their significance and impacts or effects on operations.