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The most serious business oversight is not knowing as much as possible about the economics of a plant. This would include the types and costs of waste, such as off-spec material, seconds, reworks, trim, grade change and, most importantly, customer returns. This would also include knowing the types and lost minutes per month for delay on a machine for reasons such as cleanup, grade change, planned and unplanned maintenance, and so on. Finally, it would include a rough knowledge of the costs of materials, labor and other resources necessary to design, make, market, distribute and service a product. Without information such as this, we cannot know for sure what we should be working on. Without it, our priorities might be driven by whoever shouted loudest or most recently, by someone's judgement or by blind faith in our bosses.

When I go into a plant to help with a problem, I will always ask what the top three causes of waste are, even if my assignment was defined more narrowly. The answers give invaluable insight into the system. Also, different defects might be connected by a deeper, common root cause. Only about half of the engineers and supervisors know for sure what they are. Some of the rest may only venture a guess. When I ask how much waste is costing the company a year, only a small fraction of plant people would know. They assume that economics is the business of management and bean-counters, not technical people. As politely and firmly as I can, I will tell my clients that that the economics of waste is everyone's business.

I expect that all plant people—from the broom sweep to the president—not only have access to, but also have current knowledge of, this month's costs of quality. It should be posted on bulletin boards and it should be a regular item in all team meetings.

Unfortunately, all too often a group that is intimately involved in waste, the operators, are not given this information. They are seldom full and equal team members for waste reduction programs. However, they are the ones who make the product. They are the ones who choose process settings and make process adjustments. They often make the quality decision to pass, hold or reject a roll. They should be able to place work orders to maintenance to correct quality, productivity and safety deficiencies on their machines.

The same is true of delay. We must know how long a machine is down for various causes before we can decide which ones are most serious. Here we would use real minutes to gather and report productivity if the machine were run at constant speed for a grade. If the machine runs different speeds, we might use pounds of output instead of lost time. In any case, we must convert delay or reduced speed to lost dollars, so that delay can be compared with waste. Since materials are more expensive than labor, in most processes, a few percent waste is more costly than the same percentage downtime. The cost of customer returns is trickier to estimate because the true costs are much more than mere reimbursement for returned rolls. Indeed, it could be more than 10x as much, if one is about to lose a customer.

The economics of waste and delay should determine what our various efforts should be and how much of our time should be allocated to each. The economics will determine if a particular effort should be abandoned, maintained, or stepped up. If the economics are minor, we will seek only to do the best we can with the tools we have. If the economics are more significant, we may get expert help, as well as consider redesigning products and upgrading equipment.

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