13 Intro to Waiting Waste

UNDERSTANDING THE CAUSES OF WAITING

Capacity, Demand, and Variability

Mike Dixon, PhD

Waiting waste directly affects lead times, customer satisfaction, and overall efficiency. This

briefing aims to elucidate the causes of waiting waste, emphasizing the roles of capacity,

demand, and variability. By understanding these concepts, organizations can better align their

operations to minimize delays and enhance performance.

Introduction to Waiting Waste

Definition of Waiting Waste

Waiting waste refers to the periods when work-in-process (WIP), people, equipment, or

materials are idle within a production or service process. This occurs when one process step

waits for another to finish, causing delays and halting the flow of operations. For instance,

assembly line workers may wait for parts from a previous station, or customers may wait in line

due to insufficient service capacity.

The Significance of Eliminating Waiting to Improve Efficiency

Eliminating waiting waste is crucial for several reasons:

• Improved Flow: Reducing waiting times ensures a smoother flow of operations, enhancing throughput.

• Increased Productivity: Idle time is non-productive time; minimizing it directly boosts productivity.
• Customer Satisfaction: Delays can frustrate customers; reducing waits enhances their experience.
• Cost Reduction: Waiting leads to higher costs due to wasted labor, extended lead times, and potential overtime.

Time spent waiting does not add value.

Key Concepts

To further explore waiting waste, we will first discuss and define some key concepts that will

allow us to use common language for further discussion. These definitions will help us

understand some underlying causes of waiting.

Capacity

Capacity is the maximum output that a system or process can produce over a given time period

under normal operating conditions. It represents the potential of resources such as machines,

labor, and equipment to produce goods or deliver services.

Factors Affecting Capacity

1. Equipment: Machinery capabilities, maintenance, and technological advancements.
2. Labor: Number of employees, skill levels, and work schedules.
3. Technology: Automation levels, software systems, and process innovation.
4. Facilities: Physical space constraints and layout efficiency.
5. Material Availability: Consistency and reliability of input supplies.

Demand

Demand is the quantity of products or services that customers require over a specific time

period. It reflects customer needs and market trends. It represents how much customers want,

and when they want it.

Fluctuations in Demand and Their Causes

•  Seasonality: Periodic increases or decreases based on time of year (e.g., holiday seasons).
• Market Trends: Shifts due to new products, fashion, or technology.
• Promotions: Sales and marketing efforts that temporarily boost demand.
• Economic Factors: Changes in economic conditions affecting purchasing power.
• Competitor Actions: Competitor promotions or product launches impacting demand.

Internal Customers

In the context of operations and process management, it’s vital to recognize that not all demand comes from external end-users or clients. Within an organization, different departments, teams, or individuals often rely on the outputs of others to perform their functions effectively. These stakeholders are known as internal customers.

An internal customer is an individual or group within an organization that depends on assistance from another to fulfill their job responsibilities. The concept emphasizes that every employee’s work serves someone else within the company, creating a chain of service that ultimately leads to meeting the needs of the external customer.

The Role of Internal Customers in Demand and Capacity

• Internal Demand
  • Process Interdependencies: In a workflow, the output of one process becomes the input for the next. Each stage creates demand for the previous one.
  • Service Departments: Functions like Human Resources, IT, or Maintenance provide services that other departments rely upon, generating internal demand for those services.
• Internal Capacity
  • Resource Allocation: Just like external-facing operations, internal departments have capacity constraints based on resources like personnel, equipment, and technology.
  • Balancing Workloads: Internal teams must manage their capacity to meet the demand from other parts of the organization without causing delays.

Capacity Utilization

Capacity utilization measures the extent to which an organization uses its capacity. It is a

percentage indicating how much of the available capacity is being used to meet demand.

Causes of Waiting

There are two main causes of waiting.

1. Capacity Not Keeping up with Demand
2. Variability in Demand and Capacity Leading to Uneven Flow

Capacity Not Keeping Up with Demand

When demand exceeds the existing capacity, operations cannot process work at the required

rate, leading to bottlenecks. This mismatch causes queues and idle times as the system

struggles to keep up.

Another way of saying this is that the capacity resource (human, machine, inventory) is unable

to keep up with the Takt time required to meet the demand.

• Reminder: Takt Time is the maximum amount of time available to produce a product or complete a process in order to meet customer demand.
• When a resource can’t keep up with a Takt time, it creates a bottleneck and can limit the entire system.

A bottleneck is a stage in a process where the capacity is insufficient to handle the workload efficiently, causing delays and limiting the overall throughput of the system. It is the point where the flow of operations is constrained due to a mismatch between capacity and demand at a specific process or resource.

Examples of Bottlenecks Resulting from Insufficient Capacity

• Manufacturing: A slower machine in a production line causes products to wait before processing.
• Service Industry: Limited staff at peak times in a restaurant leads to customers waiting for seating and service.
• Healthcare: Insufficient medical staff or facilities result in longer patient wait times.

Managing Bottlenecks

Two fundamental approaches exist for managing bottlenecks in operational systems. The first approach follows the Theory of Constraints (TOC) methodology, which focuses on systematically identifying, exploiting, and elevating bottleneck resources to improve overall system performance. This method recognizes that system throughput is ultimately limited by its constraints and advocates for concentrated efforts to optimize these critical points.

The second approach involves capacity balancing, where resources are adjusted to achieve similar processing rates throughout the system. This might involve redistributing work, adding or reducing capacity at specific points, or redesigning processes to ensure smooth flow across all operations. While perfect balance may be difficult to achieve in practice, this approach minimizes the formation of bottlenecks by reducing significant disparities in processing capabilities between different stages.

Each approach has its merits depending on the operational context, and organizations often employ elements of both strategies to optimize their processes. The choice between these approaches often depends on factors such as process flexibility, resource constraints, and the nature of customer demand. We will discuss these options in greater detail in a future brief.

Variability in Demand and Capacity Leading to Uneven Flow

Variability encompasses the natural fluctuations that occur in operations, primarily manifesting in two ways. Demand variability reflects the changing patterns in customer arrivals or order timing, while processing variability represents the differences in time required to complete tasks due to factors such as job complexity or resource capabilities.

1. Demand Variability: Fluctuations in when customers arrive or orders are received
2. Processing Variability: Differences in service or production times for each job

These variations create significant operational challenges. When demand suddenly spikes, it can temporarily overwhelm available capacity, even if the system typically has sufficient resources. Random arrival patterns make it difficult to schedule resources efficiently, while inconsistent processing times complicate workflow planning and resource allocation.

The “curse of variability” refers to how these fluctuations impact system performance, even when operating well below maximum capacity. For example, a process running at 80% capacity may still experience substantial queues and delays due to the combined effects of demand and processing variations. This phenomenon leads to several challenges:

• Queues form despite having adequate average capacity, resources alternate between being idle and overloaded, and
• Operations become increasingly difficult to predict and plan effectively.

Understanding and managing this variability is crucial for operational efficiency, as its effects

can significantly impact performance even in systems that appear to have sufficient capacity. This makes variability reduction and management a key priority for improving operational performance.

Managing Demand and Capacity Variability

Organizations can implement various strategies to manage demand variability effectively. Demand smoothing through marketing initiatives includes targeted promotions during off-peak periods and dynamic pricing systems that encourage customers to shift their timing of purchase or service use. Enhanced demand forecasting through advanced analytics and comprehensive market research provides better predictability, while structured arrival systems like appointments and reservations help regulate customer flow.

Strategies to Reduce Demand Variability

• Demand Smoothing Through Marketing
  • Promotions during off-peak periods
  • Dynamic pricing to shift demand from peak times
  • Early booking incentives
  • Incentivize, in some way, the demand to come when you have capacity
• Enhanced Demand Forecasting
  • Advanced analytics and historical data analysis
  • Market research and customer behavior studies
  • Improved forecasting tools and techniques
• Structured Arrival Systems
  • Appointment and reservation systems
  • Queue management technologies
  • Time-slot allocation methods

Capacity variability can be reduced through systematic process improvements. Process standardization, including detailed operating procedures and comprehensive worker training programs, creates consistency in output. Equipment reliability is enhanced through preventive maintenance schedules and backup systems, while workforce management strategies such as cross-training and flexible staffing arrangements ensure stable service delivery regardless of individual worker availability.

Strategies to Reduce Capacity Variability

• Process Standardization
  • Documented standard operating procedures
  • Worker training and cross-training programs
  • Quality control measures to reduce rework
• Equipment Reliability
  • Preventive maintenance schedules
  • Backup systems for critical equipment
  • Regular calibration and monitoring
• Workforce Management
  • Skills development and cross-training
  • Flexible staffing arrangements
  • Performance monitoring and feedback

An integrated approach combines both demand and capacity management strategies. Real-time capacity adjustment allows organizations to dynamically allocate resources based on current needs. Strategic buffer management, whether through inventory, time, or capacity buffers, helps absorb variations in both demand and processing times. Technology implementation, including automated monitoring systems and workforce scheduling software, provides the tools needed to manage these complex interactions effectively.

Integrated Approaches

• Real-time Capacity Adjustment
  • Dynamic resource allocation
  • Flexible workforce scheduling
  • Scalable production systems
• Buffer Management
  • Strategic inventory placement
  • Time buffers for critical processes
  • Capacity buffers during peak periods
• Technology Implementation
  • Automated monitoring systems
  • Predictive maintenance tools
  • Workforce scheduling software

Reducing service and product variety offers another powerful approach to managing variability. By streamlining product lines and limiting customization options, organizations can achieve more predictable processing times and simplified operations. This might include offering standardized service packages, implementing modular design approaches, or providing pre-configured options instead of unlimited customization. While this strategy may seem to limit customer choice, it often results in improved service quality and faster delivery times – benefits that many customers value more than extensive customization options. Successful examples include fast-food restaurants with focused menus, standardized healthcare procedures, and technology products with fixed configurations.

Reducing Service/Product Variety

• Streamlined Product Lines
  • Limited menu options or product configurations
  • Standardized service packages
  • Focused product offerings
• Strategic Customization Limits
  • Defined customization points in the process
  • Modular design approaches
  • Pre-configured options instead of full customization
• Service Standardization
  • Clear service boundaries and limitations
  • Standard operating hours
  • Defined service levels

These combined strategies create a comprehensive approach to managing variability. When implemented thoughtfully, they lead to smoother operations, reduced waiting times, improved resource utilization, and ultimately, enhanced customer satisfaction through more reliable service delivery.

Discussion Questions

1. Identify an Example of Waiting Waste in an Organization You Are Familiar With

• • What are the causes of this waiting waste?
  • How does capacity utilization and variability contribute to it?

2. How Can Demand Management Strategies Be Applied in Different Industries?

• • Consider how these techniques might differ between manufacturing and service sectors.
  • What challenges might arise, and how can they be addressed?

3. Reflect on the Impact of Demand Variability on Customer Satisfaction

• • How does increased waiting time affect customer perceptions?
  • What measures can organizations take to mitigate negative impacts?