Trash These 7 Common Business Wastes
Adopt a lean-and-mean business mentality
How do you increase productivity and profitability? Run a lean business. To do so, you must cut out business waste. Simply, wastes are steps, actions or processes not needed to successfully run your farm business.
This concept of continuous process improvement and removing business waste is outlined in Lean Six Sigma, which Motorola and General Motors made popular.
“In commercial industries, wastes are things customers are not willing to pay for,” says Austin Duerfeldt, board member of Fall Creek Farms Incorporated and former University of Nebraska - Lincoln agricultural systems economist. “For agriculture, they are tasks that do not increase profit opportunities.”
Keep an eye out for these seven types of wastes in your operation.
TRANSPORTATION
This includes any unnecessary movement of grain or livestock. Duerfeldt says a good example is harvesting corn. The transportation points could include combine, grain cart, tractor-trailer, auger and grain bin. “The waste is looking at this process and trying to find ways to reduce it,” he says. “Are there any redundancies that aren’t necessary?”
INVENTORY
For most businesses, having liquid capital wrapped up in raw materials waiting for use is a waste, Duerfeldt says, but in farming, prepaid expenses and on-farm supplies can save headaches and downtime. “The key is to take advantage of favorable prices while maintaining a reasonable level for use,” he says.
MOTION
Consider the machinery and operators’ movement on your farm. Factor in the resulting wear and tear, monetary costs and time. “Reducing tachometer hours and increasing worked acres per hour is still the lowest hanging ROI fruit for producers to pick today,” says Steve Cubbage, precision ag consultant and vice president of services for Farmobile. “The technology exists to monitor and dissect machinery efficiency. Understanding this will drive the next leap in reducing per-acre production costs.”
WAITING
This category shows up in many ways. One example is in-field working hours, Cubbage says. Today’s technology lets you slice machine hours into four categories:
- Transporting
- Idling
- In-field turning (non-working)
- Working
“This puts hard numbers to the hours or minutes it took to get to a field or how much time you spent idling,” Cubbage says. “Remember, only one of the categories is a positive to the bottom line: working hours.”
OVERPRODUCTION
“In the commercial industry, this concept involves looking at customer demand for guidance,” Duerfeldt says. “For agriculture, we look at the futures price.” Of course, futures prices are always changing. He suggests setting production and price goals and targets to maximize your profitability.
DEFECTS
This concept tends to show up more in produce and livestock. Essentially defects are issues with quality that are found to be unacceptable in the marketplace. For grain operations, an easy example is docks at the elevator. Look at your processes to see what is causing these defects, Duerfeldt suggests.
OVERPROCESSING
Duerfeldt defines this concept as pumping money into something that won’t bring you excess value. For instance, some no-till and tilled ground yields the same and has similar weed-control situations. “Elevators do not differentiate these two types of corn, so does the additional cost of tilling make sense?” he asks.
