The Healthy Beverage Company (HBC) processes and bottles organic juices for the health conscious consumer. They use only certified organic fruits and recycled packaging in the manufacturer of their products. They recently experienced increased competition from large beverage companies. The large companies have access to a variety of organic farmers and can negotiate better prices. These companies use similar packaging for their non-organic carbonated beverages. Therefore, their packaging costs are lower due to the large quantities they purchase. Although their customers value products from small local organic businesses and realize organic products are more expensive than non-organic, there is a limit to the premium they are willing to pay. HBC needs to lower its costs.

The President and founder of the Healthy Beverage Company hired a consultant to help her. The consultant recommended she implement Lean concepts in her operations. They agreed to meet.

President: The employees of the Healthy Beverage Company are dedicated and hard working. Unfortunately, our best is no longer good enough. In order to compete we must lower our costs.

Consultant: I recommend HBC implement lean concepts. The lean organization is interested in increasing value for the customer while using fewer resources. Taking a lean approach will result in lower costs.

President: This approach sounds like a good fit for our customers and our company culture. How do I start?

Consultant: Start by eliminating waste.

President: The employees are careful and dedicated. It is difficult to believe they are wasting materials.

Consultant: First it is important to understand your customer views waste as anything that does not contribute to the value of your product.

President: That makes sense. Can you be more specific?

Consultant: Using the lean approach to eliminating waste considers 7 types of waste; not simply materials tossed in the dumpster.

President: What are the 7 types of waste?

Consultant: The seven types of waste are: Overproducing, movement, transportation, waiting, extra processing, defects, and inventory.

President: Do you recommend the supervisors focus on all 7?

Consultant: I recommend the supervisors begin by focusing on eliminating wasted movement and waiting. These two types of waste are often overlooked.

CASE QUESTIONS

1. Assume you are a supervisor working for the Healthy Beverage Company. How will you go about explaining the 7 wastes to your employees?

2. Form groups of three to five students and brainstorm ways to reduce movement. Wasted movement occurs when an employee is walking without purpose. The employee is not adding value to the product. Why would this occur and how can it be corrected?

3. Form groups of three to five students and brainstorm ways to reduce waiting. What are some of the possible causes for employee waiting?