The Difference Between Overprocessing and Overproduction
According to the theory and practice of lean manufacturing, overprocessing and overproduction are two of the mudas, or wasteful activities, that companies should avoid to stay competitive. The theory was developed at Toyota, as part of the automaker’s streamlined production system. “Muda” is a Japanese word meaning inefficiency, wastefulness, or futility. In lean manufacturing, it specifically refers to process waste, or waste that occurs during the processing of a product. Seven mudas were originally identified and are ordered according the acronym TIM WOOD.
The seven mudas are Transport, Inventory, Movement, Waiting and delays, Overprocessing, Overproduction, and Defects. These activities are considered wasteful because they don’t add customer value to the product, even though some activities are necessary for successful production and marketing. Overprocessing and overproduction, the two O’s of TIM WOOD, are related, but distinct categories.
A product is overprocessed when it is manufactured to exceed the customer’s expectations or specifications. For example, a dining table is overprocessed when it is given four coats of varnish, even though the customer would be satisfied with three coats. Adding extra details that don’t increase customer value is another type of overprocessing. In the dining table example, adding gold leaf trim to table edge would be overprocessing. The customer did not want or specify the gold leaf and may even reject the table because of it. In this case, overprocessing results in a waste of time, materials and labor, and a product that must be stored until a buyer who wants a gold-edged table comes along. This leads to overproduction as well as overprocessing.
Overproduction means making more of a product than can be sold, as when the company exceeds customer orders or continues making a product even after sales decline. The reasons for overproducing may at first seem to make intuitive good sense, such as when a company overproduces, as a margin against spoilage or defects. Investments in a specific production line also make it psychologically difficult to shut off the line, even though the product becomes overproduced. However, these reasons are examples of other mudas, such as hedging against defects. It would be more efficient and more in line with the lean manufacturing philosophy to eliminate the defects so that the “hedge” of overproduction is no longer needed.
Overproduction is considered the most serious of the seven mudas, because it results from and encompasses all the others. The waste incurred by overproduction includes lost time, labor, materials and transport costs, and is compounded by the need to store and to inventory excess product as it waits for a buyer. Sometimes, the excess is never purchased and must be discarded or destroyed. These wastes also create environmental costs at every step of the process. That is why the goal of lean manufacturing is to only produce the right number or quantity of products at the right time, when they are actually needed by the customers who will purchase them.