Easily Reduce Production Costs: Find and Eliminate MUDA Precisely
Reducing production costs does not always require starting with new machinery or major restructuring. Often, the most significant wasted costs come from “waste” within daily work processes, which in the Lean concept is called MUDA. If we can “find it” and “eliminate it precisely,” factories can substantially reduce costs without needing a high investment budget.
What is MUDA ?
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MUDA (Muda) is a Japanese word that means “Waste”. According to the concept of the Lean Manufacturing system, it refers to activities or steps that use resources but do not create any value for the customer, whether it is time, labor, machinery, space, or capital.
What are the 7 Wastes of MUDA?
1. Overproduction
Producing more than the actual market demand or manufacturing without supporting orders is considered the most severe form of waste, as it increases costs without creating any value. Overproduction leads to the accumulation of large amounts of stock, requiring increased storage space, and carrying the risk of goods expiring, becoming damaged, or unsold. Furthermore, it unnecessarily ties up capital in inventory, severely impacting the company’s cash flow.
Preventing Overproduction involves producing based on actual demand and using systems like Just-in-Time (JIT) to ensure a smooth process flow that does not create unnecessary inventory burdens.
2. Waiting
The waste from waiting is the period of time when no value is created, such as waiting for materials, waiting for machinery, waiting for document approval, or waiting for work orders. The time lost from waiting causes process delays, creates bottlenecks, and significantly increases hidden costs.
This waste often arises from poor planning, untimely communication, or machine breakdowns. The solution can be achieved by improving planning, creating work standards, and utilizing technology to help reduce waiting at each point of the process.
3. Unnecessary Transportation
Transportation is the movement of raw materials, goods, or equipment from one point to another without adding value to the product, such as moving workpieces to a distant warehouse or frequently transporting documents between departments.
Although transportation is unavoidable, excessive movement wastes time, labor, and costs, and also increases the risk of damage to the goods. The approach to reducing this waste is to appropriately adjust the factory layout, consolidate storage points closer to the production line, and design the workflow to be as short as possible.
4. Over-Processing
Over-Processing is working more than what the customer requires or using unnecessary steps, such as repeated unnecessary checks, using overly complex tools, or excessive product finishing beyond customer expectations.
This waste increases cost and time without adding value to the product. The solution is to truly understand the customer’s needs, design the process to be simple, and eliminate unnecessary steps from the system.
5. Excessive Inventory
Storing too much raw material or finished goods is a waste found in many organizations and often occurs alongside Overproduction. Large amounts of stock require increased storage space, high maintenance costs, and risk the goods deteriorating, becoming obsolete, or lost.
Furthermore, excessive stock also conceals real problems, such as unbalanced production or quality issues. Proper stock management using the JIT system helps reduce costs and increases the flexibility of the production process.
6. Unnecessary Motion
Motion is the movement of people or equipment that is excessive and unnecessary, such as walking too far to pick up a tool, repeatedly bending down and standing up, or handling poorly arranged equipment.
Even small movements, when continuous, can lead to fatigue, wasted time, and reduced work efficiency. The approach to reducing Motion is to appropriately design the workspace, arrange tools in order of use, and use assistive devices to minimize movements that do not create value.
7. Defects
Defects are products or services that do not meet quality standards and must be corrected, repaired, or discarded. This leads to higher costs in terms of materials, time, and labor. Additionally, it causes late delivery and creates customer dissatisfaction.
The causes of defects may arise from incorrect production processes, poor quality control, unclear communication, or the use of unsuitable materials. Reducing Defects can be done by creating work standards, implementing appropriate quality checks, training employees, and continuously improving processes.
Why Does Eliminating MUDA Greatly Help Reduce Costs?
Eliminating MUDA (waste) does not just make operations “look leaner,” but it has a very clear and direct impact on a factory’s costs, profit, and competitiveness. The more MUDA is eliminated, the more hidden costs, which were previously unseen, disappear.
Below are the main reasons why eliminating MUDA greatly helps reduce costs, with a detailed explanation of each point.
1. Reduce Cycle Time
When waste is reduced, the time one piece of work takes to travel through the system from start to finish decreases accordingly.
- Reduce Waiting: When there is no waiting for materials, machinery, documents, or process approvals, work flows more continuously, clearly shortening Lead time and Cycle time.
- Reduce Unnecessary Steps: Eliminating steps that do not create value for the customer, such as unnecessary double-checking, redundant data entry, or pointless transportation, reduces the overall process time.
- Resulting Outcomes:
- Faster delivery
- Reduced production line bottlenecks
- More accurate production planning
- Faster customer response
2. Reduce Labor and Operating Costs
When MUDA is reduced, the work performed by employees and machinery becomes more “valuable,” instead of spending time on unnecessary tasks.
- Reduce Rework, Correction, and Defects: If Defects are reduced, employees do not waste time on Rework or repeat production. Machinery does not need to run extra hours to compensate for scrap, reducing total working hours, OT (Overtime), electricity costs, and machine maintenance costs.
- Increase Labor Efficiency (Productivity): By reducing Motion and Waiting, employees spend more time on actual production, increasing the volume of output per person per hour, and lowering the unit labor cost.
- Optimize Capacity Utilization: Reducing the time machinery stops waiting (Idle) due to lack of raw materials or waiting for setup means that when the machine runs efficiently, the unit cost also decreases.
3. Reduce Inventory and Defects
Excessive stock and defects are major cost drains that many factories are unaware of.
- Reduce Work-in-Progress (WIP) Stock: When work does not pile up excessively between stations, it helps reduce storage space, the use of racks, containers, carts, and reduces the effort for searching for work and managing related documents.
- Reduce Excessive Finished Goods and Raw Materials: The longer goods are stored, the greater the risk of damage, deterioration, obsolescence, or the need for clearance discounts. Capital becomes tied up in inventory instead of becoming cash flow.
- Reduce Defects and Correction Work: Reducing Defects means not wasting raw materials on faulty production, not wasting labor and time on corrections, and not losing opportunities due to late delivery or customer returns.
The overall result is a significant reduction in costs related to warehousing, raw materials, and repair/correction work.
4. Increase Production Speed and Overall Throughput
When MUDA is eliminated, the workflow becomes much “smoother,” increasing the number of workpieces produced per period.
- Continuous Work Flow (Flow): There are no blockages due to waiting in line, waiting for approval, or waiting for raw materials, allowing the entire production line to run better together.
- Use Existing Resources to Produce More: With the same people and machinery, when waste is reduced, the Output immediately increases, meaning the unit cost is lowered.
Support More Orders Without Major New Investment: Instead of having to buy new machinery or hire more people, increasing efficiency by reducing MUDA allows the factory to support higher sales volumes with existing resources.
5. Increase Customer Satisfaction
Eliminating MUDA does not only help internal costs but also directly impacts the customer experience.
- Timely and stable delivery: Short and certain Lead time makes it easy for customers to plan and increases their confidence in the factory.
- Consistent quality: Reducing Defects and waste, and continuously controlling the process, makes quality stand out and stable, resulting in fewer customer claims.
- Reduced costs offer competitive pricing opportunities: When the unit production cost decreases, the organization can
increase profits or use part of the savings to reduce prices and be more competitive.
Create opportunities for new work: Customers satisfied with quality, price, and delivery often increase orders or recommend other customers, leading to sustainable business growth.
How to Find MUDA?
To effectively reduce MUDA, it is not about “guessing,” but requires the combined use of data, systems, and actual on-site work. The recommended approaches are as follows.
1. Process Mapping (Process Flow Chart / Work Flow)
Start by “seeing the overall picture” of the work flow.
- Draw a chart from receiving the order, receiving raw materials, production, up to delivery.
- Identify every step: who does what, how long it takes, what is used as Input, and what is the Output.
- Clearly separate which steps are “Value-Added” and which steps are “Non Value-Added.”
When the overall picture is visible, you will start to see where there is waiting, where there is transportation back and forth, where there is unnecessary repeated checking, repetition, or seemingly redundant steps. This is the starting point for finding MUDA on a large scale.
2. Gemba Walk (Go to See the Actual Thing at the Actual Workplace)
The principle of Gemba is “Go to see the actual thing, in the actual place, with the person doing the actual work.”
- Management or the improvement team must go down to the worksite, not just look at reports on the desk.
- Spend time observing the real work of employees on the production line or support units.
- Observe movement, handling, waiting, walking back and forth, and transportation.
Often, MUDA is not immediately reflected in the numbers, but it becomes very clear when “standing and watching” at the worksite, such as:
- Employees having to walk repeatedly to pick up equipment.
- Having to wait for document approval.
- Sending work back and forth many times.
Consistently performing a Gemba Walk allows the team to see the real problems that occur in the daily life of the worksite.
3. Collect Cycle Time / Lead Time Data
After seeing the overall picture and actual behavior, there must be “numbers” to confirm what the bottleneck is.
- Measure the time used in each step of the process (Cycle Time).
- Measure the time from receiving the order until product delivery (Lead Time).
- Compare the actual time with standard time or the desired target.
When these data are available, it will be visible which steps take an abnormally long time, which points are the bottlenecks that slow down the entire line, and which steps have more waiting time than actual work time. This data helps confirm where MUDA is and where to start fixing it first for maximum value.
4. Use the 5 Why Questions to Find the Root Cause
When a problem or MUDA is found, the next step is to find the true root cause, not just treat the symptoms.
The 5 Whys technique involves repeatedly asking the question “Why?” approximately 5 times, or until the real cause is found, for example:
- Why are there many defects? Because the machine speed is set too high.
- Why is the machine speed set too high? Because production needs to be accelerated to meet the target.
- Why does production need to be accelerated later? Because raw materials were delivered late.
- Why were raw materials delivered late? Because the purchasing plan was inaccurate.
It can be seen that merely solving “reducing machine speed” might help reduce defects, but it does not solve the root cause issue of purchasing planning. Using the 5 Whys helps reveal the actual root cause and allows for the selection of a more sustainable solution.
5. Use Loss Tracker for Detailed Search
Loss Tracker is a tool for collecting data on “wasted time” in each activity on the worksite, to find out where, how much, and what losses should be addressed first. Its importance lies in helping turn MUDA “from what is already visible” into verifiable data.
Loss Tracker from DENSO Asia is a smart IoT tool specifically developed to address this need. It acts as a “black box” for the production line, helping your factory track “losses” and “see” the actual problems in every step in real-time. Want to know more about Loss Tracker? Download the free e-book today!
How to Use Loss Tracker to Find MUDA
1. Defining the Type of MUDA to Track
waste you want to track. MUDA comes in many forms, such as unnecessary motion, waiting, unnecessary transportation of goods, or defects in the production process. Clearly defining the MUDA type helps the team know what kind of problems to monitor, and what the collected data will be used to analyze and improve later. Once the desired waste is understood, collecting data through Loss Tracker will be focused and lead to precise correction.
2. Recording Events that Cause Loss
The next step is to record events that cause loss immediately upon observation, whether they are minor events lasting only a few seconds or prolonged problems. A good record should include essential details such as the time of occurrence, the event that happened, the related MUDA type, the reason for the occurrence, and the time lost. Recording data every time a minor issue occurs is very important, as frequent small incidents can accumulate into high costs unnoticed by workers. Loss Tracker thus serves to reveal the wasted time overlooked each day.
3. Consolidating Data to Check Which Type of MUDA Occurs Most
When data is recorded completely throughout the day or the week, the next crucial step is to analyze all the data to see which type of loss occurs most frequently and at which point in the process. This analysis helps visualize the frequency of events, the severity of the problems, the common time periods of occurrence, and the job steps that are high-risk points. Real data makes it clear which MUDA type is the primary cost driver for the production line. For instance, sometimes Motion might occur frequently but waste little time, while Waiting might occur rarely but consume a long time in one instance. Having real data in hand ensures that decision-making for problem-solving is not based on feelings but relies on verifiable facts.
4. Analyzing the Root Cause of Loss
After identifying which type of loss occurs most, the next step is to analyze the root cause of why those problems occurred. Loss Tracker reveals clear patterns, such as unnecessary motion might repeatedly occur in the morning because the workstation is disorganized, waiting might be due to delayed material delivery, or defects might occur during the afternoon shift because new employees are not yet familiar with the job. When the true cause is known, the organization can select the most appropriate Lean tools for correction, such as using 5S to organize the area to reduce Motion, using work planning to reduce Waiting, or using Standard Work to ensure consistent quality. Knowing the root cause ensures that corrections address the origin of the problem, not just the symptoms.
5. Prioritizing Which Problems to Solve First
When the overall picture of all losses is seen, the organization must decide which MUDA should be addressed first. Selecting the appropriate point of improvement is the core of using Loss Tracker, as it is not necessary to solve everything at once. Prioritization is often considered based on the amount of time lost, the impact on production, the increased cost, and the impact on quality. For example, if Waiting creates the most total loss even if it occurs infrequently, solving Waiting should be prioritized first. Using real data makes decision-making rational and ensures that resources are utilized most effectively.
6. Tracking Results After Improvement to Evaluate Success
After making corrections, Loss Tracker continues to play a vital role in tracking results and proving whether the improvement was truly effective. Recording the same data both before and after the correction allows for a clear comparison of how much the loss was reduced. For example, Motion might decrease from 25 minutes to only 8 minutes per day, or Waiting might decrease by almost half. Seeing clear results gives the organization confidence that the correction is effective and should be elevated to a new standard. This type of follow-up also encourages the team to recognize that the Kaizen they performed truly impacts efficiency.
How to Eliminate MUDA with Lean Automation
Once you know where MUDA is, the next step is to “choose the right tool” to manage it systematically and achieve tangible results. The following key tools are fundamentals that every organization can immediately apply. Lean Automation is here to help you. 1. Start by Identifying MUDA in the Production Process
1. Start by Identifying MUDA in the Production Process
Before using Lean Automation to help eliminate MUDA, you must first understand what type of waste is occurring in your production line. Observing the worksite, recording data with Loss Tracker, or using Value Stream Mapping will help clearly identify MUDA, such as unnecessary motion, waiting for workpieces, needless transportation, or defects. Accurately identifying these problems is the first step toward making Lean Automation worthwhile, as automated tools will be designed to solve real points of loss, not insignificant problems.
2. Select the Appropriate Points for Automation
Implementing Lean Automation does not require large-scale investment across the entire factory, but should start at points that create high MUDA and are measurable, such as points requiring repetitive labor, high risk of error, or points causing bottlenecks. Choosing the right points will make the investment worthwhile and yield a fast return. The applied machinery or automated systems should address specific MUDA points, such as using a Conveyor to reduce transportation, using Sensors for automatic quality checks, or using digital systems for document approval to reduce repeated work.
3. Adjust the Process to Align with Automation
Lean Automation is most effective when the work process is adjusted appropriately. The sequence of work steps must align with the automated machinery to minimize Waiting and Motion. Organizing the Layout for continuous workflow and clearly defining Standard Work will help automated machinery or systems operate at full efficiency, reduce delays, and decrease errors caused by inconsistency.
4. Continuous Monitoring and Improvement with Kaizen
The implementation of Lean Automation does not mean that problems will disappear immediately. Continuous monitoring and improvement are important. Performing Kaizen in conjunction with Automation helps employees observe new problems and suggest small fixes that help reduce MUDA in steps where machinery cannot yet perform, or further increase the efficiency of the automated system. This concept is about small but continuous improvement, leading to cumulative results and sustainable cost reduction.
5. Measure Results and Establish New Standards
After implementing Lean Automation and continuously improving the process, the reduction of MUDA must be clearly measured, such as the reduction in Motion, Waiting, Defects, or Lead Time. Once clear results are visible, they should be established as the new work standard, ensuring all machinery and employees work according to the same steps, sustainably reducing waste, and creating a factory with low costs, high output, and readiness to compete in the long term.
6. Increasing OEE
When an organization systematically applies Lean Automation to eliminate MUDA, in conjunction with establishing a measurement structure through OEE, what will happen is not merely a reduction in waste, but an elevation of production line efficiency to a level where “equipment and processes operate at their maximum potential.”
In the context of production, OEE measures the proportion of scheduled production time that results in actual productive time with 100% quality according to the standard. This means the equipment has “Availability,” “Performance,” and “Quality” simultaneously in all three aspects.
Lean Automation, designed to reduce MUDA, such as reducing “Waiting,” “Motion,” “Setup time,” “Minor stops,” including reducing errors (Defects), directly helps reduce Losses affecting Availability, Performance, and Quality.
The result is that the factory’s OEE will “soar” significantly. Machinery will stop less often, operate at full speed, and produce more high-quality workpieces continuously.
When OEE increases, it means:
- The time machinery is used effectively, which increases → Reduced cost per piece
- The defect rate (scrap/rework) decreases → Reduced waste, reduced material, and reduced labor costs
- The consistency and stability of production improve → Timely delivery, reduced production, and customer issues
Therefore, “increasing OEE” is not a separate goal, but a direct result of using Lean Automation to eliminate MUDA, where the organization achieves both “reduced waste” and “increased sustainable efficiency.”
Results When MUDA is Eliminated Correctly
When a factory can eliminate MUDA correctly and systematically, the results are clear and measurable. Because MUDA is the root of wasted costs, reducing MUDA is like “plugging the cost leaks” that the organization previously overlooked, leading to the following key results
1. Reduced Production Costs by 10-40%
When waste disappears, labor costs, time costs, and material costs immediately decrease, such as reducing idle time, unnecessary motion, or preventing defective production. These points combined significantly reduce the cost per piece, which many factories can reduce by 10–40% without investing in expensive new technology, simply by adjusting the process to be leaner and smoother.
2. Faster Production Without Increasing the Number of Employees
One of the clearest results is increased production capacity without needing to add more people. Because employees do not waste time searching for equipment, waiting for machinery, or solving repetitive problems, the previously lost time is converted into actual production time. This leads to the production line operating at full efficiency, and employees having more value-added work time each day.
3. Measurable Reduction in Scrap and Rework/Reject
Defect-type MUDA often results from non-standardized steps, unprepared tools, or unstable working conditions. Eliminating MUDA reduces the root causes of errors, such as improving Standard Work, Visual Control, and 5S organization. These actions reduce process variation, making quality more consistent, and resulting in a significant reduction in defects and rework.
4. Increase Output and Machine Utilization Efficiency
When wastes like Waiting, Motion, or Setup Time are reduced, machinery will run more in actual production and stop waiting less. This means the OEE (Overall Equipment Effectiveness) value will automatically increase. The factory can produce more in the same amount of time, which increases output without needing to invest in new machinery.
Reduce Lead Time and Enable Faster Customer Delivery
Many types of MUDA, such as Inventory, Transportation, and Waiting, unnecessarily prolong the Lead Time. When these wastes are eliminated, the production process shortens, the workflow speeds up, and bottlenecks disappear. The result is that the factory can deliver goods faster than before, increase customer satisfaction, and create opportunities to accept more work.
Eliminating MUDA is the core of sustainable production cost reduction. This is because MUDA is “waste” that is hidden in every process, whether it is waiting time, stalled work, excessive stock, unnecessary movement, or overproduction. When an organization can systematically find and eliminate MUDA, the production process becomes more streamlined, uses resources efficiently, and operates faster without needing to add people or machinery. This results in an immediate reduction in overall costs, along with better quality, shorter delivery time, and a noticeable increase in production capacity. All of this enables the factory to be more competitive and create stable long-term profits.
Do you want to know how to effectively reduce production costs by eliminating MUDA in your production line? Solwer has compiled real techniques and case studies to help you precisely find and eliminate waste in the production process. Download the free e-book, “MUDA Elimination Guide: Reduce Costs, Increase Output,” to start improving your factory for maximum efficiency today!