Manufacturers continually seek ways to maximise productivity and efficiency. Today, those efforts frequently involve high-level programs that employ buzzwords such as cloud computing, data-driven manufacturing, cyber-physical systems and Industry4.0. These initiatives are excellent concepts and can produce impressive results. However, manufacturing realities often interfere with the implementation of such ambitious plans, and a critical reality is the presence of uncontrolled waste in the manufacturing process.

Before discussing digitisation and optimisation, it is necessary for a manufacturer to examine its operations, determine where waste occurs, and develop methods to reduce or eliminate it. Controlling waste is the first step in preparing a manufacturing company for the adoption of sophisticated smart manufacturing strategies.

Basics of production economics

Manufacturing consists of a series of transformation processes. A shop forms raw material into finished or semi-finished workpieces through a series of individual transformation operations such as forging, welding or machining. A number of individual elements comprise each operation. The basic elements of machining, for example, include the cutting tool, machine tool, fixtures and coolant supply. Together these elements form a machining system that gets support from related equipment and components in a production system.

Planning, programming and economic management functions surround the production system to form a production environment. The key element of a production environment is people. Although manufacturing today widely utilises computers, robots and other advanced technology, people make the decisions that control the environment overall.

The machining process is based on technical application details regarding tool selection, cutting conditions, programming and workpiece material and fixturing. Other key details include production volume requirements and the specified quality of finished workpieces.

Linking technical application details with economic concerns is called production economics. The goal of the science of production economics is to balance all the factors involved. While technical elements produce desired results in terms of workpiece quality, quantity and timeliness, the operations must be carried out at a cost that enables a business to thrive.

Achieving the balance of output and cost in machining progresses through three phases. The first phase is establishing a reliable machining process. It is essential to minimise unexpected occurrences such as broken tools, uncontrolled chips and resulting destroyed workpieces. A workshop establishes operational reliability by choosing tools with load capacity that meets or exceeds the mechanical, thermal, chemical and tribological loads generated in the machining process.

Phase two in achieving balanced production economics involves choosing cutting conditions that reflect the constraints put on the machining process by real-world circumstances. The theoretical capabilities of a cutting tool are broad. But specific workshop realities constrain the range of effective application parameters.

For example, the capabilities and performance of a tool vary according to the amount of power possessed by the machine tool that is applying it; the machining characteristics of the workpiece material; or the configuration of a part that may be prone to vibration or distortion. Although there is a vast selection of cutting conditions that will work in theory, unfortunately constraints posed by reality will narrow the range of trouble-free choices.

Applying cutting conditions outside the application constraints of the specific situation will have negative economic consequences, including higher costs and lower productivity. Perhaps 90% of the problems experienced during machining result from a lack of respect for the constraints that workshop realities place on the cutting process.

When cutting conditions do not exceed the constraints imposed by workshop realities, the operation is safe from a technical perspective. However, not every technically safe combination of cutting conditions will produce the same economic result. Changing cutting conditions changes the cost of the machining process. Moving to more aggressive but still technically safe cutting conditions will increase the output of finished workpieces, but after a certain point however, productivity will decline because the aggressive cutting parameters also will result in shorter tool life. The output of parts over time then will decline as well, because more time will be spent changing worn tools.

Somewhere there is a combination of cutting conditions that result in a balance of productive output and manufacturing cost. Accordingly, the third phase of achieving balanced production economics involves determining the optimal combination of cutting conditions for a given situation. It is essential to take into account all the factors in the machining operation to establish a working domain where cutting parameters provide the desired levels of productivity and economy.

The effect of waste on production economics

Unfortunately, the elegant scientific methods of balanced production economics operate at the mercy of waste in the manufacturing system. Waste destroys the balance and occurs in many ways. For example, it is a waste of energy and power when a 60kW machine tool is used in an ongoing application that requires only 15kW. In another situation, when finished workpieces do not meet required levels of quality, the time, money and resources invested in the process are wasted in pursuit of an unacceptable result. Similarly, manufacturing workpieces that needlessly exceed required levels of quality is wasteful, because achieving increased quality increases cost.

A less obvious and less understood occasion of waste is the underuse or misuse of intellectual resources. Certain personnel in a company may possess knowledge or skills that will help the company achieve its goals, but for reasons ranging from poor communication to intra-company politics, the knowledge and skills are not shared and therefore go to waste.

Waste reduction tools

After waste is identified and categorised, a shop should create a plan to reduce or eliminate it. There exists a wide range of tools that enable a manufacturer to pinpoint, quantify, and minimise wasteful practices. For example, analysis of tool usage, manipulation and deterioration will point out trouble areas.

Such analyses have shown that in some cases as much as 20% to 30% of the tools that personnel defined as worn out were in fact still viable – the remaining tool life was wasted. Establishing clear tool wear criteria and communicating the standards to shop personnel will significantly reduce wasted tool life.

Similarly, machine downtime analyses quantify the time spent in activities such as setup, programming and tool changing. These analyses often indicate that as much as 50% to 60% of machine downtime is avoidable through a better understanding, execution and co-ordination of these necessary but time-consuming activities.

The use of interviews, surveys and training programs can uncover a lot of useful information when dealing with personnel issues that lead to waste of intellectual resources as well as unrealised knowledge and skills. As a result, employees perform their jobs better and build capabilities that maximise personnel productivity.

Value-adding, value-enabling, and unneeded activities

At the start of the 20th century, the US industrial engineer Fredrick Taylor studied workshop operations and proposed that productivity improvement be driven by eliminating any activities in a process that do not add value to the final product. Modern “Lean” manufacturing guidelines follow this same line of thinking.

In machining operations, the only true value-adding activity occurs when the tool is actually cutting metal and making chips. Other actions such as part loading and fixturing, termed value-enabling activities, do not directly add value to the manufactured product but are required to allow the value-adding activity to occur.

A third group of activities in the machining system are those that are unneeded. These activities neither create value nor enable creation of value, but rather consume resources with no benefit. They are purely occasions of waste. Problem solving is an example of unneeded activity. If a process is properly designed and controlled in the first place, there will be no problems and no time wasted solving them.


For much of the past, unneeded activities were accepted as part of the manufacturing process and not recognised as significant disruptors of the achievement of balanced production economics. Presently, attention is turning to the elimination or minimisation of unneeded activity. The focus of productivity or capacity planning is on eliminating unneeded activities, minimising value enabling activities and optimising value adding activities.