Waiting as Waste in Lean Production Processes

From the lean production point of view, waiting of components or products within a production process is a phase which creates no value to the customer. In addition to that, a plant uses resources in this time (e.g. storage) which produce unnecessary costs to the company. In the automotive industry mass production is often applied. If the waiting time is only a fragment of the whole production process, it could mean a great amount of loss in annual profit due to the large number of produced objects. At the same time, allocation of overhead costs is not always fair. In this study activity-based costing procedure is applied to demonstrate a fairer allocation when the waiting time reduction is built into the production process. With this procedure decision-makers can obtain more accurate information about the first costs of the products and the wastes of the production process. A case study is constructed to illustrate our model, which can serve as a benchmark for companies who have adapted lean philosophy.