top of page

Getting More From Your Modular Plant

If you’re a manufacturer, process waste is costing you a significant amount of time and money. Here’s how to reduce or eliminate it

There are 9 different types of waste in modular plants

  • Some of these are obvious, others less so

  • Learning to identify and address them will reduce costs and raise profits

“If I had 8 hours to cut down a tree, I’d spend the first 7 hours sharpening the saw.”

This saying, attributed to Abraham Lincoln and made famous by Stephen R. Covey, illustrates the importance of maximizing process efficiency, or output relative to input.

For doers, it’s always tempting to jump right into a job rather than to take the time to sharpen the saw. But cutting down a tree with a dull saw is slow, exhausting and frustrating. It means wasted time and effort.

Ask yourself: Is your offsite factory operating like a dull saw?

My previous article discussed modular Process Cycle Efficiency (PCE). My observation and analysis of hundreds of hours of work in modular factories found that workers were spending 74% of their time on Non-Value-Added (NVA) activities. In other words, nearly three-quarters of their time was spent on activities that provide no value to the business.

In this article, I dig deeper into where that waste is coming from and how to identify and reduce it. We’ll look at the ways in which your modular factory’s saw might be dull, and how you can sharpen it for faster, easier, and more profitable cutting.

Process Waste

As a manufacturer, your customers pay you for a very specific outcome. They expect you to produce (and sometimes deliver) building components such as volumetric modules, pods or 2D panels.

That’s it.

In Lean Manufacturing, any activity in your operation that doesn’t contribute to that outcome is what we mean by NVA, or more simply, waste.

You see, waste isn’t just the scrap in the dumpster, although that’s one form of it. In Lean Six Sigma terms, waste is defined as any output that doesn’t add value for the customer.

In nearly all companies, from the perspective of the core revenue-generating process, most activities are a form of waste. Running your plant, managing your people, maintaining your equipment, cleaning your warehouse, even Quality Control—your customers don’t pay you to do any of that, do they?

Things are even worse in the office. In terms of your core manufacturing process, pretty much everything that goes on there—business development, accounting, HR, legal, project management, administration, even top management (that’s you)—is all waste.

Of course, not all waste is created equal. There are two types.

Type I is essential waste, because it includes things that must be done to support the main Value-Added (VA) activity of producing building components. The above-listed activities, needed to operate the plant and the office, are all Type I essential waste. Although they can’t be eliminated, they can almost always be made more efficient.

Type II is non-essential waste. It includes activities that can and should be eliminated, like idle time and rework.

The 7 Lean Wastes

Type I and Type II wastes can be further broken down into more specific categories.

Toyota, the originator of Lean Manufacturing, identified seven main forms of process waste nearly 70 years ago. These forms of waste (forming the acronym TIM WOOD) can occur in any process, whether physical or digital, and in any industry. Chances are your operation suffers from all of them in some form or another.

1. Transportation waste is the movement of products, outputs, or other resources, from materials and tools to reports or computers.

2. Inventory waste occurs when there’s a bottleneck caused by materials or inputs stacking up before a step in the process.

3. Motion waste is the unnecessary movement of people, such as a worker climbing a ladder to install materials, or people walking between offices.

4. Waiting waste refers to idle time, whether by machines or people.

5. Overproduction waste refers to a product, part or service that was produced too fast, at the wrong time, or in too much quantity for the process.

6. Over-processing waste occurs when more resources (time, materials) are put into a product or service than is valued by the customer.

7. Defects, or Rework waste is when work is redone, usually to correct a defect identified by a quality control check.

The 9 Modular Wastes

Pie Chart Daniel Small.png

So how does all this apply to modular?

My observations and analyses of modular factories identified nine common forms of waste. This article includes a section for each of them. Each section includes the definition, common causes and frequency of that particular waste type, as well as recommendations on how to reduce it. In other words, how to sharpen your saw.

At the end of these nine sections I offer some thoughts on how to prioritize your efforts to correct them.

Each type of modular waste falls under one or more of the generic waste forms above. ________________________________________________________________________

Preparation/Assistance (Type I, Over-processing)

  • Definition: This includes preparing materials for installation: removing packaging, modifying product sizes or shapes and preassembly. It also includes workers assisting each other, as when one worker has to stop work in order to hold something for a colleague.

  • Causes: The usual suspects behind Preparation waste are poor product design, configuration, or packaging. A product may arrive at the factory in pieces that must be assembled before installation, or workers may have to partially disassemble a piece of equipment to remove it from its packaging.

  • Frequency: This the most common form of waste in modular factories. It accounts for 10%-20% of work time.

  • Recommendations: Since this waste is often product-related, I recommend working with your suppliers to see if they will do more of the prep themselves. That could include preassembling products before shipping them to you, or providing more efficient sizes, shapes, configurations, or packaging. Although not all suppliers will commit to this type of cooperative innovation, some will. Those are the partners you should seek out, as they can help you make huge strides in efficiency.


Conveyance (Type I, Transportation)

  • Definition: Conveyance is the carrying of components (materials, tools, accessories) to or from work areas.

  • Causes: You will get more Conveyance waste when components are stored far from installation points or in a hard-to-reach locations, such as high on shelves.

  • Frequency: This is the second-most common form of waste in most modular factories, accounting for roughly 5%-30% of work time.

  • Recommendations: The key to reducing Conveyance waste is optimizing storage locations for materials, tools, and accessories. Maintain sufficient stocks of required components and place them as close as possible to where they will be used. Use mobile carts for tools, accessories, usables, and small materials.


Tools (Type I, Over-processing)

  • Definition: Tools waste, or Non-Productive Tool Handling, is just what it sounds like: handling of tools and equipment that does not add value to the build: fetching/returning tools within the work area, changing batteries, bits and blades, switching tools, moving ladders and jigs.

  • Causes: Non-productive tool handling waste can be caused by poorly maintained tools, using the wrong tools, misuse of tools, or a lack of tool belts. A poorly designed or executed installation process can contribute as well. For example, installing items off-station increases time spent dealing with tools because the worker is further from the tool cage.

  • Frequency: This is also fairly common form of waste, accounting for up to 25% of total work time.

  • Recommendations: To reduce this type of waste: make sure you have enough of the right tools. Make sure that tools are in good condition and that batteries are constantly charged. Have plenty of bits, blades, fasteners and batteries stocked and easily accessible. Make sure that workers are properly trained and supplied with tool belts where needed.


Planning (Type I, Over-processing)

  • Definition: Planning waste in an offsite factory includes activities like looking at plans and specs, measuring things, and discussing how to complete a task. This is a form of Over-processing waste. Although planning in general is essential, it’s non-essential on the production line.

  • Causes: Planning waste has multiple causes. Checking and discussing plans are symptoms of poor information flow and of product variability that requires a new learning curve for each project. The need for workers to manually determine or verify the placement of components means there’s a deficiency in the product or the process.

  • Frequency: This varies by station/trade. On average, it’s about 10% of all work time.

  • Recommendations: You can reduce production-line planning by doing more effective planning beforehand. Create more standardized designs (to reduce the need for workers to constantly learn new things), ask suppliers to pre-assemble more components, and mark the locations of cabinets on walls or floors. If customization is an essential part of your business model, you could productize some of your more commonly repeating components. Every reduction in variability will make your operation more efficient and productive.


Motion (Type I)

  • Definition: Common examples of Motion waste in modular factories are climbing up and down ladders or lifts, or moving between different work areas.

  • Causes: You get Motion waste when the place where a component needs to be worked on is out of reach of the worker. Some amount of movement, such as moving within the module, is essential, but non-essential movements such as repeatedly climbing up and down ladders to reach the top of a module are all too common.

  • Frequency: This is another waste whose frequency varies widely from trade to trade. Overall, it makes up 5%-10% of total work time, but can be as high as 30% for some processes.

  • Recommendations: Reducing Motion waste is about better process optimization and better factory layout. Doing more tasks while the work surface is lower to the ground, as well as utilizing catwalks, mezzanines, and lifts, can help keep workers where the work is.


Rework (Type II, Defects)

  • Definition: Rework, or Defects, is something we’re all familiar with. On a modular manufacturing line, it usually takes the form of removing, reinstalling, repositioning, or adjusting materials that have been installed.

  • Causes: This is another waste that has multiple possible causes: inexperienced, poorly trained, or time-pressed workers, poor information flow, product variability, and more.

  • Frequency: Rework is fairly rare in most processes, but each instance can waste a lot of time. Overall, this represents 5%-10% of work time.

  • Recommendations: You need to address each cause. Solutions could include more product standardization and more worker training. You can also improve the frequency, clarity, and accessibility of design information provided to those workers.


Inspecting (Type I, Over-processing)

  • Definition: This includes all internal QA/QC checks, code inspections, and other reviews. It also includes installers double-checking their work as they go.

  • Causes: A certain amount of inspection is absolutely essential, as noted above. However, excessive and repeated checks can be caused by poor information flow, poor record-keeping or poorly-defined standard operating procedures (SOPs).

  • Frequency: Non-essential inspecting (e.g. a worker self-checking the placement, orientation, or appearance of materials after installation) usually doesn’t take much time, but is fairly frequent. Overall, it makes up perhaps 5%-10% of work time.

  • Recommendations: Again, required code inspections cannot be eliminated, but you can reduce non-essential inspections and spot-checks. Establish firm and well-structured SOPs and ensure that information is recorded and communicated efficiently, such as with photos or video.


Waiting (Type II)

  • Definition: Waiting waste refers to activities like watching, standing around and chatting.

  • Causes: This could be a sign that a task has been overstaffed. It could also be a symptom of poor training, or one of the other waste activities, as those can often create downtime. For example, a worker who is only needed for certain tasks in a process may spend a lot of time just standing around.

  • Frequency: If tasks are appropriately staffed, this will account for 5% or less of work time. But for tasks that are over-staffed, Waiting waste can exceeding 20% of task time.

  • Recommendations: The most effective way to address Waiting waste is to staff each task appropriately. This may require some work to determine the right staffing level for each task, but it will pay big dividends if you suffer from this issue.


Cleaning (Type I, Over-processing)

  • Definition: This is another form of essential Over-processing waste (which, unfortunately, seems to be considered non-essential in some factories). It includes cleaning surfaces, sweeping floors and hauling trash to the dumpster.

  • Causes: Possible causes of non-essential Cleaning waste include careless installation work, poor workspace organization, and ineffective or non-existent SOPs.

  • Frequency: This is a tricky one to track, as it often takes place separately from the actual work with which it’s associated. Overall, non-essential Cleaning waste seems to account for less than 5% of work time.

  • Recommendations: To reduce Cleaning time, place more trash cans near the work and create SOPs that encourage working in a tidy manner.


Finding Your Dull Spots

Every process has waste. Even the most efficient manufacturing facilities include up to 30% NVA activity, but as I mentioned at the beginning of this article, in modular manufacturing NVA activity rises to 74%.

The pie chart on page TK shows the rough breakdown of the average frequency of the nine Modular Wastes across multiple factories.

Finding waste in your processes is a simple manner of looking for it. By observing production processes and analyzing activities, you will learn which wastes are problems for you, and how big they are.

The most reliable method of waste identification is to make a video of a process, then review it in detail later. During the review, record all worker activities and the time associated with each. Once you’ve identified and quantified your wastes, use root cause analysis, the above recommendations, and your team’s, and others’, expertise, to identify causes and develop solutions for your productivity leaks.

Begin with your top three highest-frequency Type I wastes, as well as your Type IIs. Your goal with Type I wastes should be to economically minimize them, while the goal with Type IIs is to eliminate them completely.

In my experience, while some manufacturers will tackle this work on their own, most prefer to partner with an outside consultant.

Case Study

One of the quickest and easiest ways to reduce waste in your factory is through the application of simple workspace organization. This process, known as 5S, includes purging and disposing of unnecessary items, finding a logical place for the necessary items, cleaning and maintaining the space, and setting in place systems and policies for maintaining the organization long-term.

I recently did such a project for one section of a factory that had become very disorganized over the years, causing many hours per week of wasted time and frustration. Workers were wasting time searching for and moving items, and there were increased inventory costs from damaged items.

In just a few hours on a Saturday, we were able to completely reconfigure and organize the space for much greater efficiency. We also established SOPs for maintaining the system over time.

This simple exercise will save this factory more than $1000 per month in time previously wasted, thousands of dollars per year in avoided product damage and write-offs, and thousands more in unnecessary purchases. Total estimated annual savings are $30,000 to $40,000. In addition, the area is now much safer and easier for all workers to navigate, and is a source of pride instead of frustration.

Don’t Miss This Opportunity

If you could reduce your waste ratio by even half, how much could your throughput increase?

And since cost reductions go straight to the bottom line, how much could your profit increase?

If you could get more done with the people you have, how much more insulated would you be from labor shortages?

Since reducing waste also reduces errors, how much could you reduce your warranty costs and increase your customer satisfaction?

Just as a tree-harvester needs to invest time and effort to ensure a sharp blade, process waste reduction requires an investment of time and effort. Unlike sharpening a saw, however, you can reduce process waste without bringing the process to a halt.

And the best news is, saw sharpening is worth many times the investment. Once you’ve cut with a good blade, you’ll never want to go back to the old way.

Daniel Small is a Denver-based management consultant to the building industry. He specializes in Lean Construction and Manufacturing and Six Sigma methodologies. Contact him at

Published in OFFSITE BUILDER Magazine on February 27, 2022

5 views0 comments
bottom of page