The Waste That Restrains Organizations

By Tom McBride

Partners for Creative Solutions

Our last issue discussed the urgent need for many businesses to go through a lean transformation to strengthen their competitiveness.  A critical step is identifying the waste that needs to be eliminated.  This article continues the theme by describing the most common forms of waste found in organizations. 

Waste can be defined as the use of any equipment, materials, space, or activity that does not add value to a product or service.  A value-added activity is defined as something for which a customer would be willing to pay.  Anything that is not clearly value-added should be scrutinized as a suspect for waste. Many estimates indicate that organizations harbor a staggering 85-95% waste when using “perfection” as the benchmark.

The following list of eight wastes is adapted from the works of Taiichi Ohno of Toyota and other authors.

 Lost opportunities    Sales, profits, or other opportunities lost due to ineffectiveness or working on the wrong things often overshadow all other wastes.  A day invested to ensure you are offering the right products at competitive prices will usually do more to strengthen your business than a day spent cutting costs.

Overproduction      Producing something before the customer wants it is often the next largest waste.  It sets up conditions that cause many of the other wastes and may result in obsolete products.

 Waiting   People often lose time when waiting for something to happen.  Examples would be when something goes wrong upstream, when there are bottlenecks in a process, or when people wait for a piece of equipment to finish its task.

Transportation   Excess movement of an item or material that supports the production of a good or service is waste.  Causes include double handling associated with storage, as well as poor layouts, scheduling, coordination, housekeeping, or organization.

 Processing   Even work that is usually considered “value-added” may contain waste.  Although processing usually represents a fraction of the total cost, many make the mistake of focusing on this area first.

Inventory   Too much inventory complicates production, absorbs valuable resources, hides real problems, and extends deliveries.  In looking for waste we need to think beyond the traditional definition of inventory and include all of the material or work required to produce any product or service.

Motion   People often go through motions that do not add value.  Workspace disorganization, poor factory or office layouts, and bad habits can accentuate this waste.

 Product defects   Defects found anywhere in the process disrupt flow, cause delays, add cost, and reduce capacity.  Worse yet, defects found by the customer damage loyalty.

 Future articles will present some methods of finding and eliminating waste and describe how an organization can initiate a transformation program.