EIGHT TYPES OF WASTE AND HOW TO STOP FLUSHING YOUR PROFIT DOWN THE DRAIN

Everything you do in your business either adds value or adds waste to the production of an item or service. Ignoring this waste is like flushing money down the sink. Removing it can be one of the most effective ways of increasing your profit, and it may not be as difficult as you think. Here’s how to do it.

Step 1 – Identify the waste

DOWNTIME is an acronym for identifying types of waste that occur in almost every business.   It provides a framework for you to identify specific instances of eight types of waste in your own business:

Defects  – a common waste that includes defects in purchases as well as your own products and processes. Defects can result in rework, excess scrap, delays, warranty claims, subsequent remedial work and ultimately the loss of customers and reputation.

Overproduction - producing more of something than is needed or producing it before it is required. This can include over-servicing, excess time or excess reports and paperwork.

Waiting – this can include waiting for a person, machine, materials or information to get something done. It is not unusual for a product/service to spend more than 95% of its time waiting and less than 5% of its time having value added to it.

Non-utilised talent – underutilising peoples talents, skills and knowledge. Maybe the right person is in the wrong job or you just sent someone on training and they’re not using their new knowledge in your business.

Transportation – every transport event is an opportunity for damage/loss to occur and quality to deteriorate. Transport also takes time and when inefficient it wastes time. It is a source of non-valued cost. Are you making three trips instead of one?

Inventory – this includes anything with stored or under-used value and doesn’t just relate to stock. It can include unpaid customer invoices, underutilised staff or tools and equipment that is never/hardly used.

Motion - relates to ergonomics - all instances of bending, stretching and reaching. These include Health and Safety issues which can result in significant costs if not properly managed. Another example is poor office or workshop layout resulting in inefficient workflows.

Extra Processing - this means using the wrong person (under/overqualified) or the wrong tool (high precision when a simple tool would suffice) or the wrong process (e.g. overly complex).

Step 2 – Start removing it

  • Think of your business or part of your business and use the DOWNTIME framework to identify stuff that you could be doing better. This will work best if you brainstorm with another person or your team.
  • List your ideas. You don’t need to get too descriptive and no idea is a bad one. Just write them down, big and small.
  • Estimate the cost that each waste is causing your business. If this is too hard just use High, Medium, Low or whatever works for you.
  • Think about how easy it would be to eliminate each waste and score a similar scale, e.g. Easy, Medium, Hard.  Don’t overthink, you’re going to use this score to help get some quick wins.
  • Review the results and rank them to decide which should be addressed first. Prioritise the higher value wastes that are easier to remove.
  • Develop a plan and start working on removing the high priorities. Don’t try to fix everything at once.

And finally, it’s worth remembering that much of this waste is unseen. You may not be aware of the extent or cost unless you specifically look for it using the DOWNTIME framework. 

Use this process to get you started, get some wins on the board and it won’t be long before you see the impact filter through to your bottom line.