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Waste AUE%

Waste sources

  • Waste can occur at any stage in delivering a product or service to a customer, as follows:
    • Input resource waste – the waste of time of labour, materials and capital resources used for any task – these resources cost the same whether used productively or not
    • Process waste – the waste of time between productive tasks spent idle, waiting for others, or ineffective e.g. the excess time spent by staff clarifying or diagnosing a customers’ needs or correcting their mistakes and omissions
    • Output quality and service waste – the waste of time, materials and so money, by not getting things RFT – ‘Right First Time’
    • Output volume waste – the waste of output potential by working slower than maximum capacity
    • Preventable demand waste the waste of effort in having to deal with demand, most of which should not have occurred in the first place eg lung cancer from smoking cigarettes, fires from never having swept chimneys

  • Each of these waste sources can be very costly – the cumulative impact can be huge:
    • Over 70% of resources paid for are often wasted – this can make all the difference between good profits and sizeable losses
    • Over 50% of capacity can be wasted – cut such waste and you may not need to invest in more people or a new production line, at least for a few more years
    • Customers don’t like their time being wasted by others – if quality or service levels are particularly bad, many will switch to alternative suppliers – the cost of lost customers, and replacing them, can be very expensive


  • Overall, waste can have a very significant impact on productivity levels – on unit costs and so profit margins – on QI, SI and VFMI values and so total revenue

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