Return to Productivity & Waste

Waste Index – AUE%

  • 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/ or capital resources used for any task – these resources cost much the same whether used productively or not

    • Process waste – the waste of time 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 delivering goods or services RFT – ‘Right First Time’

    • Output volume waste – the waste of potential output for the same fixed costs by working slower than maximum capacity

    • Preventable demand waste – the waste of time and effort in having to deal with extra customer demand, most of which should not have occurred in the first place e.g. lung cancer from smoking cigarettes, fires from never having swept chimneys

  • Given each of these waste sources can be considerable and costly, the cumulative impact can be huge:

    • Over 50% of resources paid for are often wasted – this can make all the difference between good profits and significant losses

    • Cut such waste and you may not even need to invest in more people or a new facility, at least for a year or so

  • And, more importantly, customers don’t like their time being wasted by suppliers – if quality or service levels are particularly bad, many will switch to alternatives – and the cost of lost customers, and replacing them, can prove very expensive

  • Overall, waste can have a very significant impact on productivity levels, unit costs and so profit margins

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