The unexpected costs of production waste – and how to reduce it

Production waste encompasses inefficiencies, wasted time, missed opportunities, and often poor data quality. These factors can result in increased operational costs and even harm to a company’s reputation.

Only by gaining a clear understanding of the different forms of waste and their impacts can organizations begin to take steps toward more efficient and sustainable processes.

Waste isn’t limited to physical scraps; it includes many forms of inefficiency across the production cycle. According to the TIMWOODS model there are eight categories of waste, each bringing its own costs:

• Transportation: Moving materials or people between departments or locations unnecessarily adds no value to the final product. Instead, it causes delays and increases transportation costs in the production process. 
• Inventory: Holding too much raw material or finished stock can lock up funds and increase the chances of items becoming outdated, damaged, or unused.
• Motion: Employees spending too much time walking to find materials can disrupt workflows and lead to unnecessary inefficiencies.
• Waiting: Delays in materials or follow-up tasks can leave production components or employees idle, wasting time and lowering productivity.
• Overproduction: Manufacturing more products than demand requires, fills warehouses unnecessarily and wastes time, resources, and storage space.
• Overprocessing: Conducting additional steps or applying enhancements beyond what is necessary generates extra work and wastes both time and resources, often due to flawed designs or unclear customer requirements.
• Defects: Faulty or damaged products requiring repair or rework, lead to wasted materials, labor hours, and financial resources, creating significant extra costs.
• Skills underutilized: Underutilizing employee skills, such as misaligning their talents with their tasks or limiting their responsibilities, diminishes efficiencies. Targeted training can enhance employees' productivity, helping businesses minimize waste and add value for customers.

Beyond these eight categories, poor data quality and inefficient information management pose additional challenges. For instance, when companies lack precise knowledge of which software version their products are using or rely on customer-provided details like serial numbers, they disrupt streamlined operations and waste time and resources.

Waste brings not only visible expenses but also significant, often overlooked challenges that affect a business on multiple levels.

Once you have a clear view of improvement opportunities, modern technologies can be a valuable partner in addressing them. Systems such as Product Lifecycle Management (PLM), Internet of Things (IoT), and Enterprise Resource Planning (ERP) offer tools to target waste and inefficiencies. These technologies not only solve existing issues but also enable preventive measures.

Technologies like cloud solutions add flexibility to processes, supporting scaling and adapting to new regulations and market demands. This is essential for innovation and risk management. While the tools are available, technology is most effective when tailored to your unique business goals. Think of these systems as enablers supporting your journey toward smarter, leaner production processes.

What opportunities exist within your organization to reduce waste and address inefficiencies? While solutions like PLM, IoT, and ERP systems can transform wasteful operations into streamlined, agile workflows, is it important to identify where you have the most to gain. We help you assess your current setup, so you can utilize as much of your current setup as possible, and add the extra technologies, that truly make a difference for your company.