Waste doesn’t have a good connotation, and you probably wouldn’t want the term to apply to your company’s operations. But does your production facility know where the bottlenecks are? Are you aware of the reasons why you are losing money? Most companies focus on sales, material costs or wages, yet you won’t find the sources of the biggest losses by analyzing invoices. Waste in companies is a phenomenon that can eat up margins quietly – day after day, minute after minute.
The simplest definition is: waste is anything that does not add value – either to the customer or to the organization. In practice, there are three categories of budget burn-through:
Such a breakdown makes it easy to understand that it is not only activities on the production floor that contribute to financial losses. Just as much money is burned in offices, conference rooms or decision-making processes.
Research by the US company Zippia shows that an employee wastes an average of 4 hours and 12 minutes a day on tasks that do not add value. Let’s translate this into Polish reality. The average gross salary is about PLN 8,500 per month. This means that one employee generates more than PLN 200 in losses per day. Annually, this adds up to tens of thousands of zlotys.
In large companies, where hundreds of people work, this sum grows to several million. Importantly – it’s not just unproductive time. Losses also include a decrease in employee motivation, stress due to lack of clear information and delays in processes.
Get 5 chapters of the book for free!
Join the newsletter and gain access to 40% of the book
“15 Steps to Buying an Information System“.
According to OECD data, Poles are among the busiest nations in Europe – yes, we work on average more than 1,800 hours a year. The problem is that the efficiency of that time is among the lowest in the EU.
Why?
This leads to a situation where the work is there, but the results are disproportionate to the time involved.
One of the biggest sources of waste in companies is… meetings. In many organizations, periodic meetings are held out of habit, automatically, with no clear purpose or effect.
At explitia, we conducted an audit of meeting cycles. It turned out that some of them were too frequent – for example, weekly meetings that contributed nothing new. After optimization, the number of meetings dropped by 32%, which in practice meant regaining the equivalent of several FTEs.
This goes to show that waste doesn’t always require expensive analysis – sometimes all it takes is a look at your own calendar.
Small breaks are also not to be ignored: cigarettes, coffee, short conversations at the desk. Each such break is 5-10 minutes. On a weekly or monthly basis, they turn into hours that the team could use more productively.
In production, such micro-distractions are more difficult because machines often run continuously and the operator must be on site. In offices, however, it’s easy to get distracted. The result? A drop in efficiency that no one counts because it’s hard to capture in reports.
Although managers know that losses exist, they rarely take action. The reasons are usually the same:
Waste not only reduces the bottom line, but also affects the organizational culture. Employees frustrated by inefficient processes lose motivation, managers make decisions based on incomplete data, and customers receive a product or service late.
This is an easy way to lose margins and, in the long run, to lose competitiveness in the market.
Waste in companies is the invisible enemy of profits. It can take many forms – from downtime on the shop floor, to Excel reporting, to poorly scheduled meetings. The common denominator is a lack of added value. Awareness is the first step to change. Only when a company sees and names its losses can it begin to eliminate them.
