Value is in the eye of the consumer: How to identify waste in your business

Throughout both my past corporate roles, and possibly even more, through my latter two decades (plus!) of consulting experience, one common factor keeps haunting me. And this is true immaterial of the business sector I find myself in; or the country and its cultures; or the actual operational activities at my client’s place. 

The intensity might have varied, and the way it is tackled might differ, but it is one sure common factor – an element that has since pushed me to passionately do what I do with so many different business organisations.

This common factor is nothing more than the fact that the workplace can actually be the stage for plentiful amounts of waste!

As I said, the intensity might be somewhat different and people might look upon it, and tackle it, from different angles. For example, within the more tangible business sectors (for example, manufacturing), people are intrinsically more conscious of working effectively. Within such tangible industrial environments, waste is generally more visible and obvious. On the other hand, the risk of having much higher levels of (not so visible) waste within the more intangible services sectors is also very true. I daresay, by experience, extremely true.

In the latter case, for the less obvious services-oriented operations, waste is generally hidden. People can get busy. Very busy… doing little, not much; at an extreme, nothing…? Non-value-adding activity can be excessively higher, more than one may expect. A reality exposed through the various cases and assignments undertaken over the years.

For any type of enterprise, waste must be the greatest enemy of profitability. Any non-value-added activity which does not transform inputs into something the customer is willing to pay for (perceived value) can therefore be defined as waste. 

The most renowned protagonist of operational waste, which is the primary focus of this article and subsequent ones in this series, was Taiichi Ohno. This gentleman (1912-1990) was considered the father of the Toyota Production System (TPS). Ohno laid down the basic benchmark for what should be considered waste, simply stated as “Anything that doesn’t increase value in the eye of the customer”.  In the discipline of Lean Management, we define eight discrete wastes, which will be explored to some detail in later articles, through this medium.

Whilst the origin of this concept can be closely related to the manufacturing industry, from where I have originated, through various advisory assignments undertaken, I have convinced myself and many others around me that the same principles are very much transportable to any type of business sector, services included. 

Seven of the defined wastes are very much process-oriented. The eighth, on the other hand, is directly related to management’s ability to maximise on their own people’s skills and capabilities. Having said that, all eight wastes and their effects have a universal application to all types of business environments.

With this in mind, I firmly believe that each business owner, CEO, COO, CFO and every other organisational role with any degree of interest in its business’s health ought to strike the opportunity to examine what exactly goes on within their operations, what is exhausting their resources, and their moneys.

The tactical approach to exposing such opportunities to identify and reduce any non-value adding activity, evaluating its impact on the organisation’s performance, and ultimately, finding ways for enabling a business to achieve more with less demands a carefully managed mission. A project in its right. One that, if managed and executed with cautious and objective planning, the right approach, and a drive to implement the resulting changes, then it is a project that pays for itself and generates additional benefits in no time. A return that instigates the desire to undertake periodically, instilling the mindset for ongoing evolution of the business.

Identifying and eliminating as much of the non-value-adding activity within a business’s operations requires the determination to do something about it.  Identifying the waste is a first step. It is not the solution to the problem. Action derives the solution. The benefits are reaped from the resulting accomplishments of change!

At the end of the day, ignoring waste in the process encourages negative development. Only systematic discovery and elimination of waste improves such processes, ensures positive development, and ultimately maximises output and profitability. And that is, after all, what every manager should be aiming for.

Ing. Joseph Micallef is a freelance Consulting Advisor, bringing with him over 30 years’ worth of experience across various sectors. Working in areas related with quality, lean, business process transformation and project execution and programme management he can be contacted directly on mobile +356 9982 2244 or email: [email protected].