Waste is all around our work and most of it is chronic. We don't create it on purpose, but it often adds up to 20-40% of total annual revenues. Waste is the difference between how things are now and how they could or should be when everything is right. Would you like to grow your business or increase market share without significant capital investment? You may already have the capital, but it is being spent on waste. The four major forms of waste are materials, capital, time, and gross profits.

To estimate the annual dollar on some of this waste: 1) make a list of 3 to 5 items in each category of waste that are true for your company, 2) calculate how often that waste occurs – daily, weekly or monthly, 3) determine the cost of each occurrence, and 4) multiply the cost of the occurrence by the frequency so that you get an annual figure. The article also offers a "value-added work exercise" to assess the work activities performed.

Author: Don Barnard
Source: GATFWorld July-August 1998, pp. 7-9