The concept of waste is in business management primarily used in the context of quality management methods, such as Lean, Kaizen or 3E concept. In the Lean and Kaizen concepts, waste comes from the Japanese word muda and refers to all kinds of waste and losses, which cause reduction in effectiveness or efficiency of the organization. For wastage or loss everything that does not add a value is considered.
Muda in the concept of Lean production, is focused primarily on companies in the manufacturing sector, distinguishes seven kinds of waste (7 Wastes).
- Transportation - unnecessary transport of materials and products is a waste
- Inventory - unnecessary storage is a waste
- Motion - unnecessary motion of workers is a waste
- Waiting - unnecessary downtime and waiting is a waste
- Over-processing - production beyond the requirements of customers is a waste
- Over-production - unnecessary quality or treatment that a customer no longer requires is a waste
- Defects - production of defects is a waste
Note: to help remember, the acronym “TIM WOOD” is used
Sometimes, another one, the eighth type of waste is stated. Then whole concept is called 7 + 1 kinds of waste or eight kinds of waste:
- People, Creativity and Motivation, Skills - untapped potential of workers and their creativity is a waste
For non-manufacturing organizations (especially in the service sector) or non-productive administrative activities in a company, a set of rules of waste is transferred, sometimes referred to as “new kinds of waste”:
- Human potential - untapped potential of workers and their creativity is a waste
- Information system - inadequate or dysfunctional information systems
- Unclear strategy - unnecessary carrying out activities that are not in line with the strategy is a waste
- Market Opportunities - The missed opportunity is s waste
- Administration - unnecessary administration unnecessary is a waste
- Customer’s Time - unnecessary loading of the customer is a waste
The concept of Suffering loss, tolerated wastage, so-called “Hiragana MUDA” is used, which indicates mandatory activities such as legislation, that can not be eliminated, but the organization is trying to minimize their negative impact on the efficiency and performance of the organization.