Why should you (or us as accountants) care about a little waste here and there? Customers pay for added value – not wasteful activities. Your overheads affect your profit. Every non direct cost is crammed into your overheads. Reduce these and your profit increases.
“We’re grand so, there’s no waste in our business” I hear you say. Congratulations!! Take a look out the window. That’s Sky News and Reuters beating down your front door to interview this unique company that has eliminated all waste from its processes!
Even Toyota, the global leaders in Lean acknowledge that it’s “a journey, not a destination”.
7 Acknowledged Types of WASTE…
…Overproduction/Over processing:
In the IT sector, examples of overproduction would be creating or modifying programmes that nobody has asked for nor wants. In an office it’s creating reports that no one ever reads.
…Waiting:
How much time do your customers spend waiting for a returned phone call, a quotation, delivery of parts? Waiting adds nothing to your value chain.
…Motion:
Ergonomics – It can be as simple as moving the printer closer or placing a second printer near to your desk, rather than walking to a different room to retrieve printouts.
…Transporting:
If you are not in the removal business, then customers do not pay you to move anything. Look to solutions such as LogMeIn or TeamViewer to reduce travel.
…Defects:
Defects damage your reputation and cost you money. Measure them, find the cause and and eliminate them – do not ignore defects!! A late/short delivery, or a service that is falling below your SLA are both defects.
…Unnecessary Inventory:
Stock costs 25% of its value to store per year. It should be where it’s needed, when it’s needed. Not before.
…Energy:
Switch off lights, machinery, PC’s and printers each evening. Increase insulation. Greener is more cost effective.
Remember, for a Gross Margin of 50% and Net Margin of 25%, and for each 1% overheads are reduced, profit increases by 1%.
For more information on running a Lean Business, contact alanj@accountingforgrowth.ie or call 
01-2764254
