Knowing Your Hidden Wastes
Do you know your true waste cost?
Generally the obvious “regular waste,” the easily identifiable cost and expenses involved in operations are examined closely and waste reduced. However, it is the “hidden” and difficult to find and compute wastes that are the most harmful. These wastes can result in expensive lost profits of $6,000-$15,000 per employee!
We have identified 15 areas of hidden waste, such as:
- Lost Production
- Unproductive Meetings
- Wasted Assets
- Obsolete Policies & Procedures
- Unrealized Opportunities
- Unclear Instruction
- Passive Compliance – not putting focus in the job at hand
Let’s take a look at how lost production many be affecting your bottom line:
Perhaps an employee in your company makes $15 per hour. If they waste 10% of their time, how much are you actually losing? Idle chitchat with coworkers, tardiness, inaccurate filling- these are all activities that are not contributing to a productive employee. How much does it rob your bottom line? It’s more than you might think. Let’s do the math:
10% of their time = 6 minutes every hour. That seems like a reasonable assumption, even for a motivated employee.
For an eight hour day, that is 48 minutes.
$15 per hour = 25 cents per minute.
25 cents x 48 minutes = 12 dollars per day for this employee.
5 days x $12 dollars = $60 per work week.
50 weeks x $60 = $3,000 per year.
If you have 30 employees, that is $90,000 of lost production per year! And it is probably safe to assume some employees are taking more than six minutes of personal time per hour.
Maybe it’s time to think about what you can do to help your employees spend more productive time. Our studies have shown that unclear instruction, unproductive meetings, obsolete policies, etc. add additional waste. These can add another 10% of waste, which brings us to the $6-15,000 average mentioned earlier, and in some cases it can be even higher.
Let us know what you intend to do to find and eliminate your hidden waste.
Questions for Reflection:
Business owners- How much do you think you lose in hidden waste?
Employees- How much do you think you cost in hidden waste?
How you change this behavior?
What other hidden wastes can you think of that might be affecting your bottom line?
