9 Types of waste in Lean with examples

In lean management, the delivery team has two main objectives:

• To remove inefficiencies
• Maintain the standards of current processes

Do you feel like there might be something you haven’t considered? Would you like to know more about the types of waste in lean?

If that sounds like you, in this article, I will talk about the eight most known types and the latest addition in recent decades.

What is waste in lean management?

In a nutshell, waste in lean management is any set of unnecessary activities a business has in its system.

To identify waste, we must challenge our current beliefs and practices, leaving behind assumptions and taking a first-principles approach.

We need to start questioning even the essential things or steps, especially if you are in a very technical environment.

The reason why many companies decide to outsource lean waste identification is that for somebody within the company it is, sometimes, really difficult to detach yourself from your frustrations and your day-to-day to see things.

When you are a newcomer, challenging the current approaches and behaviors is way easier and often yields quicker results.

Having said that, It shouldn’t stop anybody from trying their best to improve their business.

The 9 types of waste in lean

1. Overproduction
2. Excess inventory
3. Defects
4. Extra processing
5. Waiting
6. Motion
7. Transportation
8. Underutilized talent
9. Employee behavior (Culture)

Overproduction

Overproduction is essentially producing more than what you need to supply your customer, and by a customer, I don’t mean just your final customers. I also refer to your internal ones.

By producing more, you are directly creating more of the other wastes, so if you are a product company, this is one of the worst wastes you can have.

When you have more products, you need a more extensive warehouse to store them. With an enormous warehouse, you need more employees to handle your product. By holding those products, you are handling them more times which can lead to more defects, and so on…

What causes overproduction?

Mainly the what-if-we-need-more approach.

As tough as it sounds, there are many times when senior management decides to push the production button just in case we need it.

You might be thinking but this is just simple to avoid. You have an order book and simply need to fill those orders accordingly.

Well, not necessarily. As you will see in the example below, it’s not so simple to make the right decision.

Things like Brexit, Covid-19, or the war between Russia and Ukraine put many question marks over offers and demands, challenging leaders to make tough decisions.

Example of overproduction

As I mentioned, Covid-19 has been one of the most recent challenges companies have faced.

Imagine you are a farmer amidst the pandemic. Everybody is panicking, buying everything from grocery stores.

To keep up with this demand, you push to increase your production levels to new highs so you can cope and drive some more business. Ultimately, you don’t know what Covid will mean financially for anybody, so it’s the safest option.

Well, it might come to a point where you have to drop your production into a ditch because you can’t sell it to anybody.

This is what happened to farmers in Wisconsin and Ohio. They threw away tons of products simply because the market corrected itself, and people finally stopped panicking and taking everything off the grocery stores.

Excess Inventories

Excess inventory is any input higher than the required quantity, waiting to be processed in a further step.

This excess is not only waiting for shipping to an external customer but anything we store for a downstream process.

The example below will clarify this statement, so it’s not confusing.

What causes excess inventory?

One of the key contributors is overproduction. If you produce more or plan to make more, you will need more raw materials or ingredients to hit that production.

Most companies run a mixed model of build-to-stock and build-to-order.

Another key contributor is poor process design. Many companies increase their stock levels until they cover these process problems.

Planning is another crucial contributor if our forecasts are way off. Understanding patterns, trends, and seasonality require tremendous market knowledge, which many companies, especially SMEs, might not have.

The investment in technology and people to balance processes, market forecasts, supply chain, and so on makes pushing products to a warehouse a “viable solution” to compensate for the lack of vision.

Example of excess inventory

Imagine you work in a car factory, and you build ten vehicles daily.

Your chassis manufacturing process is not optimal, and there are a couple of new guys in the process that only allow you to get eight chassis finished a day.

It’s sort of straightforward what is going to happen next, right?

When it’s time to assemble the doors on the car, if you keep producing doors to meet the ten vehicles a day demand, you won’t be able to.

You will always have spare doors that you will have to store somewhere till you can use them.

Another example: 

With the boom of crypto and the shortages in the semiconductor industry, people have been stocking microprocessors, and graphic cards like there is no tomorrow.

Mining crypto requires a lot of graphic cards to deal with the complex algorithms needed to mine the “next block.”

So all it took was a slight dip in the price of Bitcoin, and the costs of graphic cards and microprocessors dropped drastically, and stocks started to pile in warehouses.

Defects

A defect is anything that violates the intended purpose of a product and, subsequently, that a customer did not want.

I wrote an article on quality and customer expectations that is hopefully useful to you if you want to know more about this topic.

Defects are probably the most straightforward waste there is. We design a product to meet particular specifications and purposes, and anything that challenges that puts the customer experience at risk.

What causes defects?

Defects can be the result of many different causes. For example:

• Lack of understanding of customer expectations and needs.
• Poor process design
• Equipment out of calibration/maintenance
• No process control
• Not good enough materials

Understanding customer expectations and needs is critical to succeeding in business, not only to prevent defects.

Process design is significantly linked to process control. We should evaluate a process by considering all potential risks and mitigating them.

Failure to understand these risks and to put the necessary controls leads to defects.

The lack of quality materials is a clear example of what differentiates top-level manufacturers from their competitors. 

Examples of defects

A broken touchpad on a laptop, paint blemishes in a car door, and rotten food in a grocery store are defects.

The list is endless; you can add as many as you want to the previous list.

Extra processing

To extra process is, in a nutshell, any step that adds no value to the product or service from the customers’ standpoint.

And you might be wondering why I would do something like that. Everything I do, I do it for a reason.

I will give you a quick example: Paperwork.

I wouldn’t be able to count the times I have seen companies record a process on a piece of paper or similar.

What causes extra processing?

We go back to the example of overproduction where the just-in-case mentality kicks in. 

Like in the example before, we might have seen a defect happen, so I might put a check here just in case it happens again.

There could also be poor communication between teams. A new process release might have gone live, but it’s not a reflection of what happens on the shop floor.

The previous example means that to deliver the latest product revision, we require further processing to get it to that level.

Another example is when a company believes its employees must be busy at all times. If, for whatever reason, there is downtime, companies might ask their employees to keep producing even when there is no demand.

Examples of extra processing

I have already given quite a few examples in the previous block.

As I mentioned, paperwork is one of the most accepted forms of waste in the current business world.

In an era where digital tools are available for just a few dollars, it is a waste to fill in paperwork.

To move to fully digital environments, companies must embrace change and find ways to bring their employees into the journey.

Change resistance is one of the most difficult challenges to overcome, especially in those companies where employees have spent many years.

Waiting

Have you ever been waiting for the bus to arrive? Have you not ever thought what a waste of time this is?

That’s what waiting waste is, the idle time till something happens to continue a process.

What causes waiting waste?

Imagine every single process for your product is fully optimized. What would cause waiting waste?

Any material shortage, a spike in demand, or a few of your employees sick would immediately imbalance your processes and create waiting waste.

If those processes are not fully optimized, as I mentioned before, process inefficiencies, misuse of equipment, or set up times can create waiting waste.

Examples of waiting waste

Communicating with suppliers is extremely important to keep a healthy balance load in your operation.

Material shortages are one of the most straightforward examples in this case. If there are no materials, we must wait to produce goods.

Similarly, if we see a spike in demand and we require more from our suppliers, it’s vital to communicate with them as soon as possible before committing to those orders.

Failure to communicate on time will inevitably create waste.

Some other examples are in the previous paragraph, but sickness or downtime are also heavy contributors to waiting waste.

Motion

Any unnecessary movement of materials, people, or information in any process is motion waste.

One might think motion only applies to the product industry but is also used in the service industry.

To run a business to its maximum efficiency, we need to minimize every movement. The quicker we can deliver something to a customer, the more significant our competitive advantage and the market is fierce.

What causes motion waste?

Process design, layouts, and material flow can cause motion waste in a production environment.

But I would like to focus this point on the service industry.

In the service industry, extra processing and motion go hand in hand. I will give an example in the next section, but with most of these, one waste leads to another and vice versa.

Even process design plays a significant role in motion waste if our organization doesn’t have a clear hierarchy and key stakeholders.

Companies should be aware of this, especially SMEs, where every dollar could mean the difference between bankruptcy or financial success.

Examples of motion waste

Sign-offs are a clear example of motion waste in the service industry, particularly in SMEs, where the organizational structure might not be crystal clear.

Imagine you want to introduce anything into your business, for example, a new SEO tool in a marketing agency.

If the hierarchy is not defined, two things can happen:

• You talk to the owner / CEO, and they buy into it, and you introduce it in no time (advantage of small organizations with an understanding of motion waste).
• You talk to the owner / CEO, and they need to evaluate the decision, so they ask you to write a cost-benefit analysis of the tool. Then that report needs to go to the head of finance to see the implications, then to your SEO colleagues to ensure they would also like to use it, and so on…

It might sound simple, but even big corporations suffer from this. A report or study goes from one point to another without clear direction until somebody makes a decision.

Transportation waste

Transportation waste, in contrast to motion waste, refers to all product movement in any facility.

I am talking about any movement in which a person must use carts, forklifts, or other transportation aids to move things from A to B.

What causes transportation waste?

In most cases, as I have already mentioned, for other wastes, it’s poor process design. 

If you are a cook, you probably have a preparation table next to your hob to make it easy to transfer your raw ingredients from the cutting board to the pan.

An article about lean management in the supply chain talks about the issues, from a transportation point of view, the supply chain cascades upstream, and their contribution to waste.

In many companies, purchasing KPIs target the most effective cost per piece they can achieve. If this is all we focus on, nothing is stopping us from negotiating price reduction strategies.

For example, bigger batch sizes, looking for other potential suppliers, or perhaps even challenging purchasing specifications.

In the example below, I mention how bigger batches create transportation waste.

Examples of transportation waste

As I was previously saying, imagine our purchasing manager negotiates a bigger batch size to purchase to reduce the costs.

Usually, the more you buy from someone, the better prices you get. But that could mean a significant increase in the order quantity.

If this is the case, we might have to consider putting all this material in a new location or facility.

Some companies stock raw materials just in case they need to produce more, which, like we previously said, is one of the most significant contributors to many types of waste.

If the original storage location changes, you might have to transport them from further away. It could also lead to more defects or higher overheads as you need more people to move materials.

Talent

Talent is, in my opinion, the most crucial waste to tackle early on.

Talent waste is when we fail to recognize our employees’ potential and abilities, performing jobs not suited to them.

People are what make a business succeed. You know the saying, “if you want to go fast, go alone but if you want to get far, go together.” – African proverb

Failure to recognize your employees will lead to higher turnover and a lack of motivation, and when that happens, defects tend to skyrocket, and margins decrease.

What causes talent waste?

For starters, old-school approaches and toxic business cultures. In these environments, managers tend to pick up the ideas from their employees for their benefit or disregard them completely.

In many of these companies, the importance of an employee is directly linked to their salary or title.

In these organizations, promotions might link to time served rather than talent. This is particularly common in the United States.

Another thing that leads to talent waste is poor hiring practices. If not done correctly, job advertisements, roles, skill assessments, and so on could lead to hiring the wrong candidate for a job.

Once that happens, candidates might stay in a job they don’t feel attracted to or leave with short notice.

Losing experienced and talented employees cost companies way more than their salary. The time invested in hiring, training, and adjusting employees to your company are intangibles that are very difficult to quantify.

Examples of talent waste

Imagine you work in a graphic design studio. A personal assistant to the CEO is excellent with sketches and color theory.

But their role is to organize and plan the day-to-day activities of the CEO. Using their brains for the creative side of the business would mean losing the best planner in the company.

This person took the job to get a feeling for the graphic design studio and hoped their talents would be recognized and given a job as a designer.

Failing to recognize these situations and many others will lead to poor job satisfaction and higher employee turnover.

Behavior

Last but not least, behavior waste is any waste coming from human interactions. 

Unfortunately, I have yet to see a business with 0 behavioral waste, simply because it’s the nature of humans.

Traditional, or old school organizations, suffer from this waste more than any others. It can be pretty devastating for the morale of the employees.

Behavioral waste is a direct root cause of the other eight wastes. When I assess a business and what’s required to improve the current situation, one of the first things I do is gauge the beliefs of senior management.

Without senior management buy-in, no matter what improvements you offer, we won’t get anything done if they are not aligned with what they think we should do. 

What causes behavioral waste?

This is a highly complex question because it would mean defining why humans are humans.

The inner beliefs of each person are different. They are all linked to past experiences, upbringing, and opinions.

Everybody has an opinion, and those opinions don’t need to be the same. That’s why it is so vital to choose clients or companies where people are willing to listen and challenge their inner beliefs.

Example of behavioral waste

Politics, dismissal of ideas, and micro-management are examples of behavioral waste.

In a previous company, I heard the Engineering Director say openly in a meeting to someone, “You are just an idiot with an opinion.”

It’s not only toxic to dismiss somebody’s opinion like that, but it also makes everybody uncomfortable, and shortly after that, many people left the business.

Funnily enough, this Engineering Director is, to this date, still in that role.

I wonder how people get to those roles without raising red flags.

Conclusion

I hope this extensive article helps you identify the types of waste in lean and come up with ideas to remove them.

I would say the most important thing to drive changes and improvements is to challenge current behaviors and beliefs. If you can do that, then the world is yours.

What do you think of the article? Have I missed something? Let me know in the comment section below.