Introduction
Everything that does not contribute to profitability is waste, or in other words, everything that reduces the profitability of the company is waste. Of course, waste is not only generated in for-profit entities. These are also generated in state entities and in all types of non-profit entities. Therefore, anything that is not useful is waste.
In such a way where before we did not see waste, we begin to see it in the way in which things are counted, in the way in which the workpieces are placed on the operator's table, in the way in which the operator selects screws and screwdriver, in the way you screw, and in the way in which the screwdriver is removed and transferred the assembled workpiece. Therefore, the simple task of tightening screws in workpieces is now viewed as wasteful. The only part that adds value to this whole operation is the function of anchoring two workpieces so that they cannot be separated. In such a way, everything that does not directly serve this function is waste.
In some cases, the entire bolting operation is wasteful because there may be a more economical way to fulfill the same function. In any case, this simple example of a bolting operation should be sufficient to demonstrate the amount of waste that is in factories. It is an exaggeration of course to say that everything that works in an organization is waste. But we must ask ourselves how waste has come to take such deep roots in organizations.
All kinds of problems, small and large, grow in organizations on a daily or even hourly basis. We can say with certainty that there is no organization that does not have problems and that every organization is submerged by piles of problems. However, the amount of waste that is recorded in an organization depends on the quality of the activity with which it responds to the problems. These problems are seeds of waste, and ineffective responses to these problems allow the seeds to germinate and grow.
The bottom line is that the waste that spreads and destroys so many organizations begins with simple and wrong answers to different problems. Problems are happening in organizations all the time. People are busy looking for "elusive" answers to problems that occur. The only way to solve problems is to look directly at them and find the real root cause and then remove it. The important thing is to change from patchy solutions to real problem solutions.
Getting used to seeing something that is not normal or logical leads to continually generating new sources of waste. Lacking a way of thinking and reasoning about the different decisions that must be taken in an organization at any given time, leads to the adoption of bad decisions, leads to not thinking and meditating about the inefficiencies that are being generated.
Directors and managers tend to see activities or processes that are not efficient as efficient, and therefore it becomes much more difficult to make them recognize the mistakes they have made for so long. Much more difficult still is to uproot them, when they are what prevails in certain types of companies in a certain region.
These wastes generate their effects on costs, and therefore end up causing their effects on prices, the breakeven point and the profitability of the company. Members of an organization must understand that the costs incurred in their operations may or may not generate added value. By adopting a management approach focused on the detection, elimination and prevention of waste, the organization can significantly reduce its costs by eliminating activities that do not add value. When those costs are reduced as a result of the application of appropriate management techniques, higher levels of benefits are achieved.
Why is waste generated?
- Lack of knowledge or misinformation about the different types of waste and their consequences on economic results Failures in decisions due to lack of knowledge, experiences and an appropriate methodology or system to make decisions Due to lack of corrective measures once they are detected. Inability to see and understand the meaning of waste. Lack or absence of sensitivity towards the issue Due to a culture in the company and in society where the imperative need to fight against waste is not duly taken into account Due to lack of competition due to the existence of trade barriers Due to lack of internal information in this regard Inability to diagnose Lack of knowledge about the different methods and tools to eliminate and prevent them.Inability to plan, organize, direct, coordinate and control Focusing on solving the symptoms and not the root causes Wrong positions regarding control and resource allocation Irrationality when managing resources and making decisions From the factors external to the company that generate waste, we have from the poor quality of public services in the field of energy, communication and transport, labor laws contrary to the new forms of organization of production processes, tax systems contrary to productivity and that discourage investment and continuous improvement.Irrationality when it comes to managing resources and making decisions.Of the factors external to the company that generate waste, we have from the poor quality of public services in energy, communication and transport, labor laws contrary to the new forms of organization of productive processes, tax systems contrary to productivity and that discourage investment and continuous improvement.Irrationality when it comes to managing resources and making decisions.Of the factors external to the company that generate waste, we have from the poor quality of public services in energy, communication and transport, labor laws contrary to the new forms of organization of productive processes, tax systems contrary to productivity and that discourage investment and continuous improvement.tax systems that are contrary to productivity and discourage investment and continuous improvement.tax systems that are contrary to productivity and discourage investment and continuous improvement.
The culture of waste
Sociology provides us with a series of important concepts that allow us to describe the culture of waste.
When many people in a society do the same thing in more or less the same way over a long period of time, a social habit develops. This repeated way of thinking and acting is a cultural guideline.
The workers consider themselves responsible for producing but they neglect order and cleanliness. When a problem arises, it is not something that concerns them but is someone else's responsibility. They focus only on producing goods or services, but are not concerned with either the efficiency or the quality of their work. They are there to fulfill their function, ignoring the other activities and processes of the organization. For many, walking around offices is their job. These are some of the infinite patterns of behavior that constitute the culture of waste. Workers and managers continue to do things the same way because they have learned that this is how it should be done.In this way, the pattern of behavior is the uniformity of acting and thinking that occurs regularly among a plurality of people.
Behavior guidelines are not just outside activities; they are also common ways of thinking and believing in a culture, and contain beliefs, meanings, values, and attitudes. People ignore the productivity, costs, quality and competitiveness of their companies. People do not care to develop professionally, they are only interested in receiving an amount at the end of the month, whether or not they do something productive.
EB Tylor defines culture as "this complex totality that includes knowledge, belief, art, morality, law, custom, and any other habit and capacity acquired by man as a member of society."
Within this conceptual framework we have those workers who are only specialists in welding, or only attend metal cutting work, under no point of view are they willing to do different jobs and be polyfunctional, much less are they asked to do cleaning, transport and control tasks.
In this culture of waste we have the thought or posture of "we and them", "we think and they are only to obey and use their hands." This culture of wastefulness is something that invades the attitudes and habits not only of workers, but also of managers and entrepreneurs.
Thus, we have the cost manager who is limited to recording and calculating costs based on the information provided, completely ignoring the veracity of the data, and the operation of production processes. Therefore, he remains locked in his office, he will never see the processes with his own eyes, limiting himself to handling figures.
This habit of thinking and doing things is something that even educational entities are transmitting. Cost teachers tell them to account for drawing, machining, or die-making operations, completely neglecting the meaning and characteristics of each of these operations. These learned bad habits are then transferred to managerial or office positions. Only repetitive and meaningless tasks are performed in exchange for a salary.
Politicians are clear representatives of this culture of waste. Few speak of the fiscal deficit, and much fewer or none speak of the causes or reasons that motivate them.
We have these societies in which the loss of time is a habit that is taken as normal, long lines to do official procedures, notable losses of time queuing at banks or public offices. These are societies in which time is worthless, and where employees are hired to move papers from one place to another, and then queue for their presentation or money deposits.
State waste is the mother of all waste, generating waste, corruption and economic aberrations in all other sectors of society.
Symbols of a society that promotes waste
There are a series of classic elements of a society for which "there are no problems with waste", a society in which a disregard for waste and a lack of will for continuous improvement are generated in the unconscious of people. Some of these symbols are themselves a clear and forceful sign of waste, others are symbols of factors that encourage unproductiveness and waste.
- Excessive number of non-working days. Countries in which to promote tourism production is destroyed. Having twenty days off comes at the cost of losing a month of work. Something that no high-income country allows. Labor agreements that define high levels of specialization and do not promote the multi-functionality of workers. "I am an office worker, do not ask me to clean the office", "I am in charge of producing, maintaining the machines and cleaning the sector that someone else does", "my hours in the company are eight a day, if something is left without doing will be done tomorrow. ”Use and perception of time. Any procedure involves long queues, or many days for its completion. Time is worthless, and people's time much more. In all of them, a mentality of "let's not rush" is created.Arriving late to jobs, or leaving early becomes the norm A country with strong internal regulations, where everything requires special permits or payment of duties Strong customs protection through tariff or para-tariff measures, which It leads to protecting an industry too much by making it incapable of competing internationally. Training is more of an award to employees, or a way of showing concern and work on the part of the Human Resources area, than of an action that responds to a preconceived plan to improve the productivity and competitiveness of the company. Training is considered an expense and not an investment. A society where it is difficult to hear from leaders, politicians, businessmen and trade unionists talk about cost-benefit analysis, or opportunity cost.In these societies it seems that there are no costs, they are all benefits as in the Island of Jauja High levels of public employment High social disorder, with examples such as roadblocks due to demonstrations, roadblocks, lack of concern for cleanliness in public spaces, lack of respect for private property with stickers on walls and buildings. Lack of social and judicial sanctions for acts of corruption. Being this a strong motivator of fraud, which in itself generates waste, but also generates in employers and workers the idea that it can only be won based on cheating and crime. With this, companies are discredited, the quality of their processes, products and services do not attract the attention of those responsible. High inflation, significant level of unemployment and underemployment.High degrees of contamination.
Many may be against this list of symbols of the unproductive society, but it is enough to make a comparison between countries to see that these symbols are clear examples of a society in which waste is not taken into account. A society with high levels of waste generates low levels of productivity, a lack of international competitiveness, low living standards for a large part of its population, low levels of economic and social development, apart from fiscal and monetary problems.
Symptoms of high levels of waste
The symptoms that are detailed below can be observed with the naked eye walking around the facilities and areas of the organization. They can also be reached in talks with managers and staff, or they can be reached through the analysis of accounting and statistical data. You also get to know many of them by listening to customers, users and suppliers.
- High degree of disorganization, disorder and lack of cleanliness in some or all sectors of the organization (the Five S do not apply). This leads to preventing a good use of the spaces, inconveniences for a good management and control of the processes (both productive and administrative), interruption of work, loss of time, accidents, problems in the quality of products or services, as well as in the maintenance of machines and equipment. Low level of staff satisfaction, loss or misplacement of supplies, tools and information. It also creates the basis for the commission of fraud: high inventory levels, whether it is supplies, products in process or products for sale. Very high financial, maintenance, storage and management costs accompany these high inventories.These high inventories end up hiding the inefficiencies of the processes High levels of breakdowns, which generate higher repair costs, waste due to quality failures, high unproductive personnel due to excessive downtime High levels of defects and complaints from internal customers and external, which causes scrap and reprocessing. High and continuous returns for failures and defects. Generating losses in sales and customers Lack or absence of reliable controls Derisory levels of internal control Problems with collections and defaults Liquidity and solvency problems Difficulties in reaching and exceeding the Balance Point High number of days to cover fixed costs Lack of competitiveness against its competitors in terms of quality, price and customer service.Discouragement and lack of staff satisfaction Lack of reliable information Low profitability Structural costs and high and continuously growing products / services (in relation to the costs presented by competitors) Important employee turnover Excessive time for changes of tools, machine preparation and adjustments Drops in sales and loss of customers Payment problems with suppliers Constant repetition of the same problems, errors or failures in organizational processes, whether it is production, administrative, commercial, credit or logistical processes. Lack of compliance with delivery times to customers. High processing times, much longer than those of competitors. Production or processing in batches, which leads to excess products in process,as well as late-detected quality defects High degree of blurring when diversifying the production of goods and services beyond the organization's management capabilities Prices and costs of goods and services higher than those of competitors. High staff turnover.
These symptoms are both causes and consequences that generate waste and higher costs, which results in less competitiveness and low or no profitability.
It is one thing to perceive the symptoms, either from the managers of the organization or from the consultants, but it is another thing to carry out a more in-depth task of analysis to systematically detect waste and quantify the magnitude of it.
Testing for the detection and quantification of waste
This should be done by using a list with the various types of waste, analyzing whether, given the type of processes and organization, the most effective systems and methods are applied to avoid the generation of different types of waste.
The list should be used to verify whether or not each of these types of wastes are being generated and proceed to quantify them.
New waste list
- Waste due to lack of focus Waste due to overproduction Waste due to excess inventory Waste due to excess of fixed assets in quantity and capacity Waste due to excess personnel Waste due to breakdowns Waste due to accidents Waste due to pollution Waste due to high staff turnover Waste due to high customer turnover Waste due to bad debts due to collection losses Sales Waste due to occupational illnesses and accidents Waste due to failures and defects in products or services Waste due to inefficient processes Waste due to inefficient product or service designs Waste due to erroneous information or out of term Waste due to quality of materials and supplies Waste due to unacceptable quality of machinery and tools Waste due to failure inthe quality of the personnel Waste from internal transportation Waste from waiting times Waste from excessive movements Waste from excessive bureaucracy Waste from energy waste Waste from variations in exchange rates, interest rates and raw material prices Waste from fraud Waste from serious control failures Waste from lack of insurance Waste due to lack or defects in contingency plansinterest rates and prices of raw materials Waste due to fraud Waste due to serious control failures Waste due to lack of insurance Waste due to lack or defects in contingency plansinterest rates and prices of raw materials Waste due to fraud Waste due to serious control failures Waste due to lack of insurance Waste due to lack or defects in contingency plans
The fight against waste. Everyone's task.
All areas and all individuals in an organization must be fully committed not only to generating income, but also to fighting waste.
Each process and each area can be a generator of waste, therefore everyone must be committed to identifying and warning about them.
On the other hand, certain sectors must re-conceptualize their approach and strategies.
In such a way, Internal Audit does not fulfill its functions properly if it stops worrying about the organization's waste. To some extent Internal Audit must embody the fight against waste. Waste that takes many forms, from the loss of resources due to internal fraud, to the loss of resources due to failures in production processes, quality problems, high delinquencies and bad debts, and excess inventories.
The financial area must pay special attention not only to the waste that is incumbent upon it due to its own decisions and internal processes, but also due to its relationship with the other sectors of the organization, and how the waste generated in these other areas hinders liquidity and profitability of the company.
The accounting area cannot remain oblivious to the problem, so it is worth asking to what extent does it record the wastes that affect both the Equity and the Company's Results Chart in the accounting or off-the-books record? Is the accounting area in a position to report on existing waste and the magnitude of it? What is the real cost of the goods and services, and how much is the waste that affects the costs of goods and services?
Are the engineering and production areas aware of the level of waste that is generated in the processes for which they are responsible, and of the magnitude that they have? Most of those responsible for these areas consider the processes correct and only attend to incremental measures, not seeing all the waste due to concepts that they must remove from the planning of their activities.
Conclusions
Analyzing the external factors that affect the waste generated in organizations not only aims to show the way in which the environment influences the running of the company, but also to be aware of how this environment with all its ideas and preconceptions influences the way in which it is planned, organized, directed and controlled.
Waste exists, and it exists even in the best companies, the difference is not only in their magnitude, but also in the way they react to them. While some put them aside and happily include them in the costs of goods and services, others are concerned with detecting, eliminating and preventing them. For the latter, it is enough to give names to become aware of them: Toyota, Honda, Suzuki, Samsung, LG, BMW and Toshiba are a clear example of companies that are at the peak of global competitiveness.
Of course not all companies can claim to be Toyota, Honda or Samsung, but that is the way. It is a path not only marked by technological innovation but also by the continuous improvement of each and every one of the business processes.
A company cannot be happy to throw one or more months of billing into the street due to its lack of awareness, attitude and aptitude in the fight against the misuse of resources. Mismanagement of resources cannot be considered valid. After all, if there are areas of industrial engineering, costs and finances, it is to make processes and the use of resources more efficient and productive.
Companies that register losses in their results can completely turn the situation around if they detect the leakage points through which resources are filtered and adopt decisions for their elimination and prevention.
Bibliography
- Improvement of the Added Value in the Processes. William Trischler. Management 2000. 1998. Quality Management. Bruce Brocka and M. Suzanne Brocka. Editorial Vergara. 1994. Transforming the Income Statement. Tony Hope and Jeremy Hope. Editorial Paidós. 1997 Business Philosophy. Harvard Business Review. 1978 Kaizen. Lefcovich, Mauricio. www.monografias.com. 2003.
