Why Waste is a Threat to your Business and How to Eliminate It

Written by Rhea Rahme, December 2020. 

Regardless of the industry that your business is in, waste is a constant threat to your success. What we mean by waste is any process that takes more resources than necessary. Time, money, and your employee’s talents are all resources that should be mobilized for one unique purpose: delivering the best quality to your clients so that they are happy. When your business is not optimized, things like processing times can take longer than they should, which ends up costing you more money and diminishes your client’s experience. 

Whether the cause is not enough business automation or whether it is the operational side of your business that needs to be optimized, the efforts to eliminate waste by automating your business processes, with an ERP tailored to your business, have a big return on investment. 

Lean management is an approach that was first put in place and systemized by Toyota who named it Six Sigma and is now a standard in waste elimination that is used by organizations worldwide. Lean management cuts back on waste and produces the desired outcome faster, with fewer costs, and without frustration from employees.

 

Main Sources of Waste and How to Fix It 

Defects

Defects don't only concern you if you are working in the manufacturing sector. In fact, any process that needs to be re-worked due to non-optimized processes or miscommunication is considered a defect.    

For example if your field salespeople have to show a catalog to a prospect and get their order and signature using a triplicate form, not even sure whether the items are available or when to promise the shipment, this is a defect waste. Instead, an efficient ERP will have the order and the customer signature captured directly onto the mobile device and the items in stock reserved for that customer. 

Overproduction

Overproduction is one the most serious types of waste that a manufacturing organization can have.  It locks capital, consumes resources that would have been beneficial elsewhere, consumes warehouse space and runs the risk of items expiring where applicable. 

An efficient ERP knows exactly the specific stage where each component of the finished good is needed, knows the delivery time of that component, and will ensure that production orders are released just in time to satisfy existing sales orders, and purchase orders are placed just in time to be ready for the production line when needed.

Waiting

In today’s fast-paced business environment, where consumers and corporate customers are less and less patient to get the products or services they need, time is of the essence.  Waiting for someone to transfer a customer order into a purchase order from your suppliers is a waste of time that will put your organization at great risk.  Risk of losing your customers and risk of giving your market share to your competitors. 

An efficient ERP will automatically identify the missing components for a sales order, select the supplier that can best satisfy all the customer’s requirements, including delivery time and email that purchase order to the selected supplier with direct or drop shipping instructions, as needed. 

 

Non-Utilized Talent

Information technology has converged from every previous facet to satisfy today’s competitive business environment.  No longer do we need people to exit one program and enter into another just to complete a business process.   

For example, modern smart ERP’s now know the exact point in the sales fulfillment process at which to: 

-Email a sales order confirmation

-Which customer should receive such an email

-Who, at the vendor or at the production floor, should receive the corresponding purchase/production order 

All of this without any user involvement.   

Your people have better talents for you to exploit than just sending emails or doing routine tasks that computer programs are better suited to handle.  Your people have talents to handle customer and vendor communication, marketing and analysis with much higher returns on your investment. 

Transportation

If your customer is closer to your suppliers than your warehouse, there is no point shipping the products to your facility then to your customers.  If your truck driver has delivered the goods to the customer and collected the payment, there is no need for that truck to come back to your warehouse to deliver the triplicate delivery forms signed by the customer or the cash or check to accounting.  All of these represent transportation waste. 

An intelligent ERP will automatically assign the shipping address based on where the customer is located.  An intelligent ERP will instantaneously be informed that your truck driver has effectively delivered the merchandise to your customer and even got their signature recorded, and that payment is now in your account paid automatically using the driver’s mobile device.  

 

Any process consuming resources that does not add value to your customers is a waste that you have to hunt and eliminate. 

Inventory

Overstocking or understocking has plagued the manufacturing and distribution industries for a long time.  Knowing the secret formulas for producing or stocking exactly according to demand has long been a mysterious science that many distributors find difficult to master. 

Technology comes to the rescue.  Modern ERP’s are equipped with manufacturing resource planning modules and demand projection analysis, which can substantially ease that problem and through self-learning abilities, these modern ERP’s will give you the best possible guess of the expected demand for your products or services, by season, product or any other parameter that you judge to be influential.

Motion

If your warehouse staff is picking products from the bins to fulfill several customer orders, imagine the motion waste that can happen if that staff has to pick these items in a haphazard manner where one item is in a bin at the beginning of the warehouse and the next one is at the end of the warehouse.  This waste costs a lot in fulfillment delays, losing precious time that you could have used to delight your customers with your speed of delivery, and not the least, staff fatigue and unproductivity. 

A smart ERP will produce a smart Pick List where items are picked in the sequence of picking motion, because it knows exactly in which bin each of the items on each sales order is stocked, and the geographical location of each bin. 

Extra Processing

You have worked hard to set up an efficient fulfillment process for your customer orders.  They are now entered, processed and fulfilled smoothly with very little human interaction.  But what about Accounting.  Once your order leaves the warehouse, who will advise Accounting to invoice.  Again a manual step here makes your automated total process incomplete. 

Modern ERP’s will automatically transfer customer orders to invoices as soon as the shipment is recorded, leaving your staff to focus on what matters most, customer experience. 

 

With a tailored ERP solution, your operations can be integral parts of one system that works seamlessly and efficiently to produce the best outcome. 

In today’s fast-paced business environment, where consumers and corporate customers are less and less patient to get the products or services they need, time is of the essence.  Waiting for someone to transfer a customer order into a purchase order from your suppliers is a waste of time that will put your organization at great risk.  Risk of losing your customers and risk of giving your market share to your competitors. 

An efficient ERP will automatically identify the missing components for a sales order, select the supplier that can best satisfy all the customer’s requirements, including delivery time and email that purchase order to the selected supplier with direct or drop shipping instructions, as needed. 

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