How to Solve Your Wastage Problems

According to statistics across the supply chain industry, a staggering 8% of stock ends up as waste. Of course, this is an average. Some industries have far worse numbers than others.

In the beauty industry it’s 10.2%. Within that number, 6.2% is due to overproduction and 4% comes from perished or damaged goods.

Surprisingly, it’s even higher than the food industry. While it naturally suffers from a higher degree of perishable items, accounting for 7.1% of the total, it doesn’t over produce to the same degree (just 2.9%), making up a total of 10%.

The question for these industries must be, with the dawn of AI and big data insights at the beck and call of those with the purse strings, how can these numbers be so high?

An Unforgivable Sin

Having such high numbers of waste in your business is a problem. You’ll know without looking what 10% of wasted stock is worth to your business. Wantonly throwing away stock means lost revenue and lost profits.

Think what you could do with an extra 10%. Think about where you could invest that money. And what that investment could turn into. For some businesses, that 10% might mean the difference between black and red. Open or closed.

But there’s also a sustainability issue associated with this too.

I’m sure, like most businesses, you take great care to show you’re a sustainable business that cares about the world and its future. But allowing wastage of such a high scale doesn’t ring true with the message.

The worst part of all of this? Waste is a very avoidable problem. It might be something many businesses consider ‘par for the course’. But it shouldn’t be for you. And if you take a stand against this assumption, you might well find a huge competitive advantage against your competitors.

Where Does Waste Come From?

Supply chain waste doesn’t just come from throwing away the occasional broken or out of date product. And we’re not just talking about landfill either. In fact, there are seven different types of waste.

1. Transportation

The unnecessary movement of goods, materials, or products between locations causes a massive amount of unnecessary pollution. It means fuel burned needlessly and gases and fumes put into the atmosphere for absolutely no reason.

Not only will this lead to increased costs for your business but potential damage too. For your business, and the environment.

2. Inventory

Excess inventory beyond immediate production or customer demand is one of the more obvious examples of waste. And this is one you’ll be able to see with your own eyes in the warehouse, whenever you venture down there.

Excess inventory ties up much needed capital, takes up valuable space, and drains your resources unnecessarily. So much for being lean.

3. Motion

Moving sporadically might be a good idea for your personal health, but it’s criminal to do so in business.

The wasted movement of people, equipment, or materials will have a huge impact on the amount of money you spend to facilitate it. It might also affect morale. No one likes doing things for the sake of it. And purpose plays a big part in job satisfaction.

In fact, wasting your staff’s time might be the worst waste of all.

You’ll gain inefficiencies, produce more errors, and increase safety hazards.

4. Waiting

Lots of businesses have to wait idly for missed shipments or supply issues. But wasting time because of equipment breakdowns or inefficient scheduling is avoidable and shows a lack of control.

Wasting time will decrease productivity in your business and produce huge lead times that ultimately needn’t be an issue.

5. Overproduction

Some industries, like the beauty industry, purposely overproduce. These companies might know they need buffers in safety stock, should marketing campaigns produce spikes in demand. But consistently overproducing to the degree you have an annual 10%+ wastage is an issue.

This should shine a light on your lack of forecasting capabilities.

Yes, sometimes safety stock is the right focus. But constantly producing more goods or materials than you need isn’t.

Left unabated, you’ll see excess inventory, higher storage costs, and the risk of obsolescence.

6. Overprocessing

Performing unnecessary or redundant tasks is another form of waste. Similar to wasting time, this will have a detrimental impact on the psyche of your team.

If you waste time, resources, and energy without adding value, you might find your staff looking for an employer who values their time and abilities to a higher degree.

7. Defects

Quality, or the lack thereof, hits most businesses. Defects in your products isn’t a problem unique to you. But it’s the degree of the problem that you need to keep an eye on.

You’ll often experience quality issues, errors, or defects in your products or materials.

But what impact does this have? Do you know? And do you know how much of a knock-on effect this is having? It might mean reworks, repairs, disposals, increased costs, and delays.

Sadly, each one of those outcomes can be hugely disruptive. And each one will probably cost you and your business dearly.

What’s the Size of the Prize?

To look at the savings on offer if you tackle your wastage problems, Louise Lyle from Bidfood shares her insights in the video below.

She talks about their investment in technology and the value in seeing the problem as a whole, rather than re actively managing waste week to week.

Their focus is on making their processes easier and their people’s lives easier and therefore finding better results. For this, technology can play a huge part.

You can listen to Louise’s insights and the savings and strides forward Bidfood are making on the video below.