Wastage in operations + causes


The possible causes of such waste are numerous and include:

1. Faulty material.
2. Inadequate inspection at earlier stages.
3. Inadequate manufacturing tolerances.
4. Inadequate supervision.
5. Inefficient labor
6. Faulty equipment.

Cost reduction action in these fields will largely depend upon the disclosure of evidence pointing to one or other such cases of wastage. This presupposes the rigid control of excess material issued to replace material and parts spoiled in the course of manufacture. It should be rendered impossible for such supplementary material to be obtained except upon the authority of some responsible person, who should ascertain the reason for the request.

The documentation necessary to the operation of the business should provide a further aid to control and should be designed to furnish adequate data forr this purpose and also for the guidance of designs and purchasing departments in determining material specifications.

These recommendations may appear to be elementary in conception, but there are few concerns in which a systematic investigation of material usage, supported by scientific and objective analysis of the problem, is carried out as a regular feature of management.

The collection, disposal or reclamation of waste or scrap material cannot be divorced form this subject and should receive careful attention as possible means of reducing material costs.

Labor costs

Waste labor, as reflected in high costs, is to some extent one further effect of the primary causes of manufacturing inefficiency already referred to in other connection, e.g.

1. Faulty factory layout and production methods.
2. Product design.
3. Inefficient production planning and coordination of activities.

Additional causes of waste in this sphere may be lack of suitable training facilities and inadequate utilization of the principles of incentives, or, on the other hand, the use of unsoundly based incentive schemes.


The judicious use of incentives as a stimulus to increased productivity should be seriously contemplated as part of any cost reduction programs.

The scope for the introduction of incentives in Industry is considerable and is not restricted to financial reward for effort, although the direct effect which this popular form of incentives has upon individual output is a vital factor in reducing costs.

Non-monetary incentives, e.g. canteens, recreation and sports facilities, medical services, joint consultation and training, may also be utilized with advantageous results.

Their purpose has been aptly stated to be to create the right conditions under which direct incentives can have the best chance of realization. They are introduced to make conditions of employment attractive as well as beneficial to the employee.