The Quiet Profit Killer You Can Fix Fast

High Operational Waste: the quiet profit killer you can fix fast

High Operational Waste functions as a hidden profit destroyer which businesses can resolve through quick solutions.

Leaders who initiate their business expansion process encounter difficulties in reaching financial stability. High Operational Waste serves as the main cause because it represents time and effort and materials that fail to generate value. The problem manifests through rework activities and idle resources and emergency response efforts. The problem becomes evident through two main signs which include missing deadlines and exceeding page limits.

You can fix this fast, and no, it doesn’t take layoffs. The first step involves waste exposure followed by short periods of waste reduction. The reduction of waste leads to an increase in available capacity. Cost per unit falls. All parties involved including buyers and boards and teams take notice.

What waste looks like in real numbers

A factory or service team with High Operational Waste spends money twice: once to do the work, then again to fix it. The double spend exists within individual line items of the transaction.

Cost leak map

Create a “leak map” which tracks down all the leaks that occur in labor, materials, assets and time. The organization should measure the total number of rework hours and scrap rates and rush freight expenses and overtime work and equipment downtime and waiting periods. Convert each leak to currency (SAR/USD). Now you have a daily cost-of-waste number. The high operational waste rate generates 5%–12% of revenue according to this calculation.

Signal metrics (plain definitions)

First-pass yield: jobs done right the first time.

The OEE (Overall Equipment Effectiveness) formula consists of three elements which include uptime and speed and quality.

The target production speed which matches customer requirements is known as Takt time.

Touches per order: handoffs; fewer is better.

Track these weekly. The waste reduction rate will increase when they improve their performance. The system will continue to produce High Operational Waste if the stall condition occurs.

Root causes you can fix in a quarter

Waste exists as a natural process that does not represent any form of moral deficiency. It’s design failure. The design requires modification because the behavior pattern continues to exist.

Process variation

Variation is doing the same work many ways. The best-known method should be standardized before conducting a light audit. Services need to use checklists and templates as part of their operational framework. Plants require designated work areas that need to be identified through simple boundary markers. Variation is a core source of High Operational Waste.

Data and handoffs

The existence of poor data quality requires organizations to perform additional work. The process becomes more difficult because of missing fields and unidentified owners and delayed approval times. Each process should have its own page which includes trigger information and owner details and inputs and outputs and SLA (promised time) specifications. Cut approvals to the vital few. The removal of each handoff results in a decrease of High Operational Waste.

Asset utilization

The equipment and vehicles that remain unused result in unnecessary financial waste. Measure the number of hours that were planned against the actual number of hours worked. Preventive maintenance produces better results than breakdowns do. The organization should redesign schedules and consolidate assets when average utilization rates fall below 60%. Idle time is High Operational Waste in disguise.

The 90-day elimination plan

You do not need a 12-month transformation. Your project requires a small team which should define specific goals and establish a project timeline.

Weeks 1–2: see it

Choose one value stream from the available options which include orders, claims and production line. Map it end to end in one day. Time the top five steps. Baseline yield, rework, and lead time. The waste board needs to operate as a daily updated system which makes information available to the public. Link the board to [Internal Link 1] so teams can follow the method.

Weeks 3–6: fix it

Standardize the top three steps. Remove one approval. Create an extensive list of potential exceptions which should include all possible cases. The work needs to be distributed based on the time period of one hour or one shift. Set aside one hour each day to solve problems at the production line. The project will generate instant results which include achieving a +5 points first-pass yield and reducing rework by -15% and enhancing workflow efficiency. This is how High Operational Waste starts to fall.

Weeks 7–12: lock it

Install owner dashboards. The bonus system should reward employees based on two performance indicators which are first-pass yield and on-time delivery. The organization needs to schedule one vendor-led maintenance day to reach its goal of increased system availability. The organization needs to establish new procedures as Standard Operating Procedures (SOPs) while providing training to all staff members. Share wins on [Internal Link 2] to spread the template. The objective for week 12 needs to achieve a 20% decrease in High Operational Waste throughout the chosen stream.

GCC and KSA: the urgency and the upside

The GCC region experiences unpredictable price fluctuations for its input materials. Skilled labor is scarce. Logistics operations reach their peak operational requirements during peak seasonal periods. The result of these elements produces High Operational Waste. The region enables operators to achieve success through their manufacturing and service excellence programs by mastering time management and variation control.

Make it real. A Riyadh e-commerce warehouse shipped 8,000 orders daily. The error rate for picking reached 2.4% while overtime work occurred during every weekend and return items accumulated in large quantities. Standardized pick paths together with labeled bins and two-minute quality pauses for each cart delivery delivery led to a first-pass accuracy rate of 99.2%. Overtime fell 60%. The team freed SAR 3.5m in cash within two quarters.

The mid-cap metals fabricator in Dammam generated 18% scrap from its custom work operations. The project includes a three-week “first-article” review together with a weld template and improved nesting cut scrap reduction to 9%. EBITDA reached a 200 basis point increase. Customer churn eased. The modern customer views the company as a platform rather than a business that can be fixed. The main advantage of minimizing High Operational Waste exists in its unobtrusive nature.

Simple rules that keep waste down

Set one owner per process. Publish the method. Time the work. Limit work-in-progress. Make defects visible today, not month-end. The organization needs to establish a reward system which motivates teams to stop production for identifying and fixing core problems. Above all, keep improving weekly. The decrease of operational momentum creates situations which increase the chances for High Operational Waste to reappear.

If you do one thing this month, do this: create a daily cost-of-waste number and print it on the board. When the number drops, celebrate. Start your day by identifying the root cause of the problem at the workplace and resolve it before taking your lunch break.

References:

Internal Links:

https://www.3msbusiness.com/gcc-firms-toxic-culture-lost-profits

https://www.3msbusiness.com/poor-inventory-management-and-how-to-solve-it

External links:

• PwC Middle East — Operations Transformation (2023): https://www.pwc.com/m1/en/services/consulting/operations.html

• McKinsey & Company — Operations Insights (2024): https://www.mckinsey.com/capabilities/operations/our-insights

• World Bank — Manufacturing, value added (2021): https://data.worldbank.org/indicator/NV.IND.MANF.ZS

• Saudi Ministry of Industry and Mineral Resources (2022): https://www.mim.gov.sa/",