Rework: Wasted Time Wasted Money

The term “rework” may not be as commonly heard as it once was, but it’s still highly relevant. Originating in manufacturing environments, rework is closely tied to the concepts of Quality Control, Six Sigma, Lean processes, and the broader Japanese efficiency movement.

In a manufacturing setting, rework refers to items or batches that need to be sent back through the production line due to defects or substandard quality. The term is closely linked to the Japanese concept of “Muda,” which translates to “waste”, an inefficiency caused by poor quality, overproduction, or time delays.

But rework and waste aren’t exclusive to manufacturing. They are present, in varying degrees in all organisations. They manifest in various ways. In your organisation, how much waste and rework occurs due to the following?

• Credits issued to customers: Incorrect pricing, wrong items shipped, or duplicate orders
  
  
• Product returns: Defective products, incorrect shipments, or mismatched quantities
  
  
• Pricing errors: The effort required to identify and correct these mistakes
  
  
• System issues: Incorrect part numbers, prices, or customer details
  
  
• Futile deliveries: Returned items due to transport companies being unable to locate customers
  
  
• Problems with discounts or promotions: Outdated specials still applied, incorrect discount levels, or bundle orders with only some items on sale

Each of these represents rework as your team spends time fixing errors, adding waste rather than value.

Surveys show the average ratio of credit notes to invoices is around 7%. Processing an invoice can cost between $15 to $40, and the cost of issuing a credit note is much higher. Not only does it require time to investigate the reason for the credit, but approval must also be obtained before it’s issued.

Consider this: If your business issues 500 invoices per month and you’re operating at the average credit-to-invoice ratio, you’re effectively spending the equivalent of one-third of a full-time employee’s work hours just handling credit notes. And that’s before accounting for other sources of rework.

Want to operate more efficiently and reduce costs? Stoke Consulting has helped many businesses streamline their processes, connect frontline workers with actionable, real-time customer feedback and hence cut down on rework.

Contact us today to find out how we can help you improve your operations.

Rod Wallace

Stoke Consulting

Previous line management roles (Supply Chain, Customer Service, Logistics, Sales Management) in SME businesses through to large companies have underpinned Rod’s success with a variety of clients. Key solutions in previous engagements have included Project Management, Business Improvement programs, Facility Development and Relocations and Company Governance.