What is the purpose of minimising waste in a business enviroment?

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pohnpei397 eNotes educator| Certified Educator

The main reason to avoid waste in a business environment is to reduce costs and to increase productivity.  This allows a firm to get the maximum possible profit and the maximum possible market share. 

In today’s world, most businesses face tremendous amounts of competition.  Therefore, they need to reduce waste as much as possible.  If they do not, they will have higher costs.  Imagine that Company A and Company B both make cars.  They have to buy tremendous amounts of steel to make into those cars.  Let us say that Company A needs 1 ton of steel to make a small car while Company B is more wasteful and needs 1.2 tons of steel to make its small car.  Company B is going to be less profitable because it is having to spend more on steel for each car that it makes.  It is losing out on profits and market share because it is not using the steel as efficiently as it could be.

Businesses have to buy the things they use to make their product.  Every time they waste some of what they have bought, they are essentially throwing money away.

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