What Waste is and What You Can do to Stop It
Fraud. Waste. Abuse. All three are significant issues that can undermine the financial health and operational efficiency of any organization. While all three are detrimental, waste is sometimes the most misunderstood, yet it has the potential to cause the greatest monetary loss.
Understanding waste
Waste is defined as “Intentional extravagant careless or needless expenditure of Exchange funds, assets or resources, including intentional improper practices not involving prosecutable fraud.” Unlike fraud, which involves “willful or conscious wrongdoing that adversely affects Exchange interests,” or abuse, which “consciously and intentionally violates or abuses Exchange directives, policies or procedures which result, or could result, in loss or injury to the Exchange,” waste often stems from inefficiencies, poor management and lack of oversight. Some examples of waste include:
- Continued and unjustified commitment of excessive resources to accomplish a job.
- Disregarding and not correcting procedures or operations identified as inefficient or conducive to losses.
- Disposing of assets (including merchandise) rather than taking cost-effective action to salvage, repair or otherwise make serviceable/saleable.
Workplace cultures that seamlessly adopt “the cost of doing business” without having a strategy to move forward can be an ongoing root cause of waste and continue losses within an organization.
Identifying waste
Identifying waste is key to supporting the bottom line. Looking closely at the definition, waste results from deficient practices, systems, controls and decisions. Everyday practices can be a great start in identifying waste in the workplace.
Harvard University-School of Public Health reports that “food ‘loss’ occurs before the food reaches the consumer as a result of issues in the production, storage, processing and distribution phases.” Adopting best practices can result in customer satisfaction as well as reduction in waste. Methods of doing so may include special offers (i.e., BOGO); reduction in inventory; and practicing the “first in, first out” retail method to avoid expirations and storage issues.
Waste is not restricted to food. Administrative errors, poor project management, prioritizing price over quality and blatant disregard of standard policies and procedures also cause waste. Correctly using established Exchange internal controls, in conjunction with a thorough decision-making process, is sure to foster the “Courage to use good judgment.”
Exchange activity
Identifying and addressing fraud, waste and abuse are integral to an efficient and effective workplace. Through the years, the Exchange has adopted programs—such as business intelligence, directorate toolboxes, contact centers; and inventory tracking—as resources for all Exchange associates to ensure the maximum benefit of “Family Serving Family” to our associates and service members by reducing fraud, waste and abuse.
Remaining vigilant
Reporting instances of fraud, waste or abuse is a critical step in safeguarding the organization’s resources. To effectively address concerns, the Exchange provides the opportunity for associates, customers and vendors to report concerns involving fraud, waste and abuse to the Inspector General (IG) Hotline.
The IG Hotline provides a standard, confidential, anonymous means for reporting through the IG home page or at Hotline@aafes.com. When submitting a complaint, it is important to provide as much information as possible including, but not limited to: location, times and dates, and any evidence supporting claims of wrongdoing.
The IG Office continues to make fraud, waste and abuse awareness a priority and conducts a survey at least every three years. The 2024 fraud awareness effort includes the IG Office contributing articles to the Exchange Post, culminating with the results of an enterprise-wide fraud awareness survey. More information regarding the survey will be released closer to its release in October.
