Any activity that consumes resources but does not create value for the customer. Most wasteful activities fall under the heading of muda and can be divided into two types.
Type-I muda does not create value but is unavoidable with today's technologies and production assets. An example is the inspection of welds to ensure they are safe.
Type-II muda creates no value and can be eliminated immediately. An example is a process with decoupled steps in process villages that can be quickly reconfigured into a cell in which redundant material movements and inventories are no longer needed.
Most of the activities in the value stream that truly create value in the eyes of the customer constitute only a fraction of the total number of activities. Elimination of the large number of wasteful activities is the greatest potential source of improvement in a company's performance and customer service.