Taiichi Ohno of Toyota defined the following five types of waste (Womack and Jones added the sixth; (ref: Lean Thinking, Jones & Womack, 1996, Simon & Schuster):
1. Errors requiring rework. Rework refers to any operation required to fix or repair the result of another process step. In service processes, management intervention to resolve a customer complaint may be considered rework.
2. Work with no immediate customer, either internal or external, resulting in work in progress or finished goods inventory.
3. Unnecessary process steps
4. Unnecessary movement of personnel or materials
5. Waiting by employees as unfinished work in an upstream process is completed.
6. Design of product or processes that do not meet the needs of the customers.
Ohno has since clarified (2013):
I don’t know who came up with it but people often talk about 'the seven types of waste.' This might have started when the book came out, but waste is not limited to seven types. There’s an old expression: 'He without bad habits has seven,' meaning even if you think there’s no waste you will find at least seven types. So I came up with overproduction, waiting, etc., but that doesn’t mean there are only seven types. So don’t bother thinking about 'what type of waste is this?' Just get on with it and do kaizen.
Learn more about the Lean Six Sigma principles and tools for process excellence in Six Sigma Demystified (2011, McGraw-Hill) by Paul Keller, in his online Lean Six Sigma DMAIC short course ($249), or his online Green Belt certification course ($499).