The purpose of this research is to develop a Lean-RFID based waste identification system (LRWIS) for small-medium manufacturing companies. The specific objective of this research is to develop and implement the LRWIS from integrating the appropriate lean tools and advanced technologies for wastes reduction and inventory management. Subsequently, the framework was converted into a system for a small-medium sized wood processing manufacturer in Malaysia and integrated into a computerized program. The LRWIS can monitor real-time inventory and production status so the manufacturer can optimise the quantity of the primary products and deliver them on time as per the RFID information of each container. The manufacturer can also make decision instantly for controlling and changing different products in the production progress. The system provides simple constructed framework under a low cost infrastructure, yet it is of practical value in reducing the wastes and also optimising the production process.