In most systems there are several components, each operating at a particular efficiency. In my series hybrid vehicle, for example, there is gasoline delivered with about 82% efficiency, an engine running at 25%, a generator at 90%, a battery bank at 90%, a traction controller at 98%, a motor at 90%, a transmission at 95%. etc.
Suppose you have 10 components in series, each at 90%. .910 is 35%. (Not great, but actually slightly higher than the efficiency of US power generation from fuel to outlet.)
Suppose you back off on efficiency of each component? How much can it matter? Let's try 50%. .510 = .00097 For every kilowatt in you'd get 1 watt out, and 999 watts of waste heat.
Let's try 80%. .810 = .11
Try 95%. .9510 = .59
So what's the lesson here: every link of the chain is important.