How to Address Inventory Wastes Identified by LEAN Manufacturing

Waste #6: Inventory—Part 7 of 8: Addressing the Seven Wastes in LEAN Manufacturing with Corporate Kiosk

This week, we’ll be wrapping up our series on the seven areas of waste identified in LEAN manufacturing. It’s a topic we’ve been revisiting since it generated plenty of interest when we first mentioned it a while back. Today’s post provides a little more depth on the wastes involved in maintaining inventory. Conventional wisdom regards inventory as a necessary evil. But LEAN manufacturing seems to view it as evil, period!

The word inventory covers a lot of territory. It is commonly called WIP (or Work in Progress). Businesses need things to make things, of course. But piling those things up can be counterproductive. Inventory can include:

Raw materials needed as part of the production process
Parts and sub-assemblies often stockpiled to “stay ahead” of production
Items in mid-production awaiting completion

Most managers justify this as logical “protection” against running short. But this line of thinking ignores other important considerations.

LEAN Manufacturing Reveals Hidden Wastes

If you think inventory is your “safety net” you might be surprised to find it really could be your profit-draining away, especially when there are better ways to get that production security. Here are three ways inventory doesn’t save, it costs.

Inventory Takes Up Space

Whatever is not moving through your production process at any given time is taking up space. That applies to raw materials, parts, office supplies, and anything else that, for whatever reason, isn’t needed right now. You’re paying for all your space, and if you are not using it to produce value to your company or your customers, you are wasting it.

Inventory Takes Up Money

Think of your inventory as the money you spent for it. If it sits idle it is not, at that point, contributing anything to your bottom line. In fact, it represents an investment that is unavailable to you for other, perhaps more profitable, purposes. There is even risk involved; needs and markets can change. Thus, if the demand for those materials or “half-made” products changes, you could take a loss on them.

Inventory Signals Missed Opportunity

There’s another reason inventory should make you less satisfied, not more. A buildup of inventory at any point suggests that the efficiency of earlier steps in the process surpass that of later steps. If the finishing steps lack the capacity to complete production, perhaps that part of your process should be maximized to make use of those materials waiting. Turn that inventory more quickly—into income.

Forget “Just in Case,” and Think “Just in Time.”

Hopefully, these LEAN manufacturing principles have begun to show you how that inventory security blanket is anything but. Getting materials just when you need them is simply the better way. When it comes to printed business forms, catalogs, flyers, sell sheets, promotional products and much more, Corporate Kiosk™ is the LEAN answer.

Corporate Kiosk is our advanced e-procurement technology. Your company can use it to keep track of inventory in real time. As a result, you always know what you’ve got. You store pre-approved forms and collateral pieces behind an online portal. Authorized employees can access and receive them quickly, without wasting any time recreating a piece or getting it approved.

In addition, you can set automatic re-order thresholds, so you automatically avoid both dangers: stocking up needlessly, and running out. Furthermore, thumbnail images of every product in the system eliminated any need to “order to see it what it looks like.”

Replace WIP with MIP (Money in Pocket)

We’re nearly finished with our series on LEAN Manufacturing and the seven areas of waste it identifies. Check back Thursday when we look at waste number seven.

I hope today gave you a different perspective on inventory. We’d love to talk to you about how we can help your production process avoid the need for inventory, and get your company to its maximum productivity level. Contact Superior today, or get in touch with one of our very talented sales reps. LEAN on them for some very constructive advice for your business.