Business Builder Bob - Just-in-Time #4

Why Inventory is the Root of all EVIL...


To put it simply, inventory hides the problems your team should be working on.

Picture a lake that is full of large rocks that are hidden below the surface. Those rocks represent quality problems, equipment downtime, work-force imbalance, low yields, etc. The water level is inventory and it is hiding your improvement opportunties. To find the opportunitites, you have to lower the water level (inventory).

If you are thinking that lowering inventory would cause problems, you are halfway to improving your process time and reducing cost. Make it a goal to lower inventory and start systemically solving the problems that stand in the way. Want more examples of what is hiding below the surface of your inventory lake?

How about production process deficiencies. These include system design, capacity balancing (especially for dependant processing steps), unnecessary work (non-value added), material flow and information flow.

How about production planing and control deficiencies. These include priority control, dispatching, standards, master records, scheduling, and capacity planning.

The question you should have in mind is NOT...how much inventory should I get rid of. The question should be...why does it exist at all? Inventory reduction is a tremendous diagnostic tool for locating problems or barriers to more efficient systems, Just-in-Time, reduced process time, improved flexibility, responsiveness, etc.

In the next post I will share the only acceptable reasons for having Any inventory...there are only three. Can you figure out what they are?