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This is the sixth in a series of articles on the Seven Types of Waste[1]. This article addresses Inventory.
Inventory
This type of waste is not just supplies and materials on shelves but also any recourse your company has that is not being utilized. We normal see inventory as parts and supplies sitting on a shelf like boxes of cereal in the grocery store. But here inventory also include equipment that is standing idle or in storage and employees that have skill that are not being used to their fullest.
Some times we do not realize how much we spend on skilled employees that are actually doing work that does not maximize their skill set. Take a look at any given skilled employee and think about what they are actually doing during their days work. Now ask your self how much of that required their special skills; I believe you would find that there are a lot of activities they are doing that do not need their skills. Those activates could be off loaded to someone else at a lower pay scale to do. Meanwhile the skilled worker could be working on another active that does require their skills. In this way you decrease costs and increase throughput.
Equipment is usually a capitol expense and as such if it is not working it is costing you money in floor space and maintenance and maybe even loans. I have an old truck at my house that I very rarely use. But I have kept it to “haul stuff” when I need to (have you heard that). I have to pay insurance and maintenance on it even if it sits. Plus I have to run it once in a while just to keep it in working condition. It takes up space in my driveway as well. I should sell it, freeing up the space and saving all the expenses of insurance and maintenance. If I need to haul things I could rent a trailer or buy one which would cost me less than what I am currently doing with the truck.
You get the idea!
Some symptoms of Inventory that you can look for are:
- Complex tracking systems
- Extra storage & handling
- Extra rework / hidden problems
- Paperwork / documents
- Stagnated information flow
- High disposal costs
- Obsolete material
- In-process packaging
- High utility costs
Look around your place of work or at home and see if you can see any of these. They are just the flag that there is a cause for these that needs to be identified and addressed. What are some of the root causes associated with these symptoms? Let me list them as well. I would associate them with the symptom but many times a root cause shows more than one symptom. So as you read this list of root causes look at the symptoms above and see how many of them it could cause.
Some Root Causes of Inventory:
- Product complexity
- Incapable processes
- Unleveled scheduling
- Poor market forecast
- Unbalanced workload
- “Just-in-case”
- Unreliable supplier shipments
- Inadequate measurement
- Misunderstood communications
- Reward system (wrong metric)
I invite you to post what you see around you that are Motions of Operators that could be changed.
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[1] The seven types of waste are: Corrections, Overproduction, Movement of material or information, Motion of operators, Waiting, Inventory or other resources that are not being used, and Processing.
Tags: Method, Seven Types of Waste
Companies look at inventory as a pile of SKUs. This is one of the biggest challenges in addressing the inventory problem. If you look inside the SKUs, you can see the attributes that causes customers to buy the SKU. Ability to manage the inventory at that level will solve the piling up issue. It will also give you insight into how to give the customer a ‘close enough’ SKU to meet his need – hence increasing turns, increasing availability and reducing inventory.
Look at http://www.emcien.com
for more details.
There is a great article on this at
http://blog.emcien.com
.-= John Fisher´s last blog ..Home Page Article – Sales Effectiveness =-.
This is very true. As you create new SKU’s you tend to not reevaluate the one’s you have to control the number you have. Always trying to meet your customer needs sometimes create more work and inventory of SKU’s that costs you money.
Great comment.
Peter Bersbach
peter@bersbach.com
(520) 829-0090
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Inventory is the most important in a certain company/business, without it a business will not certainly survive because you don’t a proper info in your returns and cost.
Inventories can be trick. To much or to little can cost a company big time. BUT it is a waste. What is better to control is speed and quality of production. With High quality and quick response one can reduce or eliminate inventory. That is what we strive for in Six Sigma.
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