Definition: There are too much material (raw material, WIP, finished products ) in excess of the required quantity
Impact: Extend the delivery times, tied the liquidity, manpower, shipping, potential quality problems, it covers the problem
Reason： Unclearly standard or no standard, wrong machine set up, just in case and so on
“Inventory is the root of all evil” and all improvement actions are directly or indirectly related to the elimination of inventory.
Unnecessary handing, accumulation, placement, protective treatment and search waste
Make it difficult for FIFO
loss of interest and administrative expense
The value of the article will be reduced, become dead stock
Occupy the shop floor space, resulting the construction of shop floor and warehouse
Intangible losses are much higher than the tangible loss, lean producers believe that inventory will hide problems, while ”problems” are regarded as treasure in lean production. If problems can be found and solved continuously, then benefits will be generated continuously.
Lack of management tension and block improvement
Because of high inventory, there are no immediate countermeasures for the problems caused by machine breakdown/defects…
Because of the sufficient inventory, all the problems are hidden already. When a problem happens, no need to solve and become not urgent. The supervisor will not blame anybody because of this.
“Reasonable inventory is a traditional concept and method for a manufacturing industry” In order to avoid the stagnation of the production, inventory is taken for granted. While lean producers believe that inventory is caused by disordered management and poor logistics. Meanwhile, it is itself a major source of manufacturing waste.
If there is inventory, a warehouse needs to be built as a storage place and workers need to move the goods by machine. Lean production aims to reduce costs as one of the goals, inventory waste contrary to this, is not allowed.
Practice has proved that the biggest value of lean production is inventory reduction and the value of lean production inventory is far greater than the implementation of a set of ERP/MRP systems. The reason is that lean production is to transform the process and the constantly break the status.
However, implementing ERP/MRP is a process of constantly modifying and adjusting the software system to adapt the current situation of the factory.