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Eliminate Waste: Overproduction and Inventory

Deciding to eliminate waste in your organization is easier said than done. You need to be able to recognize waste and understand what causes it. Lean defines waste — or muda — as any use of resources that goes beyond what a customer requires and is willing to pay for.

Types of waste

The seven types of waste you may encounter are overproduction, overprocessing, motion, waiting, transportation, inventory, and defects.

Overproduction — or producing more than you need — is viewed as the worst type of waste, because it leads to excess inventory. You produced too much, and now, for instance, you have boxes of winter boots left in stock that you can’t sell during summer season.

Excess inventory is linked to overproduction, so these types of waste typically have similar causes.

A push-based system

In a push-based system, production is based on future predictions of demand. This can sometimes lead to waste. For example, if the forecasted customer demand is overestimated, excess winter boots produced accumulate as inventory.

Just-in-case manufacturing

Just-in-case manufacturing, or JIC, is another potential cause of waste. This type of production involves deliberately overproducing or keeping a large volume of inventory as a buffer, in case of production or supply problems later on.

Clothing manufacturers know that customer demand for sweaters has a seasonal element and may keep large inventories or intentionally overproduce to prevent low stock risks.