FITT Facts: Waste #2

Waste #2: Inventory.

Inventory refers to the unnecessary storage of materials (raw or finished goods), supplies, products, information, data, etc.

Although some inventory (a.k.a. buffer inventory) can be deemed necessary due to supplier lead times, sourcing challenges, cost or delivery constraints, the goal should be to minimize or eliminate inventory.  Inventory is a cash flow killer that ties up money in stuff that just sits and doesn’t create any value.

Remember: if you ever find yourself justifying a waste with “that’s the way we’ve always done it,” then you probably have an opportunity for savings and improvement.

Inventory Waste Examples	What to do about it…
Keeping many years of order history, physically or electronically, when the data is never/rarely looked at or used.	Why do you keep it in the first place?  Only keep history of changes and the previous two orders.
Buying “extra” office supplies because you ran out once.	You need an inventory replenishment system with min/max/restock quantities, trigger levels, and process owners.  Kanban can be a simple system that doesn't require an ERP or fancy software to implement.
Producing/storing too much raw/finished product for a customer because they will “eventually use it” and you “won’t have to purchase/run it as often.”	Work with suppliers to determine ideal/minimum order quantities and lead times that maximize cost and value.  Work with customers to get consumption forecasts.  Improve setup times so that many shorter runs is more cost effective.
“It’s cheaper if I buy 10,000 rather than 1,000.”	Sure, the per unit cost may be less, but what if the product becomes obsolete?  What else could you do with the space needed to store so much?  Find the sweet spot  between cost, storage space, customer demand and lead time.
Leaving all your e-mails in your inbox.  Also applies to files in folders on your computer/network.	Create files and sub-folders to organize your e-mails.  Really ask yourself why you’re keeping all those e-mails in the first place.  Think of the time spent scrolling through your inbox/folders to find that one e-mail/file.  Keep it clean and current.

Be FITT!