Week 3: 09/17 – 09/21 – Reduce Inventory and Over Production

Theme: Reduce Inventory and Over-Production

This week starts out for me with a trip to Kansas City to do a Lean workshop. If you have any great Muda Walk examples to share with me – post it on the Muda Walk Blog ( http://mudawalkforamonth.blogspot.com/) or email me so I can share it at the workshop.

This week we are looking for the waste of OVER-PRODUCTION OF GOODS and INVENTORY. Over-production leads to inventory and to the waste of movement both of people and material. When we order or fabricate material too much or too soon we have to store it somewhere causing “inventory” to build. When we fabricate duct, pipe or other products too far ahead of schedule we have to stockpile it either in a warehouse or more often at the job site. When we do a bulk-buy to save money we must store it somewhere – again usually at the job site. Studies show that material stored on a job site gets moved at least twice before it is installed. Lots of waste incurred.

Signs of over production include stacks of material either in the warehouse, in trailers, in the yard or at job staging areas. Why do we have stacks of material? Ask why enough times to get to the root cause. Why? Why? Why?

INVENTORY itself is waste. It costs you money and more than you think! Any material or parts not being used by the customer is waste. This includes raw material, work in process and final fabrications. It includes extra parts, excess space and unused tools, copies and reports. Look for stashes and personal stockpiles.

Inventory is a double serious waste because it produces or hides many of the other basic wastes. Companies often accumulate inventory because of unreliable support from their shop, vendors or the material delivery function, or because of efforts to save money through a bulk buy. Usually the money saved in bulk buys is spent by the hidden, but real, costs of holding inventory.

When you spot inventory waste ask why – why do we have to keep inventory? Keep asking why until you find the root cause and implement countermeasures.

Have you seen any of these:

• Stacks of material at the job site?
• Rental equipment not being used?
• Trailers full of fabricated or ordered material?
• Stashes around the work area?
• Job site trailer closets stuffed with supplies?
• Piles of fabricated material in the yard?
• Boxes of paper goods stacked in the hallways?
• Fabricated product on pallets in warehouse?
  

All of these and many more are indicators of overproduction and they are inventory. We don’t want the crews to ever run out of material, but we want to avoid as much inventory as possible while still allowing the work to FLOW.

When you spot these waste ask WHY – why do we have to keep this inventory? Why do we have so much inventory? Why are we over-ordering material? Keep asking why until you find the root cause and implement countermeasures.

Ways to reduce inventory are:

• Better job site planning and coordination. Use the Last Planner System® of look-aheads and weekly work plans.
• Use a Kanban method. It means a signal to refill the inventory. This is especially useful for consumables in the shop, field and even office supplies. Use a min/max marker. Use an inventory card with a dual bin system so when one bin is empty pull the card for order a refill of the 1st bin while continuing to use the 2nd bin.
• Work with suppliers to service your material needs and include them in identifying how much material to stock.
  

Record your improvements.

Go and See – Ask Why – Show Respect – Do No Harm