No question, if your line grinds to a halt due to a production oversight, it can cost you plenty. But it could cost you far more to overcompensate the other way. Excessive inventory eats up valuable floor space and profits just by sitting there.
So how can you keep your production line going and your inventory at a bare minimum without sending your stress levels through the factory roof? This article will give you some answers.
Make everything to order
If a restaurant kitchen made all the steak meals first, there would be a lot of customers waiting for chicken meals and a lot of steak meals waiting for a customer. Overproduction creates shortages at one end and bottlenecks at the other. It also leads to excess or obsolete stock having to be discarded, much like those steak meals.
Overproduction takes up large blocks of space pushing every essential item further and further away from where it needs to be. Think about it: a buffet has ten dishes, one of each dish on one table. A second buffet has the same ten dishes, but ten of each on ten tables. Is that what your factory looks like? If your workers are operating in the equivalent of a ten table buffet, you have serious inventory and 'time in motion' issues to address.
So make to order. Make only what you need when you need it to feed production and keep one (not ten) steps ahead of customer demand. It's the Toyota way, it's about making things 'just in time' and it clearly works for them. So calculate and recalculate, stock only necessary amounts of everything and restock in equally small amounts only as customers, not computer schedules, demand.
Ignore discount price breaks
Discounts encourage you to pay 10 per cent less for 90 per cent more than you need. It might seem like sensible economics until that 10 per cent and more is eroded away through excess inventory downtime. So buy lean, even if you pay a bit more initially, and you will be rewarded in the long run by the faster run.
Go old school with inventory warning signs
Sometimes computers can be like weather forecasts: you get a far more accurate reading by just looking out the window. It's the same with your inventory. Write good old fashioned signs saying 'Restock' and place them towards the back of inventory stacks or shelves. When they appear, it's time to make more.
Surprisingly Toyota still uses this simple system despite all the technology at their disposal. If it works for them, is there any reason it can't work for you?
