Simple logic also dictates that the more times a thing
is handled, the greater its chance of receiving dents or
other damage-related defects through mishandling.
5. Inventory creates unnecessary management costs
We incur storage costs whenever we stop the flow of
goods and we incur transportation management costs
whenever we move those goods. The more defects we
have, the more we must put out for QC. A poorly-run
factory eventually finds itself up to its ears in management
costs.
6. Inventory eats up valuable stocks of materials and parts
We cannot make products out of thin air. We must have
the materials and parts to make them. If we use our current
inventory of materials and parts to make products
that cannot be sold immediately, and therefore sit idly as
product warehouse inventory, we have eaten up stock
of materials and parts—the value of which will become
painfully clear if a big order comes in for a different
product that we now lack the components to make.
7. Inventory gobbles up costly energy
Unnecessary inventory means unnecessary consumption
of energy. Whether that be electricity, pneumatic or
hydraulic power, or whatever, the company has to pay
for it.
These are just some of the “evils” of inventory. And I have
not even mentioned the real reason why inventory is bad.
When you get right down to it, inventory is bad because it
conceals the factory’s problems.
All factories have problems. Problems pile up in even the
very best factories. Inventory casts a sort of camouflaging
shroud over these problems, and this makes the problems
that much harder to analyze and solve.
For instance, workers at a process that turns out defective
products by the dozens may choose to pile up a “buffer” stock
of products for inspection. The inspectors can identify and