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
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
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