Taiichi Ohno, in the Toyota Production System (TPS), described seven different categories of waste (or muda) in the production process. The elimination of these wastes is the most important step in creating a lean production process. (Lean=No Waste. Makes sense!) This is the first in a series of posts describing each form of waste and where it can be found in everyday life processes.
The seven muda are Defects, Inventory, Motion, Overprocessing, Overproduction, Transportation and Waiting. Let’s start with Inventory, since I’ve already mentioned it several times as I talked about our baby sippy cup situation.
From the lean perspective, inventory is not an asset, it is a liability. This is a reversal of the positive way some see excess inventory, as a “stockpile,” a “cache,” or a “surplus”. Inventory is a liability because no pile of stuff is truly free of cost. To keep an inventory you have to:
- Put it somewhere – Pay for and maintain a space for it.
- Keep it in decent condition and well-organized – Set aside resources for maintenance and organization.
- Find uses for it to justify accumulating it to begin with – Hold yourself back at times when you should be making changes and going other directions instead.
As I mentioned before in my post about resources, the highest cost of inventory is that it can hide a multitude of procedural sins that really need to be dealt with.
In the traditional car factories that lean production later transformed, massive amounts of space were set aside for extra parts, extra tools, and extra cars that had been produced but were not ready to be shipped. These inventories cost a great deal of money to house and maintain, costs that had to be either absorbed by the company or passed on to the buyer. Both of these are bad for the car company.
Although it was nice to have a few extra parts or completed units sitting around “just in case,” having large inventories of these things also kept managers from noticing important problems. With a large inventory of extra parts at hand, a worker trying to bolt a defective part onto a car can simply toss it aside and grab one of the extras without having to wonder why the part was defective to begin with. When a large number of completed cars are sitting in a lot behind the factory, it’s unnecessary to iron out chronic procedural issues that cause delays or even complete stops in the production line from time to time.
Lean production methods do allow for some small inventories in a process (enough to cover the time needed to bring new supplies to the line, for instance), but large inventories are totally eliminated. This is frightening because it removes a number of traditional safety nets, but it is powerful and effective for that same reason: After a period of adjustment, small inventories make the process more sensitive to its underlying problems and more dependent upon people resolving them quickly and completely. In addition, the organization gets back all of the space, money, labor, and time it was spending maintaining those large inventories and can use them for things that more directly benefit the customer.
Large inventories can have the same negative consequences in everyday life that they have in the business world. For instance, I recently thinned-out our collection of knives in our kitchen knife drawer. I found to my surprise that many of the blades were dull, some were missing pieces, and some were not being maintained properly because we could always grab another older, lesser knife that would work “good enough for now.” Now that we have only a few knives we truly like using, we can find them more quickly, maintain them more easily, and have freed up space in the drawer for other things.
But it wasn’t easy. Reducing inventories takes time, imagination, and a bit of courage, three things that we can actually use a little more of in our everyday lives.