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Many companies use inventory to combat such problems as late deliveries, defects and various other problems. And, while it may help to mitigate these problems, it can also create other problems. You see when companies create inventory buffers to meet customer demand, they tie up cash, take up space and cause inventory to accumulate throughout the production processes as well. There are two distinct strategies that have been used for some time now to combat inventory build up:
Many people wonder, why is inventory considered wasteful? Inventory in itself is not wasteful. However, inventory that has no demand associated with it is wasteful. Inventory waste is any unnecessary storage of materials, products or information. The key there is the word, unnecessary.