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.
Many people don’t realize that inventory is a lot like a graveyard. It is where the materials you have on hand lay until some demand becomes associated with it. Using this analogy, we can better understand why inventory is so wasteful and detrimental to a company. Let’s look at a few different reasons why inventory can be bad:
With all this in mind, the biggest challenge you will face when lowering inventory and implementing a pull system is your culture. Many of the individuals you will be working with will have a mindset that has been ingrained in them for a very long time. We depend on our inventory, how can we function if we lower it? That is the challenge. Convincing those individuals that inventory is crucial, but only the inventory you need. When they see what can be done by pulling to demand and it affects them directly, they will learn.