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Having too much waste can be costly in terms of your business’s resources and time. Inventory is tied to your capital and if you don’t manage it effectively, it can affect how quickly cash flow takes over or hide weaknesses in your organization. It is important to install proper inventory control procedures to minimize your inventory waste.
But, before you start reducing waste, you need to understand why it happens. Based on the principles behind lean manufacturing, there are 5 ways in which companies can effectively reduce production waste and improve productivity and increase profitability.
A disciplined quality control process ensures effective returns management, helping both business and sustainability objectives.
1. Overproduction
If you already produce a lot of stock, you will incur higher inventory holding costs. On the other hand, you’ll have a lot of inventory that you can’t sell. You can avoid overproduction by producing things as fast as the customer needs them.
This type of inventory allows you to keep the minimum stock needed to keep your business afloat. You can order what you need for your needs and avoid excess production by producing what you need, only when necessary. Accurate forecasting also helps in your production decisions.
2. Delays
Delays are often referred to as wasted waiting. They often increase production costs and can result from late deliveries, bottlenecks, or inefficiencies in processing information. Production bottlenecks can negatively impact your entire processing chain. Whether your employees are waiting for raw materials to be delivered, a machine to be fixed, or a job that has already been done, sitting still can be a huge cost to the business.
Well, you can reduce these delays by automating your entire inventory replenishment process using modern software solutions to ensure timely delivery. Additionally, you can optimize other areas of your business, such as warehouse processes, to control product flow and overall efficiency.
3. Defects in goods
Defects can occur due to design and equipment, as well as lack of operator training or irregular procedures. Many costs are associated with defects such as rework, troubleshooting, extended lead times, scheduling, delivery failures, and unhappy customers when their needs are not met.
Well, you can reduce material waste by reducing total raw materials, work in process and finished goods. If you have lean stock on hand, you can easily detect and correct defects when they occur. To keep your business competitive by reducing waste while maintaining consistent quality, you need to invest in modern equipment and the right kind of software.
4. Over-processing
Yes, going above and beyond what customers ask for is a great way to improve customer loyalty. However, it can quickly lead to a waste of inventory. If whatever strategy you implement doesn’t improve the functionality, speed, and appearance of bringing a product to market, it qualifies as inventory waste. Note, overprocessing can also include double handling and overpacking of the product.
You need to evaluate each step in your operations to identify where you can effectively reduce waste. You should avoid every process that might not change the value.
5. Transportation
Much of the shipping waste can be attributed to overproduction of the material. It increases the need to move stock from one functional location to another, manual handling, and transportation between stores and factories.
Excessive handling and transportation increase the possibility of loss or damage. On the other hand, every time your trucks are loaded but not moving at the loading dock, it can actually be considered inventory waste. You can try a variety of reliable solutions like expedited freight and trailer programming to keep your cargo running smoothly and your customers will be satisfied.
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