7 Forms of Waste: Excess Inventory

Excess Inventory as a form of waste in lean maintenance

Last week, we discussed over processing as a form of waste in lean maintenance. This week, we take a magnifying glass to excess inventory to understand why it occurs (sometimes very often) in maintenance and how to balance it with a CMMS. Ervins Akrong, Compliance Specialist at LGC, recalls a buildup of excess inventory that occurred at a food production facility he worked at in this week’s case study, Food for Thought.

Excess Inventory in lean maintenance: cost, environmental impact, resolution

Not having the parts needed to make a repair is frustrating, having too many parts in inventory that never move is even worse. Excess inventory often results as a consequence of overproduction, such that excess product ends up in inventory. In maintenance, overestimating a PM schedule or preparing for unscheduled maintenance can lead to overstocking spare parts, sometimes referred to as safety stock. This ultimately wastes dollars, storage space, and transportation required to relocate/retrieve spare parts (if stored off-site). The case study from our transportation article is an excellent example of this.  

In some cases, unprocessed inventory becomes obsolete and new parts are needed to replace the old. These can have major environmental impacts if new parts are being shipped by air carrier and the old parts are frequently being disposed of. Utilizing the inventory function in a CMMS to make sure your part stores are relevant with the correct safety stock is an efficient and cost-effective way to save operational expense.

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Case Study

Ervins Akrong, Compliance Specialist at LGC, recalls a time when the trickle-down effect of overproduction resulted in excess inventory at a food production facility he previously worked in:

“In previous pet food experience, there was a product known as a Variety Pack (a variety of flavours for pet food). For example, a 24 pack could containing 3 flavours.

During production, the manufacture of each different flavour (if being produced for a Variety Pack) is planned in a way that ensures all of the components are made in equal amounts. This would guarantee that there is enough product made to fulfill the Variety Pack order. There have been many instances where one component was made in excess. Since this was a Variety Pack-only product, the excess product would just sit in inventory (until the next order), taking up space in an already crowded warehouse.  This would lead to damaged or lost product (as product would be jammed in locations where they shouldn’t be).”

Ervins’ experience demonstrates not only the immediate loss of time, money, and production capacity, but highlights the downstream challenges of storage and disposal when excess inventory exists. While this case study illustrates the waste of excess inventory in the context of lean manufacturing, it can be applied to lean maintenance practices with respect to spare parts inventory.