Compared to Europeans, Americans have large houses – and often rent additional storage space for our “stuff” as George Carlin called it.
So I was struck by this line in this post, and realized manufacturers do the same thing:
In many typical manufacturing operations, large runs of certain products are produced and then the inventory is put directly into storage. As the goods are sold, inventory is slowly reduced until there is more demand, and then another large run is produced.
I remember the first time I walked into a Sam’s Club. $12 for a super jumbo package of toilet paper – what a bargain!
We quickly realized that a bargain can turn into a storage headache. The linen closet could barely hold our sheets and towels – forget 96 rolls of toilet paper!
While a certain amount of inventory is preferred (or desperately required as you know if you’ve ever run out of toilet paper at an inopportune moment) loading up on inventory and keeping it in storage is not a good use of resources.
What is the solution? Demand Driven production – let the demand determine the supply. If you are interested in learning more about this, give us a call at 1-800-601-3456 and ask about our workshops.