Building Up Excess Inventory

From the comments of readers about management roadblocks, dlankford writes:

 

I have a new manager that wants to build up inventory even though he understands that we should be building JIT. The area we have cleaned out for finished goods is no longer large enough and now they want to put finished goods in several different locations.

 

            The first question that comes to my mind is, why does the manager want to build up finished goods inventory? (The implication here is that products are being made to stock, not to order, and the goods being built up go beyond whatever orders there are.)

            We don’t have a lot of information here, so I can only speculate that the manager thinks his job is to produce – and the more he produces, the more he is doing his job, and the more it makes the shop floor look productive, which (he believes) makes him look good.

            There are other unknowns here as well. Is the manager building up inventory of products that match whatever sales forecast the company has? Is there much (or any) communication between production and sales?

            It’s hard to know where to begin. It sounds as if there is a lack of a company-wide focus on the customer, and producing what the customer wants. There needs to be inter-departmental sharing of goals and objectives, so that everyone has the same view of how to serve customers.

            Moreover, everyone (especially production) needs to understand the negatives of producing excess inventory, including the fact that unsold goods are a liability, not an asset, and including the recognition that storage is not the most productive use of space.

            A more positive approach might be to persuade the manager that the focus should be not on constantly producing, but on improving production, reducing cycle times, so that the company can respond to customers faster. The ability to do that might help sell more goods that are truly desired by customers.

            Achieving that change in thinking is not easy and takes constant reinforcement. Getting sales involved might help, if they’re concerned about having to sell excess finished goods that customers don’t necessarily want.

            Any suggestions?