Every time we head out to Sam’s Club I tell myself to be careful, to control yourself, to buy only what is needed. It’s not a good deal if you don’t need it or don’t use it. Then later, when we return home, while I’m trying to talk the neighbor’s kid into helping me unload my new 55 gallon drum of kadota figs, I realize that I’ve done it again. I’ve succumbed to the dreaded Warehouse Syndrome. That is, buying huge inventories of things you don’t need or ordinarily use just because the price was low and the deal was just too good to pass by.
Having a huge supply of figs at home does not make my life any easier. We eat figs perhaps twice a year. When I look in our garage and see the fig barrel taking up what used to be my parking space, I know I’ve over purchased Figs. My figs stay nice and warm and dry while by car freezes and ages prematurely while exposed to the elements in my drive way.
Then finally there is the money itself. A large can of figs is priced at around US$5. My barrel of figs was close to US$35. Yes, the unit price for the barrel figs is way below the unit price for the figs sold by the can. But, now that I’ve opened up the fig barrel, I’m confronted with another expensive challenge, how do I keep the unused figs from spoiling?
The answer is to freeze the figs. Now I have a freezer full of figs which is probably the most expensive storage space in my home. I also now have several steaks, a turkey and a large piece of Mom’s meatloaf that no longer fit in the freezer. I can expand my freezer storage by acquiring a large capacity freezer for the basement.
My money saving strategy, buying a bulk quantity of figs is now costing me additional dollars in the form of more storage space (new freezer) and higher electrical bills (again with the freezer). This expense is not going to go away anytime soon because after a steady diet of figs, I am now sick of them and I get a bit queasy at site of the things.
Too Much Potato
The wasted expense of inventory works the same in industry as it does in my kitchen. Companies will frequently tie up large amounts of cash and expensive floor space storing stuff that they hope to use before it obsolesces.
Perhaps even more important is the tendency excess inventory has to hide problems in the production process. Since the wastes of overproduction and waiting contribute to, if not cause, excess inventory it is easy to be blind to the processes that cause the overproduction and cause the waiting in the first place.
Let’s look back at our hamburger stand example we’ve used in the past. We saw huge batches of french fries waiting under heat lamps for the noon rush to start. The entire daily allotment of french fries was pre-cooked because the fellow working behind the counter was overworked during the lunch time rush.
The question which begs to be asked is this: would the customer rather have cold fries fast with their burger or would they prefer to have fresh, hot fries with their burger. The answer is obvious. The customer is going to want fresh, hot fries without a protracted waiting period. The problem that needs to be fixed is how do we get fresh, hot fries to the customer without having to wait through the entire cooking cycle?
Our intrepid burger cook should have asked how the process could be modified to assure fresh, hot fries without threatening the level of customer service delivered for hamburgers. After all, the central goal of eliminating waste in the lean enterprise is to eliminate anything that does not add value for the customer. This was the real problem, not the fact that our guy was lazy or didn’t like the pressure of the lunch hour rush.
Any management person could have inquired, “Bob, anything we could do to make the lunch hour rush run more smoothly?” Bob would have been happy to tell them that making customer wait on fries while their hamburgers got cold was going to cost them business. Bob doesn’t need to have a degree from the Wharton School of Business to know that no one wants cold hamburgers.
Bob knows. Bob can tell you what’s wrong. Bob won’t tell you unless you ask. Involve your employees in the design of the process and you will be rewarded with a better process.
A simple solution exists, increase the number of fryer units and prepackage the french fries in a away that permits demand to be met over a short cycle of time. Bob can “drop fries” every ten or fifteen minutes during the lunch rush thus assuring an adequate supply of fresh fries.
Learn more about eliminating the waste in your manufacturing processes. Click on the Lean Manufacturing category or the waste tag in this blog.