Inventory Management: Why keeping comfort stock should make you very uncomfortable

We all know keeping excess inventory on hand can hinder warehouse space optimization and is not a good business practice. However, as much as we understand the importance of just-in-time manufacturing and  supply practices, we’re easily susceptible to all those pesky “what-ifs:” 

  • What if something goes wrong in our production process?
  • What if my supplier can’t get a vital shipment out?
  • What if my customer needs more than was forecasted or wants delivery on an accelerated schedule?

We believe in Just-in-Time (JIT), so why don’t we practice what we preach?

Well, because what-ifs are stressful. It feels so much safer to have a buffer zone, to stock up in case of emergencies, to make like a good scout and “be prepared.” That’s why excess inventory is so insidious; it’s one of the hardest wastes to root out because it gives us the illusion of control, and that’s very comforting. Except that it’s a really expensive way to hedge your bets.

Related Reading: Inventory positioning: Best practices

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Even aside from tying up operating capital in physical goods, there are also significant non-capital costs associated with holding and servicing excess inventory: tracking, managing, handling, storing, transporting, and insuring physical inventory are carrying costs that can add up quickly and are generally not recoverable. There is also a very real risk of inventory loss, damage, deterioration, theft, or obsolescence.

Are you starting to feel a little uncomfortable about holding comfort stock?

Inventory buildup can be driven by overproduction, poor planning, process imbalances, inefficient workflow, over-ordering to qualify for bulk discounts, or any of a range of other hidden factors. Sure, it creates anxiety to drop inventory to JIT levels, but right-sizing inventory can alert you to the underlying problem(s) that need to be addressed.

Related Reading: The value of time & space

Taking stock of inventory practices readies you for JIT delivery not by hoarding goods but by shoring up your supply chain, shortening lead times, and streamlining production processes. Isn’t that a comforting thought?

UNEX solutions are designed specifically for individual applications to address the unique storage needs of manufacturing facilities. With a variety of options, UNEX organizes and optimizes workflow to make part picking faster, easier, and more accurate for assembly line workers. Keep your inventory optimized by contacting your UNEX Pickologist today.

Read the Lean Manufacturing Storage Guidebook

Posted by: UNEX