Waste of Overproduction
Waste of overproduction is considered the worst of the 7 wastes of lean manufacturing. When the basic concepts of Just In Time are considered, which are building what is needed, when it’s needed, in the quantity needed, it’s no wonder waste of overproduction is considered the worst waste. The mind set of continuing to build regardless of orders has to change if your company is going to be successful implementing lean.
When To Stop Production
Many production facilities believe that shutting a production line down due to lack of orders is too costly a venture to undertake. This is generally how waste of overproduction begins. In a lean manufacturing environment, zero orders equals zero production.
Here’s a typical scenario. There’s an hour left in the shift, all orders are filled and the production line is standing around. The supervisor decides that they should build something in order to keep the line from shutting down. They build an hour’s worth of product in a specific color, let’s say black. The next shift comes in and they prepare to start the build for the customer order of red parts that just came in. The red parts use a common component with the black parts. The other shift consumed the components in parts that weren’t required (the black parts). Now the line is down. Now parts are getting expedited and the company is paying premium freight. See where this is going? If there are no orders, shut down the line. Have the production workers clean or work on continuous improvement ideas. If you continue to have available time at the end of the day, you may need to adjust your manpower.
Possibly the most costly aspect of overproducing is obsolescene. I have seen cases where extra product has been built without a customer order, and the product remains unordered and sitting on a shelf. These parts can become obsolete as they sit there and the demand for that product has diminished or completely disappeared. The parts may be stored for future use if your company is required to support a past model service program, but the cost to store them could eventually out weigh the cost of the original parts. You may be able to tear the parts down and salvage some of the components, but now you’ve added even more labour to the cost of the product.
Over producing leads to other types of waste. It will lead to excess inventory, which will result in increased material handling and increased labour. Extra equipment will be required to move this material. FIFO (First In/First Out) will become difficult with the extra inventory and this could cause further problems if you have a quality issue and are forced to contain product from a specific build date.
As you can see, waste of overproduction can be a very costly venture. Plan your production and staffing well. Continue to monitor your situation and adjust accordingly.