no waste

returnOver/ Under Stocking


This is something that is quite common, whether at work or at home, sometimes it is because it looks like we can save some money, other times, it can be the fear of running out of supply. Whatever it is, it means tying up your working capital or cash in hand, taking up storage space and using management time to deal with the extra stuff. Oh, and did we mention that you will also pay some people to take it away when you eventually decided to get rid of it? As far as efficient management of a supply chain is concerned, this is ridiculous, the only people who benefit in this are the materials supplier and your waste contractor. Why are we stuffing money in their pockets?

The big fear is that we will run out of a critical resource just when we need it and then have to stop work. A colleague recounted that her small office ground to a halt one day when the entire office ran out of paper for printing and she estimated the lost to be in "tens of thousands of pounds", it may sound apocryphal like many other urban myths. But it is true, just like many building sites over order on cement. We do it because we have always done it, and to make it worse, other people in the buying process worry about us forgetting to add a bit extra, so they added their extra on top just to make sure. Then the materials supplier offer you a better deal if you order just a bit more... and so on.

As you can imagine, over stocking comes with a serious list of impacts: your money is spent when you may not need to spend it. People have to devote time to manage the excess stock, and the environmental impacts related to making the materials (embodied energy) and transporting it to your place (traffic, fuel, pollution). And then there is the storage conditions - just about everything should be stored in a "cool, dry" environment and often away from sunlight and protected from elements. All this require energy to maintain.

What can we do? We still cannot afford to run out of raw materials - "...even if a bag of cement only costs £4, when you run out, you'll find that bag of cement will cost you £1000!". We think the situation should be turned on its head... why are we likely to run out in the first place?

This is the critical question - what causes us to run out of that resource?

Answering that will likely bring up a host of reasons, for example: product expiry dates, theft, unskilled workforce, damage from poor storage, damage from bad weather, uneven cash flow and so on. Addressing these reasons will allow us to sort out the problems that cause us to run out. More importantly, it will make us think about the way we work and offer us opportunities to improve our productivity and competitiveness.

Of course, in some instances, tactical over stocking will need to be practised - like in the summer of 2012 in London when "numerous roads will be closed to traffic" thus hampering deliveries. Fair enough, buy a bit extra but at least make sure you're not buying more than what you need.

This waste is part of the classic Toyota 7 Wastes, which formed the foundations of Lean Operations. Toyota believes that these 7 wastes are the reason why we have physical wastes. However, as these were originally developed for large scale manufacturing, we explored what these wastes mean in a generic sense and have changed some of the emphasis so that they can be readily applied to other business areas.