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Effects of Overproduction

February 10, 2017

Overproduction may be the worst of all the deadly wastes in an operation because it hides and masks other operational issues that cause an operation to struggle. 

 

Each of these Symptons are an expense to the organization. To put it in perspective, 

 

"For every dollar in expense you waste you typically have to sell an additional $5 or more depending on your margin to recoup.  For every dollar you save in expense....you get to keep the whole dollar."

 

 Here is one tip to quickly identify potential Overproduction in your operation:

 

 

  • Recent Sales Changes - Has your business either experienced a spike or dip in sales?  Understanding the drivers for the sales changes will allow operations management to react.

 

Sales increases tend to drive ramping up production leading to:

    • Just-in-case logic (increasing safety stock)

    • Excessive raw materials

    • Excessive floorspace utilized

    • Extra inventory  

 

Sales decreases that are not addressed lead to:

    • Unnecessary work

    • Misuse of equipment

    • Unleveled scheduling

    • Potential disposal charges

    • Extra Inventory 

       

       

       

       

       

       

       

       

       

 

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