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Discussion Post:An appropriate amount of inventory can greatly help deal with stock issues such as backorders and stockouts. However, those would be the only benefits inventory stock would a business.
After World War 2, Japan companies realized that inventory can both help and hurt a business. Reason being when businesses have inventory in stock, those companies tend to be not as efficient as they can be, that results in inaccurate forecasts and orders, which leads to an overstock of inventory.
The post-WW2 Japanese were so infatuated with eliminating waste, they even created a strategy to combat it, known as Lean manufacturing. In the article, “What is Muda? The 7 Wastes Every Lean Business Needs to Combat,” Henshall explains, “the elimination of waste is the primary goal of any lean system. In effect, lean declares war on waste – any waste. Waste or muda is anything that does not have value or does not add value. Waste is something the customer will not pay for” (Henshall, 2018).
Keeping extra inventory to meet changes in demand would increase a company’s expenses. This is because extra inventory needs to be stored and managed, which would require money. Therefore, storing and managing inventory is a waste of funds and labor.
I believe the best way to deal with inventory is to adopt the modern just-in-time manufacturing strategy. JIT includes creating strong rapport with suppliers and ordering only when it is necessary.
