Perhaps you’ve heard of “Funko Pop!” toys, collectible figurines in the like of everyone from Spiderman to ET to Dolly Parton. They quickly grew in popularity after their release in the late 1990s. However, demand for the toys has plummeted more recently, leaving Funko with excess inventory--$36 million of it to be exact, which they’re now looking to “eliminate.”
It's no secret that Lean teaches that overproduction is one of the deadliest forms of waste. This is a textbook case of the impact it can have on a company that doesn’t identify and reduce waste wherever possible.
Overproduction is a serious problem that can have catastrophic effects on any company. As one of the 8 forms of waste in Lean manufacturing, overproduction can be defined as “making more than what is needed or before it is needed.” The production of goods and services beyond the needs of customers leads to the accumulation of unnecessary inventory. Excess inventory because of overproduction has a domino effect, triggering other forms of waste, too. This can include labor to move and manage it (transportation and motion), materials (excess inventory, higher defect count), time (waiting and skills). It also ties up floor space and capital, which could have been used for other productive purposes.
To avoid overproduction, companies need to take a holistic approach to their production process. This requires a careful analysis of their customer needs, the production process, and the supply chain. Businesses must produce only what their customers need, in the quantities they require, as they need it.
Lean calls this principle “Just-in-Time.” To achieve this, they need to establish a clear understanding of their customer's demands and match it to their production capabilities. It is a proven way of reducing inventory costs and improving the responsiveness of the production process. It’s clear in this example that “Funko Pop!” simply did not match their production with the demand of the customers, resulting in a position where they literally will have to throw away inventory to reduce complexity and cost in their business – what could be more wasteful?
Companies can also avoid overproduction by learning to systematically attack the waste in their process by empowering their employees to continuously improve the system and solve problems. Lean calls this kaizen or “good change.” It emphasizes the importance of constantly looking for ways to improve the way we make things, communicate, and run our organization. Considered by many to be a father of many of the Lean concepts at Toyota, Taichii Ohno said it best: “Progress cannot be generated when we are satisfied with existing situations.” Kaizen pushes us to never be content with our current situation so that the business can continue to win in the marketplace.
At CI-CG, we help businesses avoid the dangers of overproduction. Our team of experts can analyze your production process and identify areas where you can improve your efficiency and eliminate waste. We also seek to equip every level of your business with the mindset and tools to drive waste out of your processes. By adopting lean principles, we can help your business reduce inventory costs, increase production efficiency, and improve customer satisfaction, all while empowering your workforce to help lead the charge. Schedule a call with us today.