The Waste of Overproduction

The Toyota Production System is famous for its relentless focus on waste elimination. The chief architect of TPS Taiichi Ohno and his staff coined the “7 wastes” as a way to convey the concepts to employees. Overproduction was considered the worst of the seven wastes since it usually lead to the creation of the other types.

  1. Overproduction
  2. Inventory
  3. Conveyance
  4. Motion
  5. Waiting
  6. Rework
  7. Overprocessing

Companies I visit have of course have often made their own additions to the list. The list by no means is exhaustive. Industrial Engineering broke things up into different categories for study long before the seven wastes were created. The IE categories were Operation, Transportation, Inspection, Delay, and Storage. Click here and here for a couple of old text book examples.

I saw a couple of striking examples of “overproduction” recently in the newspapers. Not even Toyota is immune from this problem it appears.

Thousands of Toyota vehicles in inventory at the Port of Long Beach, California. The lot became so full that Toyota and other companies were forced to rent extra space for the vehicles coming across the water. Factories in Japan and the U.S. were idled due to the decreased demand but the system could not scale back fast enough.
Toyota is not the only company experiencing this problem. Here are some domestic vehicles stacking up at a port on the East coast as well.
Here are extra containers as well piling up all over Asia as every industry suddenly has excess capacity, too much inventory, and other problems.

Taiichi Ohno had a famous quote that was essentially, “It is easy to make money in an up market. Only a strong company can make money when sales go down”. Currently Toyota is not making any money. My guess is that they are reflecting hard upon the recent situation and what lead to the overproduction and over confidence in recent years. It will interesting to watch events unfold…

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