Waste of Inventory, 7 Wastes in Lean Manufacturing (SIX Sigma)

Inventory costs you money, every piece of product tied up in raw material, work in progress or finished goods has a cost and until it is actually sold that cost is yours. In addition to the pure cost of your inventory it adds many other costs; inventory feeds many other wastes.
Inventory has to be stored, it needs space, it needs packaging and it has to be transported around. It has the chance of being damaged during transport and becoming obsolete. The waste of Inventory hides many of the other wastes in your systems.

Waste of unnecessary inventory is similar to the waste of overproduction. Just like overproduction, supply of too large quantities leads to the waste of unnecessary inventory. Costs upon exit from the warehouse consist of costs for purchasing material and products, order-launch costs and inventory costs. High costs are therefore related to storage and they can amount up to 20% of the product sales value. Waste of unnecessary inventory can be minimized by defining optimal, maximum and minimum inventory, as well as exact time when the ordered quantity should arrive at the warehouse.