The Advantages of Inventory Reduction

Inventory reduction is a core principle of lean manufacturing.

As a whole, lean calls for reducing waste in order to improve efficiency and increase profits.

And while inventory reduction is a small part of the lean mission, it packs a whole lot of punch.

Here’s how reducing inventory will benefit your business:

COST

When you decide to reduce inventory, you take the pledge to base production solely on demand.

In the long run, this bodes well for business because:

It reduces storage/rental space costs

It eliminates certain material costs

It frees up funds for other areas of business

LESS WASTE

Since your products won’t be sitting on the shelf indefinitely, you won’t have to worry about them going to waste.

Producing on an on-demand basis means that:

Products will never diminish in quality over time

Material and monetary losses will occur less frequently

MATERIAL MAINTENANCE

The less inventory you have on your shelves, the less you’ll have to worry about:

Setting time aside to count it

Your company’s risk of theft

COMPETITIVE ADVANTAGE

Implementing inventory management practices will also give you a competitive advantage.

This is because you’ll have a better idea of:

What’s in stock

What needs to be manufactured

How quickly an order can be sent to customers

And since you’ll be saving money by reducing inventory, you may find that you can price products at a better price than your local competitors.

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