Thursday, August 21, 2008

Inventory as Waste

My coworker Paul was telling me today about some of the presentations he attended at the Agile conference earlier this month, and one of the things he mentioned was the idea that inventory is a kind of waste.

It took me a little while to grasp this concept, but I think of it this way:

Imagine a mechanic's shop. There is a team of mechanics, and they all work together to fix cars (or whatever). They have an inventory of wrenches, and each wrench has a certain cost associated with it, based on the initial cost of the wrench, the cost of storing it, degradation of the wrench over time, etc. The wrench's purpose is to be used to fix cars. When used for its purpose, the wrench is not wasted; it is contributing to the goals of the team. Whenever the wrench is in storage instead of being used for its purpose, it is wasted; it costs the team to store it, track it, put it away, etc. So, ideally, every wrench should be used (appropriately; misuse of a tool is another topic!) as much as possible.

Now, of course, some waste might be necessary. Perhaps certain tasks require the use of multiple wrenches, or when the team is at capacity all the wrenches are in use (but this doesn't happen all the time, nice as that would be). So you have to find the appropriate balance of waste vs efficiency.
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