Overproduction waste is caused by producing more than the next step in the process needs or more than the end customer will purchase.
- Producing more units than what a customer ordered
- Ordering more units from the supplier than is needed to fulfill the customer order
Costs of Overproduction Waste
Overproduction waste causes you to have capital tied up in resources like raw material and finished goods that you no longer need for the next process or the customer will not purchase. In addition to not being able to move the material or products, there will be costs associated with the transportation and storage of them.
Causes of Overproduction Waste
Overproduction waste is caused by not trusting suppliers who may not be reliable with delivering the raw materials so they order more than what is needed to avoid waiting waste. This will cause more production than is needed so the raw materials are not wasted. Certain processes have longer than normal setup times. In this situation, it is common to produce more than what is needed so you do not have to setup the machine or process again.
How to reduce Overproduction Waste
To eliminate or reduce overproduction waste you should create value stream maps, process flow diagrams, and spaghetti diagrams. From here you can identify what machines have the greatest setup time and what raw materials or finished products are being help excessively in stock.