capable of delivering product in the required variety. As you observe the opera-
tions, identify the method currently used to compensate for the process incapa-
bility.
Inventory is commonly used to compensate for inflexibility. Toyota considers
inventory to be an indicator of “weakness” in the process, and the inventory is
a constant reminder of the need to strengthen the process. Many people misin-
terpret this concept to mean that there should be no inventory within the
process. Ideally this would be the case, but realistically some processes are
currently not capable of operating without some inventory. Toyota is always
striving toward the “just in time” ideal; however, in the meantime, the philosophy
is to utilize inventory strategically for the best performance results. This strate-
gic use of inventory includes specific rules and controls, as well as location
within the flow.
44 THETOYOTAWAYFIELDBOOK
TIP
The Paradox of Inventory
One idea that is difficult to grasp is that in lean systems inventory
maybe useful (at least in the short term). We all know that inven-
tory is one of the eight forms of waste, and therefore the goal
should be to eliminate it. In fact, until processes are capable, the
careful use of inventory may be advantageous. One paradox of
the eight wastes is that it may be preferable to substituteone form
of waste for another (like trading cards).
The key is to think about wherethe waste is and in what state
it is. In other words, is it in finished goods? Is it in WIP? Does the
inventory serve the process to achieve one of the larger objec-
tives? Are you minimizing the waste as much as possible? It is
preferable to push inventory back “upstream” toward the begin-
ning of the value stream and to use inventory in those situations
where it is currently not feasible to flow. Examples include
processes that have multiple products and customers, and
processes that are inflexible.As you study and map your operation, identify inventory locations as well
as the category (work in process, finished goods, purchased components, and
raw materials). Each category of inventory is typically used to compensate for
a specific weakness.
Identify where in the value stream the customer order enters the stream
(where do you schedule?). How long does it take the product to reach the end