Overproduction

To have something to sell, you need to make it. Sometimes, though, you make too much. On the surface, it seems a bit silly to make things you can’t sell, but every company does it. Overproduction is everywhere if you know where to look.

Next time you’re in the bakery section of your supermarket at the end of the day, look around at all the loaves of bread that didn’t sell – That’s Overproduction. What about the newspapers and magazines that are left at the end of the day or month? That’s Overproduction. The last unsold coffee in the pot at your local diner at the end of the day -more overproduction.

End of year “blowout sales” and discount racks? -Yup, Overproduction.

Sometimes it isn’t so obvious, though. I was once in a small manufacturing business that painted fiberglass parts. For each batch of parts, the paint booth employee would mix up the paint to be sprayed on the parts. The paint was mixed with a curing agent and had to be used quickly. The owner mentioned how surprised he was that there was never any mixed paint leftover. At first, he figured that the operators were just really good a estimating how much paint they’d need. After watching the process one day, he realized that it was too good to be true. Actually, since nobody wanted to run out partway through a job, they’d mix up more than necessary, but would just keep spraying until it was gone. Maybe some batches of parts got just enough paint, but others probably got lots more that they needed. The customers didn’t care, but the owner did. Overproduction can be expensive, and sometimes it’s harder to see than stale bread on a shelf.

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