The Costco Conundrum – Supply Inventory

Note:  This blog is the second in a series on the “Seven Wastes of Muda”.

 As most families with fewer kids than Mother Hubbard know, the problem with Costco is that the 64-ounce jug of ketchup is awkward to handle, takes up a lot of room in the refrigerator and may spoil before you finish it. But the intuitive appeal and the long legacy of Henry Ford’s production system, with its emphasis on reducing unit costs, are hard to suppress.

When, in the 1990s, a delegation of executives from Detroit visited Toyota to find out how it was making cars for so much less than Detroit, one of the major surprises was that Toyota had completely abandoned the Henry Ford mass production philosophy.  The Toyota Production System (TPS) was (and is) in large part built on the principle of never having anything on hand that is not immediately used, processed, or consumed.   And so we come to the Waste of Inventory – the “I” in Tim Wood (the acronym for the Seven Wastes identified in the Toyota Production System). 

A core tenant of the Toyota Production System (TPS), as well as its Western successors (Lean Manufacturing, Six Sigma) is that “Inventory is the root of all evil”.   Waste due to inventory impacts courts with particular force in the document management arena at both the front and back ends of processes.   Let us first consider the front end impact.

 In the Detroit factories, all of the parts needed for an entire run would be brought to and stored at each assembly line station.  That way, a crate of screws, a truckload of doors, and so forth, could be on hand (“Supply” Inventory).  The assembly line worker would grab the needed part from the stack and perform the assembly function as quickly as possible.  The fewer trips needed to resupply the stations, the better (lower per-unit costs).

 At the Toyota plants, the assembly stations were essentially the same:  Axles got attached to frames; doors to bodies, and so on.  But there were NO EXTRA PARTS at any of the stations.  The parts did not arrive until they were needed – hence the term “Just-In-Time”.   By developing and implementing technology and workflow (technologies never available to Henry Ford), Toyota automated the movement of the parts to their destinations when needed.   Thus, the space required for each station was substantially less.  There were never any leftover (wasted) parts that had to be moved again (and possibly never used – pure waste).

 In courts, stacks of papers and files waiting to be processed constitute “Supply” inventory.  It may seem simpler and more efficient to pile them up, process each, and move them from the “In” box to the “Out” box; and, let’s face it, that’s what people are used to doing.  However, just as Toyota realized with its assembly line, the results are counter-intuitive.  The stacks take up valuable work area space.  While items are in the stacks, they are unavailable for any other use.   Processing them “out of order” requires shuffling through the stacks.

 Using Enterprise Content Management (ECM) with configurable workflow on the incoming end, the electronic document is available “Just In Time”, whenever the user is ready to process.  So, for example, a judge can sign one or several documents whenever he or she is ready.  Files in court are available as cases are called.  Court staff reviewing and processing documents pull them from their work queues. 

 (It is important to note that electronic documents or files listed in a work queue are not “inventory”, in the sense that they occupy no space, require no movement, and remain available to everyone else even while “queued” for processing.)

 ECM, then, is the technology that enables elimination of front-end, supply inventory.  Space is saved, document and file availability are not compromised, organization is easier, and there is no “waste” – unnecessary pulling, transport and refiling of unused and unneeded documents and files. 

 Note: In the next post, we will consider inventory on the back end of processes, i.e.,  Finished Inventory.

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