What is overproduction?

Overproduction is the phenomenon we face when a company produces too much or does so early. We encounter overproduction when production “overtakes” customer demand or the needs of the next process. That is why overproduction is often called just-in-case production. This situation is to ensure that the company will be able to supply all customers, regardless of how many products they need.
Overproduction leads to inventory build-up and influences the development of other losses, which you can read about in this article. It is also called the “mother of all losses” by practitioners for good reason.

Causes of overproduction

Overproduction can have a variety of causes. The most common are:

• The desire to use the full capacity of machines,
• Introduction of automation in inappropriate places,
• Badly organized bonus system for employees (rewarding for the volume of production instead of the implementation of the production plan according to the schedule),
• Improperly functioning communication system in the organization,
• Inadequate production planning,
• Manufacturing in large production batches,
• High costs of machine changeover.

Effects of overproduction

Producing too much and too soon results in:

• Increasing inventory levels and increasing storage costs,
• Reducing available floor space,
• Requiring more resources to take care of storing, stacking and sorting inventory,
• Freezing cash, which increases opportunity costs (e.g., investment in modern technology),
• Increase in damage and defects due to movement of goods,
• Decreasing flexibility in planning,
• Development of other losses. The effect of overproduction is inventory. The processes performed during overproduction can be described as over-processing and unnecessary movements. Moving products from one corner of the shop floor to another is unnecessary transportation. The hope that the customer will order what has already been produced is anticipation. And shortages and defects can occur during any additional activity in the process.

Prevention of overproduction

There are two basic concepts that influence the elimination of overproduction.

1. The first of them is the concept of Lean management. It consists in gradual elimination of losses, thanks to rational use of resources in the company.
2. The second concept is Just In Time. The aim of this concept is to produce exactly what is needed, when it is needed and in the quantity needed. As a result, inventories are reduced to a minimum, which has a positive impact on optimizing the size of each delivery.

Elimination of the problem of “overproduction” allows for better use of resources, improvement of work efficiency and reduction of enterprise costs. And this affects the increase of competitiveness of the company on the market.