But inventory gives a feeling of security?!
That may be, but it's a false sense of security. You rely on inventories when you believe they are in perfect condition. Unfortunately, this is often no longer true after days and weeks of storage. And the security you trusted on has vanished...
But another economic fact is even more serious: As a company you have to pre-finance this inventories, which are expensive. Usually, customers only pay after delivery of a perfect product. As long as the product is not shipped to the customer, you don't get any money. And maybe you have to invest extra money for the storage!
So how can you minimise and ideally eliminate inventories?
This is another question that's easy to answer. You have to switch from "put in all you can" to "only produce on demand". We like to sum it up as: "If something's gone, replace it. If nothing's gone, don't add to it!"
It's much more difficult in practice to change from a push system to a pull system. But you're not alone - we're here to help you!
What are the benefits changing over to a pull system?
Economywise there is a positive business impact onto your company. Prefinancing rates will drop, inventory risks will be minimised, and storage costs will be reduced drastically. We call it the introverted or the inbound principle, benefits are mainly focusing on the supplier side, not on the customer side. Therefore its important to survive for the long term.