Over processing occurs anytime more resources are used than truly needed to satisfy customers. Unfortunately, over-processing is one of the most difficult wastes to accurately identify and assess, making it rampant in many organizations.
While inventory is often thought of as an asset, being one of the 7 wastes suggests that may be wrong-headed. In fact, as a waste, inventory can actually represent tremendous loss. Not only can inventory cost 40 percent or more of its direct cost to carry, it ties up precious cash that could better be used elsewhere in the business. A simple definition of the waste of inventory is any on-hand material other than what is needed right now to satisfy customer demand. Inventory can be categorized in various ways.