The Hidden Costs of Overproduction (and How to Spot Them)
How small efficiency wins can quietly drain cash, space, and team focus — and what to do about it.
Every manufacturer wants to keep machines running and their team busy. It feels productive. It doesn’t look right when people are standing around waiting for work or a machine sits idle.
In our world, we’re often measured by OEE — and one of the easiest ways to boost that number is to run jobs “more efficiently.” So we move to longer runs, minimize changeovers, and keep the presses humming. On paper, that looks like progress.
But here’s the trap: those efficiency gains can quietly create the most expensive form of waste in your business — overproduction.
When output isn’t aligned to real demand, you tie up cash in excess inventory, increase risk of obsolescence or rework, and put pressure on space, scheduling, and even morale. It’s waste disguised as performance.
The Core Problem: Why Overproduction Feels Right but Hurts
On the surface, overproduction can look like good management. Machines are running. Schedules are full. The team looks busy.
But here’s the reality:
You’ve tied up cash in the form of finished goods no one asked for — and that may eventually go obsolete.
You’ve lost flexibility in your raw materials, meaning you might not be able to produce a different product that depends on that same input.
You’re doubling up on inventory — paying for both finished goods and raw stock sitting idle.
You’re using valuable shop space to store work that doesn’t create value.
You’re losing responsiveness, because capacity is tied up building product without an order behind it.
You may also be masking deeper issues like long changeovers, unstable scheduling, or poor communication between sales and production.
The result? You’re busier than ever, but less flexible, less responsive, and less profitable.
How to Spot and Prevent Overproduction
The good news is that overproduction is one of the easiest wastes to fix (once you can see it). It hides in plain sight, disguised as efficiency. But a few simple routines can help you uncover it and keep it from creeping back in.
1) Walk the floor with new eyes
Instead of looking for what’s running, look for what’s waiting.
Are there finished goods sitting on shelves for extended periods? Jobs paused on a WIP rack for several days? Can every finished good and WIP item be traced to a specific order?
If not, you’re likely making more than your customers are asking for.
2) Track Demand, Not Just Output
Production schedules often reflect what’s convenient to run, not what’s actually needed. Compare your daily production totals against confirmed orders. When those numbers drift apart, you’re producing inventory, not value.
3) Make Changeovers Faster
Long changeovers are one of the main root causes of overproduction. Teams compensate by running larger batches to avoid downtime.
Attack the problem, not the symptom. Invest time in SMED (Single-Minute Exchange of Dies) so smaller, more frequent runs become realistic.
In my last business, this work reduced changeover times by over 80%, freeing capacity and improving flow across the floor.
4) Create Visual Triggers for Flow
Use simple visual controls—kanban cards, color-coded racks, daily huddles—to show what needs to be built and what doesn’t. Visibility prevents the “we thought we needed more” trap that drives excess work.
5) Realign Metrics and Incentives
If the scoreboard rewards output and uptime, people will chase output and uptime.
Shift your focus toward flow, lead time, and delivery performance. Reward stability and responsiveness instead of raw volume.
When metrics align with customer value, overproduction naturally starts to disappear.
The Real Lesson
When we stopped chasing efficiency for efficiency’s sake, everything got easier. At my last company, cutting changeover time by more than 80% didn’t just free up space and cash. It brought calm. The team stopped measuring success by how busy we looked and started measuring it by how steady the flow felt.
Overproduction hides behind good intentions, but once you learn to see it, you can’t unsee it. The goal isn’t to make more. It’s to make what matters most, when it matters most.
If your operation feels busy but unpredictable, it might be time to take a closer look. A short walkthrough of your flow is often all it takes to see where efficiency turns into waste.
