Most manufacturing businesses believe that producing more is always better, but overproduction is often the most expensive habit on the shop floor, and most CEOs don’t even realize it’s happening. Hi, I’m Srikanth Prabhu Desai. I work with B2B manufacturing businesses to improve delivery, control costs, and reduce unnecessary firefighting on the shop floor. Overproduction feels safe. You want to keep machines running, people busy, and stock ready just in case. But what actually happens is that cash gets
locked into inventory that doesn’t move. When you produce ahead of demand, finished goods pile up. That ties up working capital, increases storage costs, and raises the risk of damage, obsolescence, or rework. None of this shows up immediately as a problem, but your margins slowly start shrinking. Overproduction also hides real issues. When stock is available, problems like poor planning, inaccurate forecasts, or frequent machine breakdowns stay invisible. The shop floor looks busy, but efficiency is quietly dropping. The
smarter approach is to produce based on real demand and reliable schedules. When production is aligned with actual orders, cash flows faster, inventory stays under control, and issues surface early when they are very cheap to fix. So, if your shop floor always looks busy, but cash is tight, take a closer look at overproduction. Producing more doesn’t mean earning more. Producing the right amount at the right time is what actually protects your margins.
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