8 Wastes in Golf: Inventory

A few weeks ago I started our discussion on each of the eight types of waste seen in the golf industry, beginning with a commentary on the waste of Transport. I will dive deeper into each of the 8 wastes -- Transport, Inventory, Motion, Waiting, Over-Production, Over-Processing, Defects and Skills -- in a series of posts on this blog. Where appropriate, I will also offer my suggestions to reduce and/or eliminate excessive waste in each category. I hope you will join the conversation by posting your thoughts in the comment section below.

This week we continue our discussion with perhaps the most obvious waste seen in the golf equipment industry today: the waste of Inventory.

What is the waste of inventory?

The waste of Inventory describes any excess of raw materials, work-in-progress (WIP) or finished goods stock that is held for far longer than what the customer demands (commonly referred to as the Just-In-Time principle). Simply put, the waste of inventory is simply having too much "stuff" on store shelves and not enough customers to buy it.

How does this relate to the Golf Equipment Industry?

I think we can all agree that the current state of the golf equipment industry exemplifies this type of waste.

Think of any Golfsmith, Golf Galaxy, or Dick's Sporting Goods store you've ever been to. Traditionally, you will see new products along the outer perimeter most likely displayed on a wall or in small club racks (especially in the case of drivers and woods). For new inventory, this is actually a very lean method to display a product. After all, you don't see mountains of new irons stacked on top of one another. There is usually only one -- maybe two -- display model of a new set of irons for you to try.

The same cannot be said for the clearance rack. These sections of the store are usually much more muddled and disorganized, featuring a cornucopia of different brands and club types waiting for a customer to buy them.

Second-hand stores are even worse in this regard. Play-It-Again Sports -- a popular used sporting good retail chain -- could very well have been named Golf Club Graveyard. Layers upon layers of golf clubs from years past litter these stores' shelves, often going months or years without being purchased. Before too long storeowners must unload this excessive inventory by either donating the equipment or simply throwing it away. Either way, you're dealing with a form of waste.

How is this wasteful?

Every piece of inventory you hold comes with a physical cost to store it. It doesn't matter if we are talking about pharmaceuticals, car parts, kitchen utensils or golf clubs. If you are a business owner, you are paying someone for the space to store all of your inventory. Every penny that you tie up in inventory is one penny less that can be used elsewhere in your company. This is simple business economics.

There are also hidden -- and sometimes more serious -- forms of waste within inventory. You have to pay employees to keep track of your inventory. You have to maintain the shelving, containers, security protocols and overall environment of the space used to store your stuff. Overproduction -- another type of waste -- goes hand-in-hand with inventory as store owners cushion their product volume with a 'comfort stock.' All of this costs money.

So what is the solution?

As always, this is not an easy question to answer. From a Lean Six Sigma perspective, the first step would be to compare actual product sales against inventory volume to determine if there is a statistically significant difference in dollars spent. It would be helpful to break this comparison down by quarter, especially around "busy times" immediately before a new product release.

While I do not have direct access to this type of information from OEMs, past experience suggests that most golf clubs rarely sell out, even within the first few months post-release. On one hand, this is exactly the scenario that companies want: inventory is high enough to prevent people from having to wait to buy their product. On the other hand, most of the new clubs will not be purchased, causing excessive inventory and the snowball effect explained above.

The best possible solution, in my opinion, would be to go to a direct-buy, Just-In-Time production model where golf clubs are made and sold on a 'made-to-order' basis. Allow customers the opportunity to demo a club at their nearest golf retailer, but then require them to purchase "their" club direct from the OEM.

8 Wastes in the Golf Equipment Industry

The current state of the golf equipment manufacturing industry is a wasteland. As companies turn out more and more clubs into the marketplace, customers are hard-pressed to keep up with all of this 'innovation' and 'performance' flashing across their TV screens, golf magazines and laptop monitors. Sorry friends, but the golf equipment industry needs an enema.

Not entirely unlike the 'Seven Deadly Sins', there are 8 wastes found in industries across the globe: Transport, Inventory, Motion, Waiting, Over-production, Over-processing, Defects (Rework), and Skills (Human Intellect). Eliminating or reducing these wastes from the golf equipment industry would not only streamline processes and increase customer satisfaction, but it could very well save the industry itself.

Here are eight examples of each type of waste within the golf equipment industry as I see it.

Transport

Whenever you have an excessive amount of people, products or information moving around a process, you are dealing with waste. Think about all of the different places you can purchase a golf club. You've got brick & mortar major sporting dealers (Dick's, Sports Authority, etc.), golf-specific stores (Golf Galaxy, Golfsmith), second-hand sporting good shops, and this little thing called the Internet. The omni-channel model of combining multiple retail sources just compounds the issue.

If OEMs want to help solve the way their industry is perceived, they need to first limit the places their products are moving, not increase them. I know that sounds counter-intuitive, but less is more in this case.

Inventory

This should be obvious. Anyone who has taken five minutes of an Economics class knows the concept of supply and demand. If you carry more inventory than what your customers need, you run the risk of your products expiring or cannibalizing themselves. That's waste in a nutshell, really.

All of those drivers and iron sets you see "priced to sell" that were once at full price only 4 months ago? That's excessive inventory, which costs money to store, and even more money to throw away. (See: Dick's Sporting Goods laying off all of their PGA pros.)

Motion

Similar to Transport, the waste of motion deals specifically with excessive moving parts within a process or task. Think about all the steps you -- personally -- have to go through in order to buy a new golf club. First you have to learn about the new product. Next, you have to find the product's price. Then you probably want to test it out at a store. You might need to also get fit for the club. If it's an adjustable driver, you'll also want to tinker with the loft, swing-weight and whatever else. All of that excessive motion needs to be done before you even buy the damn thing.

Want to cut down on all of that motion? Simplify golf club technology and increase accessibility of product testing. A one-stop shop is ideal.

Waiting

Any time you have to wait for something to occur before another step can take place in a process, waste is growing. Admittedly, OEMs have done a pretty decent job with cutting down how long you have to wait before you get their product in your hands. There's always room for improvement, however.

The waste of Waiting can also be delayed (pun intended). Whenever a new golf club is announced by your favorite brand, you may be tempted to "wait" for prices to drop on "older" equipment. Every day that goes by before prices drop is a day where you -- the customer -- keep your wallet shut. Want to decrease excessive inventory while increasing sales? Lower prices a full month before the next product is announced.

Over-Production and Over-Processing

I'm grouping these two wastes together because they are very similar in most industries. Similar to Inventory, supply and demand dictates how bad these wastes can be for a product. A good analogy for Over-production is to compare McDonald's against a high-end restaurant. Mickey-D's makes a ton of hamburgers every morning in preparation for that day's customer volume (even though they really don't know how many people will walk through the door). At the end of the day, any burgers that aren't purchased get thrown away. Conversely, most restaurants are "made-to-order" and only make food at the time of order. Sound similar to golf clubs being pushed down your throat?

Over-processing is similar such that high-grade materials and features are being used when less fancy items would do just fine. I guarantee you that amateur golfers cannot tell the difference between a standard driver and an adjustable driver. Why do we need to move weights around and change our driver's center-of-gravity? Seems pretty wasteful to me. And expensive.

Defects (Rework)

This is, in my opinion, one of the biggest wastes currently seen in the equipment industry. While golf clubs might not be defective in the truest sense of the word, there is a TON of rework that occurs every single time a new club is released.

Be honest with yourself: is there really that big a difference between the TaylorMade SLDR and TaylorMade JetSpeed? Sure, there are a few different moving parts here and there, but such small details are hardly reason enough to shell out another $400. The same can be said for almost every new iron, wedge, putter or wood that comes off the assembly line. Increase the time between product releases to allow for true innovation to breathe.

Skills (Human Intellect)

Last but certainly not least is the waste of Skills, also commonly known as the waste of Human Intellect. The concept of Hack Golf and crowdsourcing was started to combat this waste, which describes any time you aren't tapping into your people's (or customer's) knowledge base.

Golf OEMs are comprised of some very, very intelligent people. I've met many of them. I enjoy speaking to all of them. And, more often than not, all of them also play golf. It would be foolish for the golf equipment industry to ignore the pain points golfers feel when purchasing new clubs, and I suspect they are finally getting the message.