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Introduction

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Software Development/Manufacturing (and Factorio) = Inventory is bad (sad)

What is inventory

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Wikipedia:

"the goods and materials that a business holds for the ultimate goals to have a purpose of resale"


My generalisation:

"Finished Products or Components not generating value"

Inventory in software development

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Either developed features or stages of development not yet in the hands of consumers


Waterfall:

Requirement → Design → Build → Test → Release

Agile:

Grooming → Sprint → Release


Shorter release cycles decrease the inventory of a software development team

Inventory as Asset or liability

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Asset

In terms of financial reporting inventory is listed as an Asset on the Balance Sheet
because it represents a value

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Liability

  • Will you be able to resell at full value?
  • Cost of maintaining inventory?
  • Relevance of product over time?
  • Customer feedback?

Value

Value is generated when a consumer is using the product

Example

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Physical:

Christmas decorations → Demand in December. Production all year

Chart
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typexyLine



0123456789101112
Produced0100200300400500600700800900100011001200
Demand0000000000001200


Difference between graphs is Inventory


Software:

Annual release → Demand all year, but only released annually → Extra releases...

Smoothen production

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Inventory evens production → Inventory hides the cause of variation

  1. Delay value generation
  2. Hiding the cause of the variation → Fix it instead of 
  3. Delay feedback and extends feedback loop

Reading recommendation

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The Toyota Way by Jeffrey Liker

The Toyota Way cover art

Try Audible.com with 1 Month Free Trial

Outro

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All material available in Confluence:

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More "10-min Product Management" Videos on YouTube

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Join the discussion on the Discord server:

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