OREANDA-NEWS. March 14, 2013. At the POSCO Center, POSCO held a ceremony launching `zero inventory` and `Mega-Y.` CEO Chung Joonyang and officers from investing companies attended and pledged to participate in reducing inventory.

POSCO, which has been continuously carrying out the `Three Zero Campaign` by selecting safety accidents, defective quality, and equipment breakdown as three items that must be made zero, added `inventory` at the end of last year for management efficiency. By adding the activity to minimize inventory, the company has decided to carry out the `Four Zero Campaign.`

Inventory exists in various forms throughout overall production activities including raw materials, sub materials, as well as work in progress products, products, and backup equipment materials. In a producer centered market where profits occurred once a product was manufactured, the amount of inventory and how to use it appropriately without losing production opportunities was a key managerial interest.

However, as manufacturing costs rapidly increase due to increased material costs while prices do not due to the stagnant economy and over-supply in the steel market, securing profitability has become a continuous issue making inventory a factor decreasing profitability. An increase in inventory also increases fund factors such as raw material purchase and storage costs, increasing financial cost burdens. Also, even if a defect occurs in the manufacturing field, the issue behind it is not revealed thus losing an opportunity for improvement.

As minimizing inventory has become a management issue for companies recently, POSCO also has made efforts to reduce excessive inventory.

The `inventory zero` and `Mega-Y` projects especially do not stop at simply finding activities to reduce costs. Its goals are to find the root cause of inventory and improve the way of working, and find a solution to the problem.

CEO Chung Joonyang at the launching ceremony emphasized that, ``While it is important to reduce the inventory we possess in a short period of time, it is more important to find and solve the root cause of inventory to increase the company`s competitiveness. We must start by revealing all the inventory we own in order to systematically reduce inventory,`` and asked for everyone to step forward, find core inventory, and lead efforts to reduce it.

Meanwhile, the `Zero Campaign` will be carried out throughout POSCO, all investing companies, overseas production subsidiaries, raw materials at processing centers, products in progress and products, materials, backup equipment, and spare parts.