The choice seems to be waste vs. performance, but can it be true that if I add waste I get better performance? Just thinking about it makes my head hurt. In reality, better performance is just an illusion. When things go wrong, as they always do in the real world, you have the ability to quickly make up for it by dipping into the reserve of "excess" inventory. But when things aren’t going wrong, which hopefully is most of the time, the waste is sitting there draining your business.
The lean argument is that reducing inventory brings problems to the surface and forces their resolution. Supplier issues, machine downtime, quality problems, low productivity, scrap, incapable processes, long setups, imbalanced lines, lack of teamwork and inadequate training are problems we can avoid fixing if we have plenty of inventory.