Firms
today are beginning to understand more and more that high levels of inventory
aren’t just detrimental to costs but also for hiding other potential issues.
Inventory management starts with lean buying and planning tactics as well as
streamlined inventory management standard processes for material handling and
planning.
It
Begins with Suppliers
The
beginning stage of inventory management doesn’t begin at the dock door; rather,
it begins with the supplier. The supplier must fully understand their
customer’s intentions (and especially demand) in regards to material planning
and purchasing for the firm. Firms need to advise their suppliers of their
consumption (customer demand) so that they can match buying and manufacturing
processes for both parties. This collaboration allows for a more level volume
flow within this particular sector of the supply chain network. As both firms
begin to understand their customers’ demands the firms are more able to align
their processes in this regard. As smaller shipments at more frequent intervals
becomes the norm, the inventory isn’t necessarily being held by an individual
firm (holding costs), rather it is being spread throughout the supply chain for
more level consumption and cost sharing. This can help reduce total costs for
all parties involved (potentially transportation costs may go up but this
amount is rather minuscule compared to materials/logistics spend). Once this
relationship begins to become more stable, real levels of inventory can be
realized, i.e. supplier processes are strong enough to support individual
quantities rather than batch shipments.
What Happens Next?Inventory
Once
the collaboration has begun with supplier(s), internal processes can be geared
toward lean receiving and warehousing functions. These functions must support
the ultimate end goal (as should all processes in the firm): customer demand.
As customer demand is realized, buying habits then reflect this menagerie of
relationships that can directly affect warehousing/production needs (to support
those customer demands). Receiving processes must also be geared to effective
storage and usage of inventory for production purposes. As production has a
specific lead time and takt time (for each process) it is important for
receiving/warehousing to understand those items and to effectively match their
processes and resources to eliminate waste in order to provide a more stable
volume flow. As inventory is maintained at low(er) levels, these stable
processes can help become more agile to the overall production process
(customer demand).
Cost
Benefit
Internal
processes, when maintained and continuously improved upon can help leverage and
maintain low(er) inventory levels. But these inventory management processes
will take some time to implement and will require parity at all levels within
an organizations, and eventually with supplier(s)/customer(s). As each function
is causal and has a direct effect on every other function within a firm, it is
paramount that each relationship is clearly understood. Lowering inventory
levels too quickly could run the risk of line stoppages (unstable processes)
and mis-communication (visibility gaps) which could be detrimental to a manufacturing
operation. For this reason, firms must understand the cost and the benefit of
maintaining lower levels of inventory, as they continue upon their lean
journey. Inventory management can help reduce one of the most strenuous (and
potentially non-necessary) costs for a firm. As long as the processes and the
visibility between each function supports all of the other functions, low(er)
levels of inventory can be maintained. Collaborating with other members of the
supply chain and leveraging these process techniques can have huge benefits for
a firm in regards to inventory management. This brings up a serious but very
real question: what is holding your firm back from lowering inventory levels
and costs?
http://www.leancor.com/blog/inventory-management-in-manufacturing-environment/