Category: Inventory Management
If you’re frustrated and unable to see the path forward, it starts with inventory management and fixing the inadequate systems you’ve been forced to work with. Once you see the solution that I’ll present to you, you will never be able to “unsee” it.
Your goal is to maximize the money kept in the Saving’s account. And therefore, minimize the money in your Checking account. But don’t let the checking balance drop below zero.
Looking back, I don’t know what took me so long to realize that I have outgrown you. You never had an adaptable planning process – you only work if there is no variability.
We know intuitively that we must be agile in order to meet the changing and volatile customer demand. Why do we continue to insist that precision and the resulting chaotic emergencies are the best way to achieve agility?
“We’re taking data we know is wrong and using it to predict a precise outcome that we somehow expect to be right.
The irony is two-fold. First, for all our talk about processes and process improvement, we really spend an obscene amount of time manually adjusting and firefighting to achieve the desired outcome.
Because precision is, um, well, precise, you now have a different starting point for your journey’s second leg. Which means all the future plans you made will need changing.
If you have product available, then sales will result. You will only maintain that level of sales if you have the capability to produce to the customer demand. And if you produce only what the customer is buying, then you will have the money to pay bills, including worker salary.
Typically, your family uses three eggs per day, so you set a safety stock level of six (two days worth). This means you never intend to have less than six eggs. That way, you should not have to rush to the grocery store just because of eggs.
the more steps you have, the less likely your calculations will be completely predictable.
So, why are we still applying the solution when we no longer are facing the problem? There are only two possible answers to that.
We are looking at the wrong end of the problem.
Today’s buzzword is Visibility. Every business leader says that we need better visibility. Therefore, the rest of us run off searching for better visibility.
In traditional MRP, we start with a prediction of demand called a forecast, which is typically a range. We are forced to choose one single number to represent that range which we then input into a complex calculator.
I asked a group of supply chain purchasing and planning professionals a simple question. I asked them how they decide just when to place an order and just how much.
It’s time for a change. Recruiting means you are actively “selling” your company to the prospective candidate.
Reduce Inventory, they said. And they’re still saying it. We’ve been working on the same things for decades. How is it possible that we are chasing the right things, but not achieving the goal?
When trying to implement a culture change or a lifestyle change or any kind of a change, you need to be intentional.
