Inventory Drivers August 30, 2008
Posted by Lawrence Loucka in : Supply Chain , 1 comment so far 
• Supply Chain Organization: Is there an integrated approach to the supply chain and inventory decisions, or functional silos? The less integrated, the more inventory problems (shortages or overages) are likely to occur.
• Supply Chain Network Design: The greater the number of stocking points, all things being equal, the higher the level of inventory. The longer the supply chain (e.g., goods produced offshore), the higher the level of inventory.
• Customer Service Policies: A company’s strategies and goals related to customer service, both generally and at an A, B, C category level, will greatly impact inventories.
• Safety Stock Policies: Relatedly, how aggressive or not a company wants to be with safety levels, and how frequently a company revisits safety stock assumptions and SKU-level targets, are key variables.
• Degrees of Freedom for Inventory Decisions: The more individuals that have the ability to add inventory into the supply chain, the higher the levels are likely to be.
• Management of Trade-Offs: Company specific decisions about the traditional inventory, transportation, and unit cost trade-offs. The lowest total cost will usually have higher inventories than the lowest inventory cost option.
• Forecast Accuracy: The greater the level of forecast inaccuracy, generally the lower levels of total inventory.
• Demand Variability: Highly dynamic demand in general leads to greater inventory levels to maintain customer service targets.
• Supply Variability: The more variable the supply, the more buffer inventory that needs to be held. Obviously, this is a potential issue with offshoring. In general, variability of supply is worse than a long supply chain in terms of the impact on inventory.
• SKU Counts: The higher the number of SKUs, the higher the level of inventory will generally be for the same dollars in sales.
• Total Cycle Times: The faster the cycle times, the lower levels of inventory required. Procter & Gamble, for instance, is trying to make its factory more flexible, with much quicker set-up times, in part to reduce inventory levels.
• Level of Supply Chain Collaboration: The more integrated a company is with suppliers and customers to jointly manage inventories, the lower inventories are likely to be.
• Vendor Relationships: Companies that have supplier-owned inventory programs, or just-in-time supplier logistics centers, will have lower total inventories on the raw materials/components side.
• Level of Supply Chain Visibility: The better visibility a company has to its network-wide inventory, the lower its total inventory should be. This is part of the promised potential of RFID.
• Inventory Accuracy: The more accurate a company maintains its levels of raw materials and finished goods inventories, the lower the level of inventory, as planners have better trust in the numbers upon which they are planning.
• Order Patterns (Seasonality): Less consistent demand patterns can lead to higher inventory levels. As an extreme example, some wrapping paper manufacturers build inventory all year to ship only in the couple of months before Christmas.
• Metrics: What gets rewarded? Metrics drive behavior, and it is no different with inventory. Have a plant that is driven primarily by yield and cost per unit metrics? Expect more inventory, for example.
* from Supply Chain Digest Letter July 2008
Gemba Walk July 6, 2008
Posted by Lawrence Loucka in : Definitions, Lean , add a comment 
1. Select a theme for each walk
2. Question the supervisors
3. Listen (and learn) attentively
4. Share what you learn as you walk
5. Write a short memo on what you learned and post it for all to see
6. Follow up to see that progress is being made
5 Rules of On-error Training July 6, 2008
Posted by Lawrence Loucka in : Definitions, Lean, Logistics, Sigma , add a comment
1. Ownership Rule - the person who first detects the problem is responsible for finding the root cause of the problem.
2. Quickly Rule - the problem must be dealt with and solved within 30 minutes, not put on a list or in a report for action at another time.
3. Actually Rule - if possible play back or recreate the process that occurred before the defect.
4. Support Rule - the person who detects the problem has primary responsibility for solving it, but supervisor and fellow workers can stop working and lend problem solving support.
5. Shut Up Rule - the discoverer is expected to solve the problem and be allowed time to dicsuss the problem and attempt to solve it. Others can help but the supervisor or manager must keep quiet and give the person a chance to solve the problem.
Gemba July 5, 2008
Posted by Lawrence Loucka in : Definitions, Lean , add a comment
The King
Looking out
Onto the Land
In the Hot Sun
Where the Pigs are
Gemba - where to be to understand: not in the office or a conference room, but in the real place.
Toyota Vocabulary July 3, 2008
Posted by Lawrence Loucka in : Definitions, Lean , add a comment
Everyone working together in a large room without partitions: Obeya.
Posting project team information on the wall of a dedicated ’situation room’: Mieruka: visualization
Personal Magnetism: Jinbo. When Toyota evaluates their supervisors and managers they emphasize process performance, learning, and teaching over results, goals, and objectives.
Adhesive Strength: Nebari Tsuyosa. Persistence and resilience are Toyota’s measure of manager performance.
Drinks with fellow workers: Nomikai. Sharing information, learning by visiting.
"Let’s Yokoten": communication is viral, literally: unfold or open out sideways.
Committees: Iinkai; every Toyota employee belongs to several.
Self organized study groups: Jishuken.
Consensus building; shopping an idea around: Nemawashi.