Inventory Reduction, Now Selling 20 Ideas

  1. Cut the package size, customers may want less right now.
  2. Increase the package size, customers will take what they can get.
  3. Have a 2 for 1 sale.
  4. Bundle a slow mover with something else.
  5. Change the safety stock service level from 98% (or where ever you have it) to 95%.
  6. Reduce the number of A items.
  7. 2%10 net 60.
  8. Double up your cycle counting.
  9. Start and Inventory Reduction process if you don’t already have one, retool the one you do have.
  10. Encourage more vendor consignment stock.
  11. Add some technology and reduce transaction delays.
  12. Find closer suppliers.
  13. In-source some of your suppliers.
  14. Switch from make-to-stock to make-to-order, or finish-to-order.
  15. Move inventory and material control to your production people.
  16. Blow up the warehouse and move parts to point-of-use.
  17. Switch to 3rd party logistics.  Have a 3PL but don’t see the benefit, the fire them and get a new one.
  18. Create a logistics function; consolidate and leverage.
  19. Forward Cycle Count – count items needed in the near future, find the stock outs before they bite you.
  20. Pull a few Kanban out of circulation, wait and see what happens, pull out some more, if it gets ugly put one back.

 

 

 

Lean String Theory

Before the widespread use of computers the location of warehouses, stores, franchises were often settled by using a ‘string map’. Pins were stuck in the map at customer’s locations, and string, usually thread or fishing line, looped over them, the weight on the end of each line being proportional to that customer’s deliveries. The ends of the string were knotted together. Where the knot settled was the center of pull (not gravity).

 

 

 

 

Fixed Repeating Schedule – Product Family Turnover Rate

Here’s another example for “sizing the wheel” for a mixed model fixed repeating schedule.

Given:

  1. Changeover Time = 100 minutes
  2. Available Production Time = 2 shifts * 7 hrs/shift * 60 min/hr = 840 min/day

and

Product Daily Demand (pcs) Cycle Time (min.) Load (min.)
A 80 5 400
B 40 4 160
C 20 4 80
D 10 6 60
700

Now some math:

  1. Total Load = 700 min.
  2. Time Available for Changeovers = 840 min/day – 700 min/day = 140 min/day
  3. Changeover Time for group = 100 min * 4 products = 400 min/family
  4. Changeovers per day = 140 min/day / 400 min/family = 0.35 group/day or a Replenishment Time of 2.85 days/family

So the fixed repeating wheel will turn once in 2.86 days.  Production run sizes as follows:

Product Daily Demand * Replen Time Cycle Time (min) Load (min)
A 229 5 1145
B 114 4 456
C 57 4 228
D 29 6 174
2003

Plus 4 changeovers of 100 min each = 2403 min = 2.86 days.

When it comes time to run product A, run 2.86 days worth. Got it?

Would be nice if we could run just one piece.  But until we can make the 100 minute changeover go away we’re stuck running a batch of some size.

 

 

 

Kanban Simulation

Table top simulations are always a great training aid, and a debugging tool too.  Despite careful instruction and process design reviews misconceptions can be hard to uncover until during implementation.  So I always make it a habit to run a role playing simulation with the team.  Here take a look.

 

Process Improvement in a Down Economy

Many business leaders fail to see the opportunities that an economic downturn provides.  To take advantage of opportunities you first need to make a rapid assessment of your vulnerabilities and then move quickly to minimize them.  Advantage can be gained by using process improvement tools to increase profitability and competitiveness:

  1. Drive out waste through Lean Sigma operations
    Tools: value stream mapping, line balancing, kaizen to reduce direct and overhead labor
  2. Customer Collaboration
    Tools: customer segmentation, goal alignment, cycle time reduction, product line rationalization
  3. Supplier Optimization
    Tools: supplier & material consolidation, lead time reduction, product design-to-cost
  4. Accelerate cash flow and aggressively manage working capital
    Tools: inventory reduction, excess/slow moving/obsolete inventory analysis, safety stock tuning, cycle time reduction to reduce WIP, receivables and payables management
  5. Increase Capacity
    Tools: overall equipment effectiveness, theory of constraints, quick changeover, product family turnover analysis
  6. Product Redesign
    Tools: component substitution, design for six sigma, design for manufacturability, value engineering