Many of you are looking for a correct, comprehensive safety-stock calculation. My company’s approach is based on more than 15 years of development and testing. As we have learned through extensive experience, optimized safety stock requires more than a formula. We use complex demand–data modeling and calculations. We provide a service, not a spreadsheet. You send us your data. We send you the results.
Our safety-stock model is correct and comprehensive, providing optimal safety stock levels for your service-level and financial-performance targets. We include all the factors that affect safety stock and service level, and apply the proper statistical techniques to them. We do not utilize the usual stockout-event-based metric, but the same quantity-based fill-rate criterion that most companies use to measure actual service-level performance during a month, quarter or year. Our calculations represent the right-skewed and sporadic patterns typical of real demand data. Our model also includes past-due demand and its disruptions, probability of past-due-demand cancellation, lead time, reorder quantity (MOQ, EOQ, etc.), package size and reorder-review frequency. Finally, our results provide a high degree of confidence, typically 95%, of consistently achieving your target service levels without costly expediting.
For more details, see our white papers at www.topdownleansystems.com/white.htm. Page 16 of the “Common Safety Stock Calculations” white paper has examples of our safety-stock analysis. Also, see how you do on our Safety Stock Quiz, at www.topdownleansystems.com/quiz.htm.
To demonstrate the power of our approach, we would be happy to calculate and analyze safety-stock levels for a sample of your inventory items at no charge. Send me data on up to 30 of your items, and we will send you results – safety stock quantity and safety stock days for each item. Our analysis also includes each item’s range of expected actual performance for fill rate; average reorder and on-order quantities; average quantity on-hand, days on-hand and inventory turnover; average daily demand and demand activity percentage.
We require this data for each item: Item identifier, target fill rate, reorder quantity (MOQ, EOQ, batch size, lot size, etc.) or reorder frequency, package size (order multiple), lead time, probability of past-due-demand cancellation, days in actual service-level measurement cycle, and as much historical daily time-series demand as possible (three years is best, two is better, one is good). We perform extensive pre-screening on your input data to identify potential issues and to avoid “garbage in, garbage out.”
Send me your contact information via www.topdownleansystems.com/contact.php. I’ll provide you with a file containing input-data examples. Of course, I’ll be happy to explain our model in more detail and to answer your questions, at your request.
David McPhetrige, TopDown Lean Systems
 Business may be slow now but before you know it you’ll be jammed again. Want to get more done with the folks you have? Things to consider:
- Keep the lifts in good repair
- Batteries getting old?
- Stagger shift starts – replenish forward picking before the first wave
- Reslot often
- Not enough space, then make more – get to 10% empty forwards and 20% empty reserves
- Qualify and prioritize the inbound freight – need the trailer now, or later?
- Qualify the product going into reserve
- Get the inbound current and under control before tackling pick, pack, ship
- Fix any and all inventory inaccuracy root causes
- Have fresh eyes look at the problem – select different supervisors or warehouse workers look at other areas
- Eliminate touches
- Minimize travel
- Right size the forwards, so inbound doesn’t need to go into reserve
- Align the picking method for each product with its order pattern
- Can the WMS round up order quantities to an easily picked unit or measure?
- Engage the troops
- Every DC worker makes thousands of decisions each day; understand and guide discretionary decision-making
- Solve the workforce’s boredom problem
- Most supervisors spend less than 5% of their time on motivating employees, double that and double productivity
- Inbound congestion means waste and extra touches
- Housekeeping
- Address the annoyances that demotivate
- Keep inbound under control and putaway as timely as possible
- Recalculate Safety Stock
- Update leadtimes
- Bust the inbound batch sizes
- Increase inbound visibility, smooth the spikes if you can
- Publish metrics for all to see and encourage friendly competition between zones, departments, facilities
- Create a ‘dog pound’ and move slow movers out of the way
- Study and fight outbound congestion
- Adjust the number of pick zones; fewer the better
- Synchronize order filling across all zones
- Keep current on replenishment
- Never run out of supplies (totes, pallets, carts, tape)
- Adjust the organization chart
- Constantly monitor outbound flow; rebalance pick, pack, and loading
- Reduce the number of job classifications
- Use inbound teams and eliminate staging areas: unload, receive and put away with one touch not two or three
- Brainstorm and then brainstorm some more
- Be careful what you measure
- If you are in a meltdown, get help
- Consider postal pick location address scheme; going down an aisle picking on left and right instead of down one side and coming back the other
 The term Waterspider or water beetle (mizusumashi in Japanese) comes from the behavior of the insect known in the States as a whirligig, an aquatic animal that skitters around on the top of a pond quickly changing direction as it goes. For a lean enterprise the role of material handlers, expediters, and support staff changes. In the Toyota Production System this is the common name for a person assigned to support a production operation, so that others may focus exclusively on value-added work. The waterspider delivers parts to the other associates in the cell or on the line so that they don’t need to stop to replenish their work stations.
Unlike a ‘floater’, a waterspider is assigned specific tasks, such as replenishing raw material inventories (via milk run), common area clean-up, communicate status, maintain visual metrics, etc… Waterspider duties usually don’t include tasks which take them away from the production area, or detract from their specific, assigned duties (the waterspider is not the ’5S’ person or a ‘fill in’). Think of the waterspider as the ‘race car pit crew’ for the production team, without which it would be impossible to win or even run the race.
Waterspiders quickly become experts in the withdrawal and production kanban system. They can ‘see’ more of the up and down stream flow in real time than most others, and because of this often making it possible to identify and eliminate errors. From recent experience the waterspiders often have a better grip on reality than their managers, planners, and engineers.
Non manufacturing examples abound in restaurants, hospitals, insurance claims processing; serving the folks that add the value isn’t just for manufacturing. In product and software development the role of the program manager is sometimes something like that of the waterspider, except bringing knowledge to the various development team members instead of parts.
Here are a few references:
Single piece flow at ConMed Linvatec
Improving Workflow With Water Spiders at University of Michigan Health System
Inventory management in electronics manufacturing: The Move To Lean
Lean in the Oil Fields
Have any examples you’d like to share?
Dave Jones and Pierre Loewe write in Chief Executive Magazine …
Discontinuities are big, foundational shifts which have the potential to fundamentally change the rules of the game. They occur when trends from different areas combine, resulting in game-changing, long-lasting modifications to the external landscape. If you can identify them earlier and exploit them better than your competitors, you will win. If you don’t, you will be left behind.
You need to assess how the current crisis has affected the discontinuities you were anticipating before the recession hit. Say that until recently, you thought that being “green” meant addressing your carbon footprint. But did you know that by the time we emerge from the recession, “green” will likely mean using efficiently multiple scarce resources, such as water? If your stakeholders are asking about your carbon footprint today, then tomorrow they’ll be asking about your water footprint. You need to get ahead of this opportunity – IBM and Toyota already have.
Lesson: Analyze how the recent events have changed the external landscape — impacted the discontinuities you had previously identified, or created new, unexpected ones.
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