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. Reduce the safety stock service level (for example, from 98% to 95%).
  6. Reduce the number of A items.
  7. 2%10 net 60.
  8. Double up your cycle counting.
  9. Start an Inventory Reduction project 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, then 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.





Check out Annals of Medicine: The Checklist by Atul Gawande in the Dec. 10. 2007 edition of The New Yorker for an insightful exploration of the medical application of one of the most basic of quality tools – the checklist.  I was astounded to learn that checklists aren’t a common practice in one of the most complex industries, the emergency room.  Setting up a machine, preparing for an audit, readiness reviews, planning a kaizen all have routine lists.  Flying a plane, launching a rocket, preparing for battle all have checklists.  Gawande describes how in 2001 Peter Pronovost, a critical-care specialist at Johns Hopkins, developed a simple five step checklist for inserting central line IV’s that dramatically reduced the odds of line infections, and the resistance he faced in implementing something so simple and yet so effective.

The Checklist – The New Yorker, Dec 10, 2007










W. Edwards Deming

W. Edwards Deming (1900 - 1993)

Pioneer in Quality Philosophy, W. Edwards Deming is widely held to have been one of the leaders who helped create the Total Quality Movement. Deming’s 14 points and his book “Out of the Crisis” are key documents in the development of Quality Systems for Business management. Dr. Deming is best known for his revolution in the quality and economic productions in Japan where from 1950 onward he taught top management and engineers, quality management methods. These teachings are widely credited for dramatically altered the economy of Japan. In recognition of his contributions the Union of Japanese Science and Engineering (JUSE) instituted the annual Deming prizes for achievement in quality and dependability of product.

  Deming’s 14 Points:

  1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.

  2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.

  3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.

  4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.

  5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.

  6. Institute training on the job.

  7. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul as well as supervision of production workers.

  8. Drive out fear, so that everyone may work effectively for the company.

  9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.

  10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.

  11. Eliminate work standards (quotas) on the factory floor. Substitute leadership. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.

  12. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual merit rating and of management by objective.

  13. Institute a vigorous program of education and self-improvement.

  14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.



Continuous Improvement

Continuous ImprovementDefinition: The management discipline to constantly eliminate waste, improve response time, simplify the design of both products and processes, and thereby improve quality, customer service, and value. Continuous Improvement is a phrase suggesting that a process or product should always get better as knowledge about it and experience with it accumulates over time. It is specifically used in quality systems or management programs such as Total Quality Management, associated with the work of W. Edwards Deming, J, Juran, and Walter A. Shewhart, and is particularly evedent at Toyota. 

Lean Enterprise is a management philosophy focusing on reduction of the 7 wastes, or Muda in Japanese (Over-production, Waiting time, Transportation, Over-processing, Inventory, Motion and Scrap) in manufactured products. By eliminating waste, quality is improved, production time is reduced, and cost is reduced. Lean "tools" include constant process analysis (kaizen), "pull" production (by means of kanban), and mistake-proofing (poka yoke). One crucial insight is that most costs are assigned when a product is designed. Often an engineer will specify familiar, safe materials and processes rather than inexpensive, efficient ones. This reduces project risk, that is, the cost to the engineer, while increasing financial risks, and decreasing profits. Good organizations develop and review checklists to review product designs. The key lean manufacturing principles:

  • Perfect first-time quality – quest for zero defects, revealing & solving problems at the source
  • Waste – eliminating all activities that do not add value & safety nets, maximise use of scarce resources
  • Continuous improvement – reducing costs, improving quality, increasing productivity and information sharing
  • Pull processing – products are pulled from the consumer end, not pushed from the production end
  • Flexibility – producing different mixes or greater diversity of products quickly, without sacrificing efficiency at lower volumes of production
  • Availability – when people, machines, product or processes are needed they are there, ready and able. Unplanned downtime, start up delays aren’t tolerated
  • Building and maintaining a long term relationship with suppliers through collaborative risk, cost and information sharing arrangements

Lean is basically all about getting the right things, to the right place, at the right time, in the right quantity while minimizing waste and being flexible and open to change. Continuous Improvement is how you get Lean.

Reflections on the Future of Quality

Courtesy of Quality Progress, Dave Watkins writes in Reflections on the Future of Quality that:

  • The quality management system lags behind evolving concepts of organizational excellence;
  • The quality function needs to focus on deliverables and their contribution to value;
  • Quality, as a management system objective, is really about excellence and must characterize the enterprise as a whole, not just its products or services.