Tag Archive: inventory levels

Forget Data Cleanup and Find a Measure to Start NOW!

January 17th, 2017

Are you mired in data cleanup and not focused on measures that can immediately help you? Stop searching for the “right” data lever and look for measures to track and improve processes.

If you have the systems to measure your ideal metric, go for it but don’t let it become an excuse! Find one that will measure progress and start immediately!

For example, in one of our clients, not only were the run rates incorrect but they were wildly different for similar items which would make planning an utter nightmare!  However, there are still ways to measure progress and plan. Find a metric that won’t change and stick to it. In this case, we used earned standard hours, and we are able to measure improvements in the metric. Of course, as data is cleaned up, we should put better metrics in place but it doesn’t have to hold up progress! And we were able to plan to the expected earned standard hours as well. All is solved to an 80/20 standpoint which is all that is needed.

This type of scenario has come up on multiple occasions – actually almost every client has some sort of situation that fits in this mold (the only question is how significant). It could be that measuring inventory levels is challenging because the system reports aren’t set up correctly. In this case, it could be that you count pallet rows or something else that is visible and easy. It could be that your system doesn’t support run rates effectively (unfortunately that was true with one client). In this case, we found a manual process to keep the load visible while storing information in the system.

What is in common in all these examples is to start immediately with what you have and find a way to make progress. It certainly doesn’t sound like rocket science but it drives results. If it was common, so many of our clients wouldn’t make significant progress once we find the “right lever” to pull, similar to these situations.

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Solid Inventory Management Practices Remain Timeless

July 12th, 2016
inventory management

Are you keeping close tabs on your inventory management practices? Improving just one aspect of your inventory can lead to improved service, margins and cash flow.

Inventory management remains a timeless and vital topic for success. Every so often, we get away from talking about it on a consistent basis because it seems somewhat humdrum. But it isn’t!


Earlier this year, I was asked to speak to a group of manufacturing leaders about it because of the ongoing importance. Then, I was asked to speak to a group of quality experts on the topic as it not only is timeless but it also crosses boundaries. Next, a peer group of manufacturing leaders asked me to speak on the topic. I didn’t have to be a rocket scientist to realize the importance of inventory to company performance, executives and supply chain leaders.

It started me thinking…. Banking executives understand the critical importance and frequently refer clients for any number of inventory-related needs: how to bring inventory levels down to free up cash, how to bring inventory accuracy levels up to safeguard assets and customer service, how to implement the appropriate protocols to maintain compliance and how to improve inventory processes to increase margins. Executives call about inventory-related topics quite frequently. Boards make it a priority. For example, corporate of one of my current clients (a facility of a multi-billion-dollar aerospace manufacturing company) has made it a top priority. Certainly none of these people think it is humdrum!


Are you leaving your inventory processes to an analyst on his/her own? Shouldn’t you be asking questions and expressing interest in the metrics? Do you know what’s going on with inventory on a weekly basis? We’ve been consulting for over 11 years as of last month, and 95%+ of our clients asked for or ended up requesting support to improve some aspect of their inventory. It does seem to be a no-brainer since it is a great way to make quick progress with and improve service, margins and cash flow  

Our marketing colleagues call these sorts of timeless topics “evergreen”. Think about all the impacts to your business stemming from inventory. We have no doubt it will spur you to go ask a few questions at a minimum. As this is one of our strongest areas of expertise and we enjoy seeing the deep impact and benefits to businesses, we have decided to offer a summer 2016 special (July & August) for Profit through People newsletter subscribers – a Rapid Inventory Management Assessment for $5000. To sweeten the deal (as we prefer to ensure results follow), we’ll rebate this assessment fee against any resulting (follow-on) inventory projects. If you are interested in getting started,
contact us.  

Did you like this article? Continue reading on how to be the Strongest Link in your organization:

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Inventory as a People Topic

June 28th, 2016
inventory management

Empowering people to make the right decisions in your organization can be the key to getting the right results in a variety of business cases including inventory management.

One of our favorite client stories on the topic of “Profit through People” goes back to one of our first clients. It is hard to choose a favorite in this category as PEOPLE make or break success at every juncture along the way.

In this case, our client needed to get a handle on inventory somewhat rapidly because it could directly affect the sale of the company — and each individual’s career success and chances at long term viability at this company. How could we bring inventory levels down while keeping the high service levels our customers had come to expect? How could we make sure the “right” inventory was in the “right” value-add distribution center at the “right” time? Seems a complex supply chain solution might be required; however, the solution boiled down to 1 tenet — PEOPLE.

We found the “right” people in the organization. In 80%+ of our client cases, they have the “right” people somewhere in the organization already. The key is whether they recognize them. In this case, we were able to readily identify emerging talent throughout the system. Interestingly enough, we found talent where we needed it by simply looking.

Next, we had to “arm” these emerging inventory leaders with the “right” tools – and more importantly, the “right” philosophy. One of the largest successes was in changing the metrics to encourage collaboration and sharing of inventory. Even though each GM was still measured as they used to be measured (since there wasn’t time to change entire systems), we were able to change the overall message. Again, simplicity can “work”.

Last but not least, we had to “get out of the way”. Encourage, empower, engage and get out of the way. Although I don’t know that the executive team articulated this message like this, it is what they followed. People might listen to what you say but they definitely will listen to what you DO. The team was set up for success — and it worked! Inventory was reduced by 30-40% on the core product lines while maintaining high service levels. Thus, less cash was tied up unnecessarily while customers remained happy. Debt was freed up for the sale.

Did you like this article? Continue reading on how to Profit Through People:

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Empower Your People to GROW


Why Planning is at the Crux of Success

May 25th, 2016


I just had a brainstorming session with one of my key clients about the integrated planning process — in essence, how demand and supply match up to ensure customer service (which is #1 for every client in today’s environment), growth, and improved margins and cash flow. It almost doesn’t matter the reason I come into a client — and the reasons can be wide ranging — there is always opportunity to improve the integrated planning process, get everyone on one page with clarity and sync up demand with supply. It sounds much easier to do than it is in reality. Yet it is vital!

Some of the results I’ve seen with this focus include the following: 1) Improved service levels from the low 60%’s to the high 90%’s. 2) Reduced lead times by 30-70%. 3) Reduced inventory levels by 30-60% while maintaining service levels. 4) Improved margins and reduced costs substantially — by millions of dollars, 5-20% and so on. 5) Improved employee engagement — probably the most important of all as happy employees not only ensure happy customers but they also are much more likely to be innovative in growing the business with new products, increasing margins, etc.

One tip to implement this week:

The good news is that there is a LOT you can do this week to improve your integrated planning process. If you are a leader, simply ask questions about this process of the people involved in these areas, customers, suppliers, etc. Listen for common threads. Undoubtedly, you’ll uncover an opportunity or two, low hanging fruit and the like.

If you are “in” the process, take a step back and think about the inputs and outputs of your process. Of all the items on your to-do lists and priorities of customers (both internal and external), which inputs really matter — and are NEEDED to gain the right outputs (results)? Answering this question can be the 80/20 to success.

Looking for more ideas to keep your supply chain connected? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”


Inventory Management Remains Core to Success

February 9th, 2016
cycle counting inventory management

Inventory management may be a less exciting supply chain topic but it is the linchpin in a manufacturing or distribution business.

No matter how many engaging conversations I have with clients, contacts and trade groups about emerging supply chain trends, the less exciting topic of inventory management often-times can deliver a higher value than the latest and greatest most-talked about trend. As the Programs chair of APICS Ventura Chapter said when requesting this topic for a recent speech, inventory management is core to success and remains a timeless topic.

3 Reasons Inventory Management Matters

This prompted me to think about what I see across all types of clients: Whether a $5 million fast-growing manufacturer in the building products industry, an $80 million dollar food processing company or a multi-billion dollar aerospace company, I’ve found inventory management to be vital to bottom line results. Three of the top reasons inventory should be seen as core to success include:

  1. Inventory accuracy – If you cannot find the product, you cannot ship it. It can be as simple as that; however, it often goes much further. If you think you have more inventory than you do, you will not purchase or produce what you need to in order to fulfill customer needs. Certainly, this will prompt higher costs, poorer service and a host of other issues. Additionally, a critical asset is not valued correctly. Do I need to go on?
  2. Inventory levels – Most accountants prefer to hold less inventory as it ties up precious cash. Most Sales folks prefer more inventory because they don’t have to worry about it being available to sell. Most Operations folks prefer to run larger quantities so that they can optimize efficiencies and minimize downtime. Lean gurus prefer to resolve process issues so they can reduce changeover times to run less inventory. Managing risk could dictate more inventory if you are concerned about service if natural disasters or political events hold up your inventory. Managing cash flow certainly dictates less inventory. No wonder it can be such a tough challenge for often-times under-appreciated planners!
  3. Customer service – One of the goals of inventory management is to have the right product in the right place at the right time. It sounds easy enough yet rarely is easy. Oftentimes, inventory is available somewhere in the system but isn’t at the right facility at the right time to satisfy customer requirements. What good is it if you have inventory in Miami when you need it in Seattle? Worse than none since you have cash tied up without the benefit. Since customers have little patience as there are typically competitors waiting in the wings, poor customer service (or even mediocre service vs. the competition) can have a detrimental effect on your business.

Inventory can be a strategic advantage or a weight around your ankles when treading water.  Take a proactive stance to take charge of your inventory and planning processes. If you are a distributor or manufacturer, there is nothing more fundamental to success. If you’d like to talk about your inventory strategy, email me. 

Did you like this article? Continue reading on how to be the Strongest Link in your organization:

Is Your Inventory System Working?

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