You manage inventory throughout the supply chain
 
Many companies have tied up excessive cash in inventories that could be used more effectively, if released. This can be done by improving the flow of materials through their supply chains. These funds can then be re-invested in making improvements to the business
Key Issues
·         Inventories in UK, European and USA operations have, traditionally, been regarded as an asset. Excess inventory has often been held ‘just in case’.
·         The Japanese changed this approach when they introduced just in time, making inventory very visible and treating it as a necessary ‘evil’.
·         To achieve this, they work ‘just in time’ with suppliers and customers. This is only possible, however, when:
·         Your suppliers are proven and VERY reliable.
·         Your suppliers can deliver quality assured parts directly to assembly
·         You provide visibility of schedules to your suppliers and make any changes only within agreed limits
·         You remove unnecessary in-process inspection stations and storage areas
·         You rationalise the variety of parts and use standard items whenever possible
·         You classify parts into:
o    A high value items controlled using MRP or management intervention
o    B medium value items controlled using Kanbans
o    C low cost items purchased in manageable batches
·         You ensure that BOM, MRP and capacity data on computer is > 95% accurate
·         You manage the manufacture and control of parts for new products differently from those needed for spares and repairs
·         You obtain, where possible, more frequent deliveries in smaller batches
·         If you use Kanbans aim to consistently review and reduce the number of Kanbans in your system
·         You reduce machine changeover times
·         You actively manage bottlenecks – people, materials, support
·         You introduce planned maintenance to prevent unplanned events
·         You benchmark your performance against companies in similar industries
Factors for Success      
Factors to  Avoid
1.     Your inventory is closely managed
2.     The cost of holding inventory is a key business performance measure
3.     You understand your customers and their key buying factors
4.     You manage the high value items, as 20% of items will represent 80% of the costs
5.     You progressively reduce your level of stock and remove any obstacles to restore flow
1.     Treating stock as an asset
2.     Excessive changes to schedules at short notice
3.     Purchasing items in large quantities and holding them in stock for a long time
4.     Relying on complex computer systems for controlling the flow of materials
5.     Treating all types of stock in the same way without regard to its value
Who does this apply to?
Operations / supply managers, module leaders responsible controlling inventories
Realisable Benefits
Release cash, reduced levels of work in progress, more responsive supply chains

Guides:

Logistics co-ordinationLogistics co-ordination

Logistics co-ordination

Uninterrupted material flowUninterrupted material flow

Uninterrupted material flow

Responding to changes in volumes and product mixResponding to changes in volumes and product mix

Responding to changes in volumes and product mix

Make versus buyMake versus buy

Make versus buy

The supplier approval processThe supplier approval process

The supplier approval process

Monitoring supplier performanceMonitoring supplier performance

Monitoring supplier performance

Sharing information with suppliersSharing information with suppliers

Sharing information with suppliers

Managing inventory throughout the supply chainManaging inventory throughout the supply chain

Managing inventory throughout the supply chain

Improving the delivery performance of suppliersImproving the delivery performance of suppliers

Improving the delivery performance of suppliers

Material flow and the factoryMaterial flow and the factory

Material flow and the factory

Production scheduling processProduction scheduling process

Production scheduling process

Calculating production capacityCalculating production capacity

Calculating production capacity

Visual managementVisual management

Visual management

Health and safetyHealth and safety

Health and safety

HousekeepingHousekeeping

Housekeeping

WasteWaste

Waste

Ensuring equipment is availableEnsuring equipment is available

Ensuring equipment is available

ChangeoversChangeovers

Changeovers

BottlenecksBottlenecks

Bottlenecks

Consistent manufacturingConsistent manufacturing

Consistent manufacturing