Companies can see they have an inventory problem with number of turns or days of inventory. This is especially shows with all the types of inventory--finished goods, work in process, raw materials, components, assemblies, etc. For those who include inventory in transit--and they should--the results can be significant.
It means too much working capital tied up and lost investment opportunity cost. Many companies have excess inventory and have stockouts at the same time. That can be the ultimate sign of underlying supply chain issues.
The way to improve the inventory situation is to build inventory velocity. This includes using time compression to do it. Inventory is a buffer. Time is a factor in that buffering. The longer the time, the more inventory is carried--just in case. Collapsing time is a big step to creating the critical end-to-end supply chain velocity.
A good way to identify lean waste in the end-to-end supply chain is to follow the inventory, starting with the purchase order and its preparation. Then end with the customer order or store replenish delivery.
Note, much of lean is about what happens within the 4 walls. For supply chain management, this narrow view misses where much goes on and where the greatest opportunity exists. Outside the four walls.
The tool to use for this effort is Value Stream Mapping--VSM. Since the supply of supply chain management begins upstream and involves suppliers, this is the place to begin mapping. Two notes here. One, do two mappings. First map what people say happens. Then map what actually happens. The difference between the two is important and provides understanding of perceived and actual events.
Two, prioritize and select what to map. Your products are not equally important--volume, criticality, risk, dollar value, etc. Given sound understanding of your items, choose well.
With mapping the present supply chain, you will see all the things that occur with each product, especially the time to do steps and the various steps. Since the need is to identify time waste, this is very important. Then analyze ways to improve, reduce time, and implement. Measure the new process. One mapping is a first step. It is not the end.
The purpose here is to move products faster through the supply chain, from start to finish. They should flow. More upstream/less downstream. More go/less stop. More link/less node. End-to-end velocity will create SIGNIFICANT improvements and opportunities. AI/analytics can also help find ways to have more flow in your supply chain.
Time compression/reduction means faster inventory flow which means less capital tied up in inventory which means more opportunities to invest the freed up working capital which mean.... You get the idea.
For more on Value Stream Mapping of Supply Chains, go to https://www.ltdmgmt.com/lean.php
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