By Becky Ferrell
When you choose a career in Manufacturing Supply Chain, there are a few imperatives you learn very, very early.
#1: Inventory & Waste
The first is that “Inventory is an evil.” Hours are spent on Lean Manufacturing, learning about the 7 Forms of Waste. Inventory, we learn, is a cost that is owned by the company until it is sold. Beyond the actual cost of the inventory, this one “waste” contributes to others: inventory must be stored. Storage requires space, which also needs to be managed, at a cost. Preservation of inventory requires specific packaging and, often, environment. Inventory has to be transported, during which it can be damaged or lost. Improper handling or rotation can cause it to become obsolete. Whew!
BUT…it’s a necessary evil. How so?
#2: Inventory Shortage & Accuracy
Well, the second imperative you learn is that running short of inventory is a sin, and running OUT of inventory can be a deadly sin.
These two imperatives lead you, as a Supply Chain Professional, into adopting a strict adherence to the “religion of inventory accuracy:”
- Methodologies to calculate the required amount of inventory necessary to sustain production, mitigate supplier risks, determine the exact amount and type of storage to ensure FIFO utilization of the material while minimizing the amount of handling required.
- Cycle Counts of parts with frequencies based on inventory categorization.
- Establishing Min-Max quantities and monitoring pick-faces for violations.
- Annual Physical Inventory.
- Receiving Test Checks to ensure the quantity billed is the quantity received.
And let’s not forget the Pink Panther detective work that goes into tracking down unreported manufacturing scrap.
Supply Chain Professional Goes Shopping
It’s no wonder that a home visit to a career Supply Chain Professional will uncover canned goods in straight lines with labels facing front, FIFO storage methods for all perishable goods, pull systems to ensure on-time replenishment of “materials” placed into use, and a policy of and adherence to 5-S that drives the other members of the household to absolute distraction.
After years of practicing this religion, our patience can be pretty short with those who do not.
Case in point: Recently our local major department / grocery store (name withheld to protect the guilty) underwent a complete re-arrange. The INTENT was to improve customer satisfaction with a complete upgrade to the layout and functionality of the store. (The result was an EPIC FAIL, but that’s another story.) During the several-month transformation, whole and partial departments moved multiple times. Shopping became a “seek and you MAY find” activity that was frustrating to all customers and many employees.
One day, as I was seeking but not finding, I ran into the store manager. His “can I help you find something” opened the door. We discussed the continual shuffling of department locations, and he admitted it was stressful for everyone. He explained there was no way around it as the contractors did their work, and perhaps I didn’t understand how difficult managing the moves were, etc. Right…
I tried not to chuckle as I explained my several decades career: managing warehouses and material movement for automotive assembly across several countries probably gave me sufficient understanding of the challenging situation. I then suggested that from a customer (and employee) perspective, it might be helpful if a floor layout would be made available at each entrance showing where departments had been moved overnight. Simple map, hand-lettered. This simple tool could reduce the confusion and frustration.
As we parted, I could see the light bulb had not come on, but there was a flicker. A few days later, I was pleasantly surprised to find some basic signs posted at the store entry with “current locations” of departments noted on them. Progress!
Out of Stock?!
Fast forward a few months: the store “upgrade” is complete, and the fresh look is pleasant. Mostly, people are just thrilled the moves are over. Gas prices being what they were/are, I checked the on-line store inventory for some items I wanted. Based on their quantities on hand, I decided to drive over to shop. Unable to find one of the items, I asked an employee for assistance, as their inventory indicated they had several packages on hand. He went to check another location, and as chance had it, the department manager walked up just as the employee was returning. “Oh, we don’t have any of that,” the manager immediately responded. What? Your inventory balance on hand shows you do. “Yeah, well, our inventories aren’t real accurate. I’ll go zero it out. Sorry.”
As I stood watching them walk away, I shook my head. I simply imagined the ensuing explosion had I given that same response to John, one of my former plant managers.
Disorganization By Design?!
Frankly, it gets worse. Looking for some spices, I noticed significant disorganization. It LOOKED like a previous customer had maybe put a bottle in the wrong pick-face. What you probably don’t know about a hardened supply chain survivor is we can’t stand disorganization. I did what I would normally do at work and started straightening it up, thinking the spice I was looking for was one or two bottles back…uh, nope.
After emptying the entire pick-face, there were none of my needed spice. BUT, I noticed there were several other locations where the pick-face label and the bottles didn’t match. As luck would have it, I was able to find the department stock person. As I tried to explain that someone had “overstocked” the pick-face, I was told “No, that’s by design.” Huh??? “Oh, yeah, according to HQ we’re not allowed to bring partial packs back to the stockroom, so we fill all available empty locations adjacent to that pick-face.” “OK, so what do you do when the out-of-stock item is available and there’s no space on the shelf?” “We don’t bring it out until there’s space.” At this point, I left the store.
In Support of Lean Manufacturing & Inventory Accuracy
For those of us who “live” Lean Manufacturing and Inventory Accuracy, it’s a fairly common occurrence to run into these types of situations/frustrations outside of our plants. I’ve had to acknowledge retail operations simply are not concerned about inventory accuracy; I’m not sure why and have yet to find anyone to explain this. Unfortunately, I have to admit I have seen similar situations INSIDE some manufacturing supplier locations and even in a couple OEMs.
In manufacturing, our goal, our job MUST be to reduce and/or eliminate waste WHILE ensuring the continuity of production. To do this, we must foster the correct environment. In short, we must create converts to the Religion of Inventory Accuracy!
Need assistance with Lean Inventory techniques, including identification of waste, buffer management, etc? Perhaps you have a supplier who has impacted your production flow and needs a resource to assist them with an improvement plan. We have experienced professionals with the skill set you need and the ability to teach those skills. Give us a call! You’ll be pleased with the quality of our work and your result!
Did you enjoy this blog? Search our blog library for other topics of interest: https://highvaluemanufacturingconsulting.com/blog/