In Control

“If I had to reduce my inventory by 30 percent by the end of May,” Bruce continued, “I would be able to spend more time analyzing which inventory I wanted to get rid of, adjusting my min/max and re-order points. I would look at inventory turns, lead times and ship frequencies.”

“So, what’s the difference in blowing out 30 percent of your inventory by the end of next week and reducing it by the end of May? You still get your inventory down?” I asked.

Bruce smiled. “If I just blow out my inventory in one week, I will guarantee that within two weeks, my levels would all be back. I might even have more inventory then, because people will be ordering stock outs without any rhyme or reason. In the short term it works, but in the long term, it all comes back.

“By working systematically, I can make permanent changes in stock levels. I will have much more control. We will have the profitable inventory we need, that turns, that makes us money. It gives us more predictability and consistency. It all gets back to the system.”

2 thoughts on “In Control

  1. AJ

    Inventory control is a massive issue that is frequently overlooked by even the largest companies. Many companies actually promote their high inventory levels to their customers, as if it were a good thing! Tying your resources up with excess inventory is wasteful and is simply bad business. However, it’s become the American way! The change needed is unfortunately counter intuitive, and calls for a complete paradigm shift. A new goal must be established and communicated to everyone! Completely eliminate your inventory. NOW!!!

    By eliminating inventory; you can free-up cash as well as valuable space by allowing someone else to store and pay for your inventory. Let your supplier waste their resources carrying your inventory and let them waste “their” valuable floor space. You can easily negotiate small job shipments as well as minimal shipping costs with your suppliers; especially in today’s market!

    Many years ago Deming said that American Manufacturers simply don’t get it; while the Japanese manufacturers embraced his teachings and the result is clearly evident today, when looking at Toyota vs. GM, Ford & Chrysler. In certain instances, Toyota only has a few hours of inventory, whereas GM has weeks and months of inventory form many of their components.

    Some good reading is necessary on this subject… W Edwards Deming is a good place to begin – check out; Mary Waltons “Deming Management at Work” and Taiichi Ohno’s “Just-In-Time for Today and Tomorrow” they are a good place to begin. Just in Time, Kanban, and Lean principles are amazingly simplistic.

  2. Dennis Blanchard

    Bruce is right in the fact that everyone will have to on board with this complete change in inventory procedures. Too much guess work instead of hard data is used in gathering inventory.


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