Balancing inventory with capability
Experience show us that, in many cases, inventory cannot be reduced before the business and manufacturing processes are improved.
- Many lean exercises fail because they remove too much of the working inventory before the manufacturing processes are capable
- Agile initiatives fail because they overestimate the capability and do not hold inventory as a buffer against the real world
Our inventory optimisation approach synchronises inventory reduction with increased capability – ensuring the business is protected whilst improvements and changes are being made.
The key challenge for many organisations is how to best to implement a Board level decision at the operational level.
A request to reduce inventory by £1 million may sound deceptively simple when presented as an overall financial target.
But at the detailed level, someone has to decide how much of each inventory item to hold, when, where and for how long – without disrupting production or running out of finished product or stock.
In this section we take a look at this challenge from three perspectives – that of the MD or CEO, the financial director, and the operations director – as well as the benefits of the inventory optimisation approach.