Wednesday, September 18, 2013

Lean Inventory

Lean management, lean six sigma, lean manufacturing, going lean, and lean startup.  Is lean just the new buzzword in the world of logistics and supply chain or is there something more to it? The truth is that an increased number of companies [1] – from retailers to automotive – continue to adopt (and see positive results from) this “trim the fat” mentality and strive to keep the focus on how each step adds value to the process so that waste is eliminated.  It seems like lean’s got everything covered.  Last week we talked about inventories, and as it turns out, companies are now applying lean inventory management.

What is it?
Lean inventory management is a new practice that becomes popular by the day.  The focus is on eliminating the over/under stocking so that you have exactly what you need to have efficient inventory turnover.  This is similar to Just In Time (JIT) methodology except that it is not applied to manufacturing, but to deliveries; although you could shamelessly just call it JIT inventory and you get the same result.  What this means for companies is no more buying in bulks “just in case we run out”, or having to take an educated guess of how much stock is needed.  The theory says that companies end up saving in delivery time, transportation costs, and overall improving their supply chain [2].  It’s not all magic and intuition with lean inventory management though.  After deciding to embrace this practice, the company needs to invest in the software that does the hard work.  Softwares like Quickbooks Inventory Management and CribMaster System are among the most popular.

Does it work?
We can ask Boeing what they feel now that they have accountability and control over parts moving in and out of their plants after implementing CribMaster.  Today they are successfully tracking transportation through all of their plants and save time on almost 1000 issues per day [3].  Sherwin Williams is another happy customer.  They have improved productivity, availability, profitability, and consistency with their Kanban-based lean stock inventory system [4].  These are only two of the most popular cases, but the users of this inventory management style keeps growing in numbers. It looks like lean it’s the way to go, so what does the future of lean management look like? What will be the next “lean”?


By Elisa Taymes

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