Optimal Inventory Levels
Having just the right amount of inventory on-hand is a challenge for most companies!
The goal is to reduce dollars sitting on the shelves, but making sure there’s always enough of the parts that are needed for production and sales.
There are many theories on how to reduce inventory dollars while improving supply and improving accuracy. Some of these are included in the theories of JIT, Lean Manufacturing, Kanban, and Theory of Constraints.
Ruth takes the best of these new theories (and a few old ones) and uses practical knowledge of operations and warehousing to find the correct combination of parts to scrap, sell back to suppliers, etc.
This is unique to each client and each circumstance within the client’s product lines. Corporate customer service goals are taken into consideration. Also balanced is the amount of space allocated for inventory, how it’s stored, shelf life, lead times, and the inventory dollar and yearly turns goal.
Ruth has had several inventory reduction and inventory accuracy projects that have been successful for her clients:
- Reduced over $56,000 in excess inventory for a local manufacturing
company that was trying to free up cash. Taught the Planners
and Buyers how to load raw information into Item Maintenance that would
cause the MRP and Purchase Order reports to be more accurate. Worked
with Buyers one-on-one training them on supply chain best practices.
Set-up Kanbans with local suppliers for more frequent deliveries. In
addition to improving the Purchasing/Planner schedules and buys, we
identified and scrapped or sold to suppliers old and unused inventory.
Goal reached on-time and within budget.
- Set up min-max program for shop floor issues. Coordinated with production,
planning, purchasing, and warehouse departments. Trained all involved.
Improved shelf, inventory accuracy by 25% within 1 month. Due to improved
accuracy, on-time delivery of raw materials for shop increased
to 97% within 2 months.
- Took over warehouse management and within 4 months had increased inventory accuracy from 65% to 98.5%. This was achieved by training entire crew on best practices. Started up a cycle count program that allowed the entire building to be counted 4 times a year (or as needed). Results were so good, that we were able to convince Accounting auditors to suspend the 1-2 times a year physical inventory. These changes have been maintained and results are continuously 98.5-99.5% accuracy to this day.
For more information as to how you can achieve these kinds of results, please contact Ruth Miller at Ruth@RuthMillerConsulting.com or call (503) 351-5914