Inventory Levels Too High, Inventory “out of balance”
Senior Management, especially Finance, often challenge the investment in inventory throughout their external and internal supply chains. A common mistake is to reduce inventories by management directive instead of replanning & rescheduling purchases and production whilst not impacting customer service or production efficiency.
This often occurs when you fail to have a multi-level inventory policy that is fully supported by robust management directives, skilled planning staff, formal planning tools, realistic planning parameters, and accurate data resulting in budgeted levels of inventory being achieved.
If you have inventory challenges, do you understand the cause?
You can tell if this is a problem as you will regularly see:
• Material plans are unstable
• Product changes / engineering changes are poorly communicated and / or poorly executed
• Inventory records are inaccurate
- Where necessary, this includes batch / lot / serial number data, shelf-life data, and detailed storage location
• Where discrepancies occur, they are not investigated to find the “true root cause” driving the appropriate corrective action to prevent reoccurrence
• Production issues drive avoidable levels of “Work In Progress”
• Unstable demand necessitates production changes, typically in the form of “Management Overrides”
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