Don't Drown Your Problems

WARNING!
Inventory Rapids

________________

In manufacturing, inventory is often compared to water flowing through a riverway.  It's up to you to decide what kind of river it represents in your organization. 

 

 Far too often, companies have the appearance of a smooth flowing operation, simply because they have drowned their problems with far too much inventory.

 

Purchasing excess raw materials, producing too much work-in-process (WIP), stocking extra finished goods, and using more space than is needed are just a few examples of how some companies appear to be well managed, but in reality are simply burying a variety of problems with unnecessary inventory.  In addition, though rarely considered "inventory", excess personnel is another common trick used in manufacturing to give the appearance of a well planned operation.

 

It is the obstacles below the surface of a river that prevent it from running smoothly.  

 

When the level of the water rises, the turbulence of the river disappears.  But, rising river levels are rarely an event people look forward to.  And thus it is with manufacturing.  Increasing inventory does not remove the production obstacles.  It only buries them.  This trend often slowly continues until, without warning, a financial flood occurs.

 

Alternatively, you can lower the level of the river water, and still maintain a smooth surface, so long as you identify and remove the obstacles as you go.  Manufacturing, again, is no different.  Slowly decreasing your inventory (raw material, WIP, finished goods, space, people) will undoubtedly reveal some issues.  So stop, fix the issue, and continue in your inventory reduction efforts.  Avoid the temptation to repair the issue by increasing inventory.

In the case of inventory control, companies should be trying to push inventory onto their customer or back on their suppliers.  And their customers and suppliers should be doing the same thing.  As a result, the purchasing/buying negotiations begin.  For me, I have always enjoyed this component of Operations Management.  I have been involved in numerous inventory reduction programs that have been executed successfully, without hindering production one drop.  In fact, inventory reduction has always resulted in a steady increase in both throughput and profitability (even when I turn-down discounts if I were to purchase in higher quantities).

Inventory management will define your corporate river.

• Poorly managed inventory, like the River Styx, can be the boundary between you and the manufacturing underworld.
• Alternatively, The Danube River in Central Europe is calm enough to host riverboat cruises lasting up to several weeks in duration.  Properly managed inventory is key to increasing throughput and profit simultaneously.

___________________________________________________

R. Dru Laws is Vice President of Seljan Company in Lake Mills Wisconsin, the Chair of the ARM (Association of Rotational Molding) Education Committee, a member of the ARM Board of Directors, and a global contributing editor to RotoWorld Magazine. Dru has a B.S. in Mechanical Engineering from Brigham Young University, and an MSc in Polymer Engineering from the Queens University of Belfast.