When
you hear the word "inventory", what is the first thought
that comes to mind? Part bins on shelving, full pallets stacked
on each other or on pallet racks, large storage areas throughout
the facility?
Before
venturing too much further, let's define inventory. Although
there are many definitions, for this overview inventory is defined
as:
Any
component, sub-assembly, or assembly/product greater than
the number required to build one unit.
Let's
take a quick look at the strategic nature of inventory. Basically,
excess inventory is a symptom. Inventory is a measure of total
manufacturing effectiveness. It includes raw material, work-in-process
(WIP), obsolete goods, and finished goods.
Just
like the water hides the dangers of rocks below, inventory hides
the underlying issues within a production environment. There
are many contributing factors to excess inventory. When inventory
is reduced, these underlying factors become exposed. If these
factors are not addressed, then a shipwreck is inevitable. This
shipwreck might be very slow and even unnoticeable or it can
be catastrophic. When the rocks start appearing, increasing inventory
is the wrong solution. Blasting the rock (improving the process)
to make it smaller is the correct solution.
There
is a necessary minimum inventory requirement for your business.
That minimum is determined by assessing many factors within your
business. CITEC can help identify the causes of excess inventory
and provide solutions that will allow you to reach that target
level.
Contact
CITEC's WasteBuster today: Eric Myers.
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