The books that have been written about "Lean Enterprise" would constitute an imposing library by themselves, but, a few very important aspects seem to have gone unexplored, and are "conspicuous by their absence" once the "journey towards Lean" has begun. To fill these gaps, Eric Matson is writing the "Schmidt-Creek Paddler's Guidebook Series" which will address these issues, and the first, "ASWO!" or "Ah, Shucks, We're Out!" examines the often naughty question of how to plan and manage inventories (of all sorts) in a "Lean-Enterprise" environment.

ASWO! ("Ah Shucks, We're Out!")

Lean Enterprise Inventory StrategiesBy Eric Matson

AuthorHouse

Copyright © 2009 Eric Matson
All right reserved.
ISBN: 978-1-4490-1121-5

Contents

Page Chapter Key Topics.........................4About the Author............................................................................5Introduction................................................................................6Table of Contents...........................................................................8- Back to Basics Forward to Fundamentals!...................................................18- New/Lean Inputs...........................................................................42- Lean Considerations.......................................................................50- "Value Stream Managers" ?.................................................................54- Problems & Resolution Strategies..........................................................66- Problem Resolution Strategies.............................................................71- Alignment with "Lean" principles..........................................................82- "Stochastic strategies & tools"...........................................................86- "Days-of-Supply" calculation..............................................................93- Finding database problems.................................................................105- "COPIRA"..................................................................................116- Cautions before "signing".................................................................122- Retaining Competent People................................................................125- Einstein et al............................................................................128

Chapter One

"Lean Inventory"?

So, just what do we mean by the term "Lean Inventory" ... an empty warehouse? Idle forklift trucks? Purchase of a "Star Trek Synthesizer & Transporter" to replace the manufacturing and distribution system? Hardly!

A notorious oil-well fire fighter named Red Adair is reputed to have told a potential customer, "We can manage this problem better, faster and cheaper than anybody ... just pick any two."

By achieving "Lean Inventory", we hope to get away from fire fighting, and surpass Red ... manage the problem better AND faster AND cheaper ... ALL THREE!

SOME inventory is usually good and necessary to satisfy customer needs, but to qualify as "Lean", it needs to be wastes-free, flowing (materials and product), and scheduled in accord with actual customer demand (ideally "pulled" from a standardized & reliable production / delivery process by the customers).

Some Consultants portray "Lean" as a sort of mystical Eastern philosophy requiring years of meditation and sacrifice to master. Note the term YEAR$ ? Actually, the basics of becoming "Lean" are quite logical and straightforward. It is only the details of execution and deployment that can seem mysterious without a guide or "Sensei" (Teacher, who has "been there and done that.")

So, just what are these logical steps, and which details of execution are key, especially with regard to inventory management?

Lean Step 1) Understand Demand

A lean system is focused on and matched, in time, to customer demand ... Everything happens to customer specification, and "just in time", so being able to define that demand, both qualitatively and quantitatively, is crucial. What product families, models and options will be wanted and when? Not sure? What do history and market trends suggest?

Is forecasting (the "F-Word") an issue? If so, do you measure its accuracy ... and if not, how do you expect to improve or at least intelligently apply adjustment ("Kentucky Windage")? Do you have "PBOMS" (Planning Bills Of Material) to help "explode" models and options from (easier to predict) product family demand?

Do you know historic customer-desired shipment or delivery or lead-time requirements? If so, making your production cycle time shorter (lean manufacturing & distribution) might allow confusion-free "building-to-order" with no finished-product inventory. Plus ... even if make-and-deliver cycle time is greater than SOME demand, knowing how much "some" is defines the upper limit to needed finished product inventory. NOTE: Historic production or shipping data is practically useless because it contains all historic "lateness" and customers' "patience factor". The goal should be to ship or deliver when customers actually want that.

Lean Step 2) Map and Identify Opportunities

Value stream mapping depicts and quantifies the performance (wastes and flow) of the entire process ... end-to-end ... order entry, credit check, planning & scheduling, procurement, production, packaging, distribution & delivery ... so that "choke points" (wastes and delays), and their relative improvement priority become clear.

How to do a VSM is beyond the scope of this work, but an excellent first reference/guide is "Learning to See", a Lean Enterprise Institute guidebook by Mike Rother & John Shook.

Perhaps my greatest learning, from leading literally dozens of VSM sessions, is that the greatest time & money savings opportunities are often beyond the production floor ... in the information-handling, procurement, distribution or product-design arenas!

But even if your operation has NOT (yet) constructed VSM's, all is not lost. Odds are VERY good the key opportunities and priorities are "communal knowledge" if you ask the right people and ask the right questions. The right people are the ones who do the day-to-day work of planning, procurement, and getting product on its way to customers. The right questions include:

* If somebody didn't provide daily work orders, how would you know how to best utilize your knowledge and skills in meeting customer needs? * What prevents you from doing your job immediately and correctly on the 1st attempt? * Where in our processes are we wasting time and money that would be better spent to satisfy customers and better compensate employees? * When Management asks for things to be done "better, faster and cheaper", what are they missing? What, specifically, don't they seem to understand?

Lean Step 3) Get Clean & Organized (5S)

It is very hard to see wastes and choke points (bottlenecks) if the workplace is totally chaotic and jumbled. Whether in the office, production floor or warehouse, "tidiness is next to Godliness". There should be a place for everything, everything in its place, and nothing unnecessary taking space or creating obstacles to visibility, movement and material flow. The acronym "5S" refers to 5 Japanese terms beginning with "s-sounds", but which loosely translate to:

* Sorting: Identify what's needed, what isn't, and get rid of the latter ... ruthlessly! * Storing: Identify the best place for what's needed, put it there, and label the space or location. * Shining: Clear away dust, debris & litter, Get product presentable for customers, facilities suitable for productivity, and equipment cleaned enough to easily determine readiness or maintenance needs. * Standardizing: Make the "S's" the "norm" ... the accepted way of working ..., and make all needed tools or aids readily accessible. * Sustaining: Establish ownerships,...