Lean Inventory Management Methods & Attributes
What rings a bell when thinking of the word ” lean?” Reduced, streamlined, insubstantial, trim, slimmed down, meager?
Every one of these definitions can help clarify the concepts behind lean inventory management. It approaches inventory control from another point: Instead of a warehouse that housed whatever the buyer or customer may require, the business would minimize excess inventory and would only stock what might be used within a specific timeframe.
Many firms choose to implement lean inventory management methods to decrease costs, enhance flexibility, and have more opportunity to concentrate on their customers. Lean inventory management and supply chain increases profits and boosts the efficiency of small and medium businesses (SMBs).
As firms hope to minimize waste, multiply turns, and be more adaptable with their inventory, management experts have tried to pinpoint how lean strategies can be embraced to construct collaborative and flexible inventory.
American Production Inventory Control Society (APICS) demonstrates that about 30 percent of organizations are embracing lean standards in their stock management.
In this post, we will discuss what lean inventory management is and the techniques needed to make it successful.
What Is Lean Inventory Management?
Lean management techniques are credited to Henry Ford, who in the 1920s used the idea of “continuous flow ” in the assembly-line process. Throughout the years, the idea has been adjusted and used in almost all industries.
“Lean” alludes to an efficient gradual way to enhancing value in a company’s stock by distinguishing and getting rid of waste of materials, time and effort through constant improvement to bring about perfection.
5 Basic Principles of Lean Inventory Management Methods
Lean inventory management methods are based on five basic principles:
1. Value: This defines the value that your business will get from lean inventory management.
2. Responsiveness: This is all about being ready to adapt to change. (Kaizen/Continuous Improvement)
3. Perfection: Continuously refine your inventory management procedures to improve proficiency, process duration, quality and cost (Lean standard: Six Sigma)
4. Flow: It enables you to understand how inventory flows in your stockroom and apply Lean principle: 5S to address any issues that don’t make any sense.
5. Pull: This enables you to move inventory only when requested by customer. (Lean principle: Kanban):
Lean inventory management puts the principles of Total Quality Managements and Six Sigma into practice. The outcome is improvement in quality and reduction of expenses.
Lean Management – A Combination of Set of Tools, a System and Philosophy
When considering lean management from a tools perspective, companies can use the concepts to choose the correct strategy or techniques to enhance whatever needs improving. From a philosophy perspective, it emphasizes elimination or minimization of excesses on all assets used as a part of different operations of the enterprise. As a system, businesses can use it to improve consumer satisfaction and lower their expenses.
The success on any lean inventory management relies on how businesses best executes the principles to accomplish its goals. The best advantage of the concepts comes in recognizing its key attributes and making use of them on functional boundaries.
6 Lean Inventory Management Attributes
Developing and managing a lean inventory management spins around six basic attributes.
1. Process Standardization
This allows nonstop inventory flow in the organization. A few inhibitors like work in queue, transportation and batch processes can back off stock delivery.
2. Industry Standardization
Process and item institutionalization among partners can result in waste, particularly when regular components are not ideally standardized. While standardization may improve service delivery and benefit consumers using the products, it additionally reduces the restrictive nature of a product, making all competitive factors more imperative.
3. Demand Management
For an effective and successful demand management, organizations need to plan their operations and sales, check the demand collaboration, demand signal and all the inventory management practices.
4. Waste and Costs Reduction
While lean inventory management may seem to concentrate on lowering cost and waste, this should be the case to the degree that it doesn’t negatively affect customer value.
5. Cross-Enterprise Collaboration
This can help in characterizing value and understanding the value stream to augment the added value delivered to the end user.
6. Cultural Change
All partners, from suppliers to clients, must collaborate to offer some incentive to the final consumer.
Is Lean Inventory Management Appropriate for You?
Lean management may work over an extensive variety of fields yet that does not guarantee it will be a good fit for your business. Proficiency doesn’t come in a day.
Before you’ll decide to use lean strategies, ask yourself:
- Can you pull stock to address your clients’ needs without trading off your business or their needs?
- Are there any pointless interruptions in your inventory flowing from you to your clients?
- What value will this give to you and your clients?
- Are you receptive to changes in your business?
- Do you like to strive for perfection?
Finally, the advantages of using lean inventory management strategies are clear: decreased inventory levels and stock keeping unit counts, improve uses of standards in materials and processes, enhanced coordinated efforts and lessening the cost of goods sold when compared with businesses that don’t use lean strategies. Lean inventory management and supply chain contributes to all that really matters.