Unleash Your Business Potential: 877-428-8486

Why Inventory Management is Central to Lean

Back to Blog

Opportunities for ERP systems to improve efficiency of operations and the level of customer satisfaction aboundyet no other reason is more compelling than the benefits of Lean management systems when applied to inventory management. Countless managers blame poor fulfillment and needless manufacturing downtime on inventory management problems, however these are symptoms, not root causes.

Think about it – missed promise dates usually occur because the necessary inventory wasn’t available to meet the requirement. The real question is “Why did this happen?” The path to answering this question begins with performing Lean analysis. By focusing on the “value stream” for inefficiencies, it’s possible to take a deeper dive and a broader look into the root causes. In other words, to address these problems, its essential to fix lack of functionality that created a less than optimal inventory atmosphere in the first place.  Below is an assessment of how these issues may have arose in the first place:

The Seven Wastes

Over-production: Too much output, too soon, and not according to actual need.

Wait Time: Shop floor managers and workers idle, waiting for equipment or inventory such as components, raw materials, subassemblies, intermediates.

Transportation: Inefficiencies in material movement, from suppliers to final destination.

Processing: Any activities or production steps that add no value.

Inventory: Is demand/supply in balance and continually monitored?

Motion: Wasted jockeying of physical objects: human capital, machine, or materials.

Defects: The cost of poor QA is immense: repair, rework, or scrapped output.

As with all application of continuous improvement, the goal to is to implement new practices and processes to reach the highest possible levels of efficiency.

Applying Lean to Inventory and Bill of Materials (BOM)

Starting with the reality that inventory problems are never the problem but symptoms of inefficient or broken processes, it makes sense to look carefully to see the various issues. The pain points can then be used to perform a deeper dive to identify the cause. This informs us where to apply Lean principles.

Typical Inventory Challenge #1

Excessive (or too little) inventory:

Where does the problem originate? Is it in the BOM structure?

Far too many companies never identify the BOM as an input, but it is the most important function in an ERP system.

Unfortunately many managers or those tasked with overseeing production simply are not trained in how to structure an efficient BOM. These, then are the relevant questions to ask in order to gain sufficient clarity to implement Lean for your inventory management:

  • Is the planning flawed? Or, are people not following the plans?
  • Are there problems in scheduling? Or, are the schedules in place being ignored?
  • Is it shop floor execution? Almost always this can be traced back to the product structure.
  • Is the forecasting/demand planning faulty?
  • Are there blind spots in sales and/or sales planning? (Specifically, within make to order, configure to order, assemble to order, engineer to order environments)?
  • Is finance involved in the form of costing, unit of measurement (UOM), etc.?

Lean principles for solving inventory management problems:

Better Quality Control: By removing defects wherever possible and using well-defined controls to standardize production and solutions to quality issues, product quality can be maintained and improved.

Continuous Improvement: Central to any Lean-based organization is the tireless pursuit of better processes, better outcomes, better products.

Establish Pull System: Limit as possible inventory and work in process (WIP) components with the objective of goal striking a balance between having enough materials for production but avoiding overshooting the mark which leads to waste.

Payoff: The end goal is to save time, money, and to deliver quality to the customer.

What should your ERP system offer for your Inventory Management?

In each client engagement our objective is to ensure our customized ERP system creates value across your entire organization. Lean principles can solve inventory management challenges and will serve as a springboard for you to gain greater efficiencies in other areas within your business. For more information, book an appointment with one of our consultants today.

Attivo All-In-One, powered by SAP Business One has the most powerful and fully integrated analytic and reporting tools in the ERP software sector for small to mid-sized businesses. This makes it easier and more efficient to design and implement customized quality control processes and methods across your organization.

Interested in learning more?

Our consultants are ready to answer any of your questions.

“EBizCharge has really helped our customer services staff and saved us a lot of time. One of the best assets is that we don’t have to store credit card information ourselves anymore.”

IT and Accounting Manager, Auburn Manufacturing

“I have been very happy with the Attivo Group and the service they provide. They have always had a fast response time to service requests and their assistance is incredible!”

Controller, Regenesis Biomedical

“Charmaine is an outstanding employee. She has done so much exceptional work for our Macola Progression system, which we are very thankful for. Charmaine you are so great!”

CFO, US Vinyl

“Attivo is truly a partner in my company’s successful and smooth operation. Their team is knowledgeable, creative, and enthusiastic. We appreciate their expert guidance with everything from maintenance and support to business process assessment and improvement”

Director of IT/IS, FSR Inc.

“I just have to let you know that Charmaine is phenomenal in her support for us. We just completed the review of her budget input and she saved me hours of frustration with a process that is difficult annually. Thank you for letting Charmaine support us, always a pleasure working with her, please don’t take her away, we love her. You have a great staff and we enjoy working with them. Thank you again.”

CFO, Advanced Micro Instruments

“THANK YOU for the Mass Edit Grid in EBizCharge. We LOVE this new functionality!”

Customer Service, Virginia Industries for the Blind

“We have faced many challenges with our process, most recently with our Inventory. Charmaine Schaefer and Rich Hartley, specifically, have gone above and beyond to assist us, taking numerous after hour calls and always coming through with the answers and/or assistance that we needed. They have taken the time to work with us on many topics and created reports that were specific to our needs. I look forward to a long-lasting relationship.”

Controller, MonoSystems

“Thank you for all of your continuous efforts and assistance with our business processes. I appreciate you guys!”

Customer Service, Western Pottery

“I never want Charmaine or Kami to go away!! These two assisted us to create an Add-on for SAP B1 to better handle our credit card payments from customers. You two are awesome!”

Found & CEO, PayNation

“Meeting up with the Attivo team was enormously valuable, and as a result, our implementation call went incredibly well!”

Account Executive, Tipalti

“I am using the Request For Quote capability with great success. The process is saving me a tremendous amount of time and effort. Thanks for all the help, Robert!”

Inventory & Purchasing Coordinator, Innovex

“Moving our Macola system to the cloud was a great business decision. Our business is running better than ever thanks to the help of Attivo. We now have the freedom to work anywhere we want. I know everything is well-managed and secure. And most importantly, we were able to get out of the “IT business”

Managing Member, 180 Innovations

“Our Macola system runs much faster in the cloud than it ever did when we were hosting it ourselves. Too bad you guys weren’t around ten years ago, we could have used the help then! And the help you provide in looking after the health of our database and our system is really helpful and welcoming”

Director of IT, Boom Creative Development

Let’s Stay in Touch

Subscribe to receive the latest updates and take advantage of our best promotions.

This field is for validation purposes and should be left unchanged.