Its been 9 months since my last blog. I have been busy eliminating waste in our Supply Chain. Inventory was the main focus area as it is one of the major indicator that affects the bottomline. Improving the NITO (Net Inventory Turn Over), is not an easy task as it requires a lot of preparation in order to realize the result on a specific time frame. High inventory creates a lot of problem in the operation such as;
1. High Carrying Cost
2. Lack of visibility in the inventory sytem
3. Wrong ordering
4. Obsolescence due to wrong timing
5. Material shortage
6. Poor warehouse management
7. Double handling
8. Low productivity
Let me share with you the key actions that was made in trimming down the inventory, most of you may find this basic, and have been implementing a more advanced approach, but this has helped in reducing inventory and improving the flow of goods in the pipeline.
1. Implemented a Lean Supply delivery involving selected suppliers - to make this work, you need to choose suppliers within the area that is capable of implementing lean delivery. Inventory level was cut down from 2 days to 4 hours stock (2 hour lineside, 2 hours marketplace).
2. Rationalized ordering parameters - transit leadtime, safety stock, ordering leadtime was reviewed and revised resulting to 2wks - 1month stock level from 3-6 months stock.
3. Re-layout of warehouse footprints - fixed location was finalized and route delivery was improved.
4. Implemented Just In Time delivery - direct delivery to the line was implemented. From a lineside inventoy of 1 day, it was not trimmed down to 2 hours.
5. Implemented a daily cycle count - this have drastically improved the material inventory accuracy from 67% to 95%.
6. Process standardization - alongside with the changes in the way we operate, our processes were streamlined in order to effectively manage the operation.
In our current economic situation, it is vital for us to trim down in all aspect of the operation in order to survive. Indeed, Supply Chain is one area that needs to shape up in order to keep us competitive and strong.
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