The Bee Hive

I happen to look through the analytics of this blog and was amazed at the number of hits on my article of December 15 entitled Distribution Resource Planning (DRP). I had no idea an otherwise "dull" topic could generate so much interest out there. So I thought a few more offerings on this topic wouldn't do much harm since DRP is the place to start if you want to solve the inventory management woes of your company.

Many companies that I worked in usually attributed their inventory management problems to poor forecasting. And in all those companies that started DRP actually found that their problems were caused by a multitude of other issues, least of which was inaccurate forecasting! In this article, I would like to share a very important element of DRP - safety stock. Let's recap….

As more companies turn to 3PLs for assistance, they're gaining confidence in these providers' ability to deliver more than just day-to-day tactical solutions. Many companies have "great expectations" for 3PL providers, expecting solutions that may be "undeliverable". I can think of four key issues even the best 3PL shouldn't be expected to solve.

The kanban system from Japan speeds up production by pulling inventory through the work center instead of pushing up to the next workstation where it sits in a queue. In Japan, kanban systems often use display cards as the visual signal to tell a workstation to begin operations. The idea is to keep the lot sizes as small as possible to optimize use of space and labor. Many plants have adopted the system and modified it to use some appropriate signal rather than a card. An empty space can do for a signal to begin production. In Energizer's version of kanban, for example, components are placed in special containers. An empty container signals the need for more parts.