The Bee Hive

A young 2nd Lieutenant was in the intelligence center of the Army. The building in which the intelligence center was housed also contained a number of other military units in the intelligence business. The lieutenant's commander, then a lieutenant colonel, had appointed the young lieutenant a supply officer. A short time later, when the lieutenant colonel was promoted to full colonel, his first official act was to summon the supply officer. He said, "Lieutenant, as you know, my new rank demands a new chair for my desk." It is true that the chairs of lieutenant colonels and colonels are the same, but the tops are different. The top of a colonel's chair is four inches wider than that of a light colonel and it has a full leather upholstery instead of PVC.

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.

The 5S system is designed for organization and standardization of any workplace, including offices. It is a pre-requisite to the implementation of any other improvement method. By implementing 5S, you will:

Demand can be classified into two types: dependent and independent. Demand for a finished product is independent; demand for a component used in making the product is dependent. Forecasting should be done only for the independent demand; dependent demand can be calculated from the forecast.

Like MRP, distribution resources planning (DRP) organizes dependent demand. Before we look more closely at DRP, we'll draw a distinction between systems that pull inventory through the distribution chain toward the retail end and systems that push inventory down the chain. In reality, many distribution chains include elements of both push and pull systems. The question for the supply chain manager is which system is best adapted to the needs of his or her chain.

Do you enjoy doing a physical inventory? I don't! Really, I prefer to to go fishing than to spending a whole weekend counting every piece of every item in my warehouse. Especially if it is a physical inventory which results in an inaccurate count of what is in stock. After all, the primary purpose of an annual stock take is to ensure on-hand quantities in your computer equals what is physically in your warehouse. If, during the counting process, your people overlook certain products and miscount others, the considerable amount of money involved in taking the physical is totally wasted. In fact, most distributors would be better off with no physical inventory than one which results in inaccurate counts.

In the present fast paced world, where almost every organization and business firm employs educated personnel and a trained workforce, there hardly seems to be an urgent need for managers. On the contrary, instead of managers supervising the employees, it is much better to hire coaches who train and provide the employees with the required solutions and appropriate directions. Rather than following the traditional job of supervising and monitoring, a manager needs to shift his focus on how to appropriately coach the workforce.

Operational excellence is no longer a competitive advantage. Globalization, access to technology, sophisticated communications and highly demanding and knowledgeable customers make it a competitive necessity. If your company is not world class now or becoming world class, chances are it won't be any class in the not too distant future. The good news is that world class business tools and techniques are available and affordable for virtually any company. The brutal truth, however, is that operational excellence has as much to do with the will, drive and focus of the company's leaders as it does with scientific management. Here are a few of those key characteristics that go hand in hand with operational excellence, along with some tips on how to make them work for you.