Wasted resources, including under- or mis-used inventory, warehouse space, employee time, packaging, even knowledge or expertise could be coming between you and profitability.
As we work to lower our overall inventory levels, all of our potential supply problems become more imminent. Doing away with the ‘silo’ mentality reduces costs, but the silo was there for a reason. We will need to deal with threats to supply almost immediately, or we will grind to a halt without the minimum inventory we need to operate.
So how can my business benefit with outsourcing or running a lean warehouse?
If we aren’t careful, we will descend into an inescapable cycle of constant fire fighting, unable to plan ahead at all and thereby encountering more and more disruptions. We need to plan ahead now, before these disruptive events arise, and eliminate the most common (or most threatening) permanently, and before they actually arise.
If you lack confidence in one or more of your key suppliers, you dare not run lean with those supplies. Better to source a superior supplier that you can rely on, and count the added costs against the reduced warehousing & distribution costs you’ll realise. If your transportation lead times are unreliable, again, seek a better provider or you will be forced to maintain extra inventory. If your department heads cannot cooperate to match their processes, you will have to find a way to improve interdepartmental cooperation or build real or procedural silos. If you do not have good business intelligence or understanding of your customer base, you need to maintain your stock against unexpected surges in demand. Better to develop intelligence assets.
One of the best, if most frightening, methods of solving these supply chain issues is to force the matter. Commit, absolutely and irreversibly, to a reduction of inventory. It will make your problems immediate, important, and real priorities. It is a sink or swim solution, but for many of us in the next few years, it may be the only choice. Think on it.