Warehousing and distribution in the lean years: Reduced inventory for lower costs.

Part One:

Inventory is the whole point of a warehouse, but all too often the sheer volume of it can hamper efficiency and reduce your ability to manage it effectively. Today, we will try to look at inventory problems from a new perspective.

Let’s look at new ways of running a leaner, more efficient warehousing and distribution operation.

Corporate environments and entire markets are shifting very quickly now, and the old-fashioned ‘silo’ way of thinking of inventory is making us too slow to react. Stable markets seem to be a thing of the past for most industries, and the most agile organisations are seeing a substantial competitive advantage.

There are a hundred ways to reduce inventory, but the most obvious come with so many disadvantages that they can be dismissed, or only apply to a very narrow subset of industries or niche markets. You will need to improve your organisation’s relationship with inventory, specifically in how it interacts with waste elimination, teamwork and critical issue response policy.

So, what strategies are the winners in the current environment using? Rather draconic ones, it seems. There are three main points to the most successful strategies, and they are interdependent. Adopting only one or two may not hurt, but you won’t see real game changing results without all three. Consider whether they might work for your organisation.

1. Adopt a management culture that doesn’t just focus on, but is passionately committed to waste reduction in all of your processes, even the sacred cows.

2. Reduce territoriality. Your leaders and managers need to be problem solvers, and be willing to let others ‘meddle’ in their processes, in order to achieve real efficiency.

I can’t stress this enough. A proper problem solving, cooperative culture will see a real profit boost through improved teamwork and truly adaptive, agile processes.

3. Elimination of excess inventory allows the kind of flexibility you need to make meaningful advances in waste reduction and efficient, team-focused process management.

Look for my next article for ways to address the waste reduction challenges of a lean warehousing and distribution centre as another part of the puzzle.