Why do we care about inventory?
- It costs money
- It uses needed capacity
- It negatively affect service
- It hides problems therefore… It delays fixing problems!!!
EntropyBusters®
Don’t fool yourself by only considering incremental cost.
World class organizations think enterprise wide when completing cost analysis.
Don’t get trapped into trying to optimize,
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A colleague recently asked what I use to train Change Management.
Leadership starts with Change… And Change starts with Leadership…
Helps to set the tone of importance and the dependence of both.
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Let’s start with the realization that plan “A” to relocate operations to China had a major flaw. If you moved manufacturing to China, India or any other low- cost producing country with the intention of importing goods back to North America or Europe (half a world away), then your plan was unsound!
I was taught to do everything possible to reduce lead-times and increase inventory velocity! Why is this important? Longer lead-times increase inventory. More inventory equates to less profits. Why? Because inventory delays fixing problems. When I see corporations chasing the labor “ghost”, I cringe! Labor typically accounts for 8-12% of the total cost of ownership. But too many leaders only have one play in their play book: to reduce labor costs by moving head count to low cost countries! They are missing 90% of the total cost of ownership!
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I like to have fun with the words ludicrous and scandalous. By personal definitions are as follows:
Ludicrous; We’ve all been there… Billy always has the crazy ideas. Often, they’re actually worth looking into and determining if they have any substance. However, with any good brainstorming there are the occasional ludicrous ideas. There is absolutely nothing wrong with the occasional ludicrous idea, just don’t spend resources on it.
Scandalous; Is spending time and money on that ludicrous idea…!
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rticle after article has been written about the advantages of complexity reduction and what should be done. However, too often there is little focus on the root cause of entropy creeping into the enterprise. A recent Forbes article outlines the seven steps to reduce complexity. Each step mentioned addresses the symptoms of the illness and not the disease. We are not doing a good enough job of asking, “Do we really need so many exceptions?” or “That’s a really stupid rule”. Rather, we need to be asking, “What’s driving and creating such complexity?”
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With a college football bowl season almost completed and NFL playoffs ready to start. It’s a good time to highlight some importance Leadership observations.
Leadership Is A Contact Sport!
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