Lean Logistics – Inbound and Inventory

Lean Logistics can help you to reduce the 7 wastes into the logistic process. In this video, the focus is on Inbound Logistics.

In this video, I will explain the relationship between Inbound Logistics and the Inventory. Further, I will give you some tips to reduce the inventory managing the inbound logistics.

Everyone Wants Pieces

Well, in every production plant, our production people ask for components to produce.

Each production process asks the predecessor for the right component at the right time.

This means we have some work in progress stock.

We have also some components stock to be transformed into work in progress and finally into the final product our customer is asking for.

What Is the Components Stock and How to Manage?

Components stock means Dollars of Material is waiting to be transformed into income for the company.

A high component stock level means low inventory rotation, obsolescence risk, and also a waste of resources.

But we need some stock to:

Deal with our materials suppliers operations

Make the operation run smoothly and avoid production breakdowns

Make sure our customer is having the service they expect from us.

How to Drive the Need for Stock to the Just Needed Inventory?

Talking about components stock we need to:

1. Make sure we have enough components between 2 supplier deliveries

2. Make sure we have enough components for our operators to pick up at the moment they need

3. Make sure we have enough components in case there’s a problem with our supplier transport

4. Make sure we have enough components in case there is a variation in our customer demand and then in our production demand

Manage all these stocks for our components with the financial targets for the business is always a challenge.

How Can We Reduce Them?

Here some tips:

1. We can increase transport frequency. If we have more trucks per week then we need less inventory between supplier deliveries. We can share transport between different suppliers in order to increase frequency. Milk run concept.

2. We can increase the frequency from our warehouse to our production line so less stock in our production line will be needed. We can also reduce the packaging size so we can have less stock.

3. Reduce transit time. Look for closer suppliers. Look for cross-docking solutions

4. Work closely with customers in order to anticipate variations. Look for the benefits of sharing demand data in real-time to improve service.

5. Reduce lead time.

You can reduce lead time:

a) the time to detect the need of a component
b) the time to send the need to the supplier
c) the time the supplier need to produce it
d) the transport time to your facilities

Conclusions

You should look always for a balance between the cost of all these actions and benefits for the customer and the company but don’t forget that time is always money and good service is always one important driver for customer loyalty.

Take care of your customers so you will take care of your business.

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