Comments on: Inventories decline as supply chains seek equilibrium

By: E-Sourcing Forum » Sourcing Blogs: 21st Century Supply Chain

E-Sourcing Forum » Sourcing Blogs: 21st Century Supply Chain — Fri, 10 Apr 2009 14:00:39 +0000

[...] Inventories Decline as Supply Chains Seek Equilibrium [...]

By: Randy

Randy — Mon, 16 Mar 2009 17:09:10 +0000

Damien – thanks for the comments. I know the picture you reference. And, I completely agree with your views. Namely, you can’t just reduce inventories in isolation, you have to look at them in context to customer service requirements, at a minimum (I picked that out mainly because I think this economy requires that to be front and center while you seek to reduce inventories).

By: Damien Garnier

Damien Garnier — Mon, 16 Mar 2009 17:04:15 +0000

Intersting when you say that inventory reduciton is a good thing. As lean Expert, I would say that’s the key item that drive the improvment of performance. Sorry to speak like a book, bu you may saw thispicture of the company like a boat floating in lake where rocks (pb, non value adds) are hidden at the bottom. When you reduce inventory, rocks appear and you can start improvement by cuting off them one by one. It’s important to not decrease too fast the lvel of water, otherwise you will see rocks appearing all together and you loose the priority order to adress the problem. I might even exceed your own capacity to handle problem.
To be back on real life, inventory reduction will means a capacity under the demand that is collpsing, thus the reduce dramatically capacity until we are back to balance: huge shake in employement. To satisfy the demand without no inventory, it’s the purpose of lean, we’ll cut others job not linked to value add (storage, material handling..). Then to employe back every one we must boost the demand at the same time…How to make it happen? Next economical cycle with creation of new business/values (organic industry, environnemental care…)