LEAN INVENTORY MANAGEMENT

According to the lean philosophy, inventory is one of the main wastes of an organization when it is not well managed, because it generates costs for the purchase of raw materials, storage, transport time, and finally, another cost of employee occupation.

Therefore, the manager must pay attention to this sector of the company to ensure that products do not remain parked in the stock and adapt its management to the customer’s buying behavior and, ultimately, move the cycle of goods.

In this article, we will talk a little more about the importance of inventory management and how the lean methodology can help your company eliminate this waste and better control the inventory of your organization. Read on!

The importance of inventory management for the organization

Inventory management is a process that has as its premise to plan, manage, organize and control all material resources stored in an organization, such as example, raw materials, and finished products, among others.

Its main objective is to balance three sectors of an organization: purchasing, storage, and delivery, so that the company is not left with idle products in stock, avoiding excesses and producing just enough, even in periods of low or high demand.

Stock management is more than important for an organization, it is essential! Because it determines how the production line will work, eliminating waste and reducing costs in the company.

How can lean help with inventory management?

Since the time of the industrial revolution, companies have worked with pushed production, following the logic of produce, stock, and sell. This type of production is scheduled in advance based on delivery time. Besides the defects in the final product, it brings a great need for equipment maintenance and a very long time for machinery setup.

However, currently, organizations – in America and around the world – use in inventory management what we call minimum stock, working with pulled and lean production, following the principles of the lean philosophy.

The minimum stock is composed of a minimum quantity of items stored to meet the demands and also to cover possible delays and cancellations from suppliers.

Pulled production aims to produce according to the demand of customer orders, using tools to make efficient inventory management, such as Kanban and the Just in Time system.

Learn what are the main tools of Lean!

It is important to emphasize that lean indicates that the waste of an organization should be eliminated and this includes inventory, but this does not mean that an organization should not have stock, but should optimize it to provide the products at the time they are required.

10 Tips to Lean Inventory Management

Here are some good practices for efficient inventory management with the help of lean!

1.  Know your customers and market demand

The commercial team of your company needs to be up to date with the market demand and must know what the clients are asking for and which demands must be met.

With the necessary information and projections in hand, production can be done according to the real market demand and customer orders, thus avoiding overproduction and losses with storage.

2.  Choose Pulled Production for your organization

As we said, currently pull production is the most used in production lines, because the production is made according to the demand of customer orders.

The Kanban is the protagonist of this methodology because as new production orders or purchase requests need to be issued, a card is issued by the production line team.

Among the greatest benefits of pull production and the use of Kanban, we can mention the reduction of waste and loss of products, which may not be out of stock due to changes in market consumption.

3.  Develop a catalog based on your inventory

Doing a survey of how your stock is doing is one of the first steps toward good inventory management.

To do this, you need to record all the items in your inventory, as well as the quantity and dates of entry and exit. Recording this information is essential to monitor and release the production order in order to avoid failure to replenish raw materials and excess finished goods.

4.  Define a person responsible for the stock

As in any other sector of the company, it is necessary to define a person responsible for the stock, usually a stock manager or a stock supervisor, to monitor and control the stock operations, such as inventory, entry and exit, kanbans, among others.

5.  Prioritize stock optimization

To do good inventory management you need to follow the goal of a minimum and optimized stock, with the right amount – without lack or excess of products – to meet the demands of your company’s production line.

6.  Keep your stock well stored and secure

The location of the stock also influences the management of the minimum stock. It is necessary that raw materials and finished products, especially when they have an expiration date, are well controlled. This is because products with expired expiration dates generate great waste and financial losses for the company.

Another factor to pay attention to is to keep the place clean and safe, to avoid stock losses such as example, damages, lost or stolen products.

7.  Evaluate your stock costs carefully

Efficient management evaluates and controls your stock costs, mainly with storage, lack of items, loss of materials, and maintenance, among others. Pay attention to your stock costs!

8.  Don’t anticipate entries in times of idleness

No demand should be anticipated in the case of idle employees and machinery.

It is necessary that the production is made at the right time and in the correct quantity to avoid waste and not to produce too many products and thus lead to overproduction of stocks.

9.  Use technology to your advantage

Technology is a great ally in any sector of an organization, with the stock, could not be different.

MRP and ERP software gather all the necessary information to perform the inventory survey and maintenance, product localization, stock process and flow follow-up, and much more.

10.  Implement 5S

And last but not least, good inventory management is performed with basic principles of organization, quality, standardization, and continuous improvement. And for this, the 5S methodology can help you!

Sense of Utilization – Seiri: unused items must be eliminated from stock;

Sense of Organization – Seiton: evaluate the layout of your stock and organize all items;

Sense of Cleanliness – Seiso: the environment should be clean and well illuminated;

Sense of Standardization – Seiketsu: standardize the activities of the stock

Sense of Discipline – Shitsuke: everything that is done must always be standardized and

Now you can go further and use lean to improve inventory management and other processes in your organization. Talk to one of our experts!