August 1, 2014

Process And Inventory Turns

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If you have never been in a retail oriented line of business, the concept of inventory turn may be a bit alien. But when your business is involved in moving any kind of product, the faster you get that product sold and out of  the door, the less time you have cash locked up in those same products sitting on shelves or in warehouses.

The February 28 edition of Automotive News (subscription required) has an extensive article looking at the internal processes that can help improve inventory turns. From my reference material – I guess that the examples mentioned being in the automotive world is a little obvious! (but the concept of this post is not limited to that market)

First?

The numbers are amazing – the article provides examples that go from one large organization improving their inventory turns about 42% (saving about 400 Million) to a smaller organization that almost doubled theirs.

Now, I don’t write about inventory on this blog – I write about technology issues for non-technology managers! So……????

It is something I have repeated before; technology if necessary, but not necessarily technology

The point I want to make clear, in some of the examples provided there were indeed technology tools that helped meet their goals.

Cash Flow

XD Cash Flow XD by MFBlank on DeviantArt

But as one example in reducing inventory processing time from 35 days to 15 days states;

… studying every step in handling … and improving the process…

Technology not always necessary.

I have written previously that removing friction, and by friction I mean reducing the gaps and time lost between individual steps or touch points can pay dividends.

You will never find a magic technology tool that you buy and that will instantly start a waterfall of cash onto your bottom line.

Technology?

Sure – it can help automate or standardize a good process. But people have to be doing the hard work involved in those processes first.

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  • http://www.ganeshmuthiah.com ganeshmuthiah

    Hi Elliot,

    I had to read your post twice,Could’t resist to read it word by word just to understand the phase “technology if necessary, but not necessarily technology”

    The example below received via facebook video could perfectly fit as good example to compliment your post

    The video show how Tesco South Korea has change the way people shop by bringing the fast moving groceries to subway station.

    This allow people to shop while waiting for a train. This concept is amazing and bet you can see numbers of waste being eliminated.

    To view the video, try searching in youtube “Tesco: Homeplus Subway Virtual Store (Movie)”

    Good Post Elliot:-)