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