The 6 Steps To Inventory Reduction | Manufacturing Inventory Optimization | Cash Flow Improvement

There are 6 steps that I have found to be essential to pursuing inventory reduction. Actually, there are many more things that can be done – for instance, focusing on supplier agreements and the management of supplier performance – but for this bare-bones presentation I will just focus on those steps necessary to get tangible reductions in inventory, which is a great start on the road to inventory optimization. I have used these same steps at five different companies to tackle out-of-control inventory levels, and this roadmap works every time. In addition to reducing the inventory, these companies saw improved cash flow, reduction in warehouse space, reduction in Excess and Obsolete inventory that needed disposition, along with improved employee skillsets as a result of participating in the optimization project. Shortcuts for topics in this video: 0:00 Start 0:37 The typical growth pattern seen in a manufacturing business 2:26 The 6 steps to reducing inventory in a company 3:40 Step #1: Gathering data 6:28 Step #2: Put together the inventory reduction team 7:41 Inventory Optimization team charter 8:47 Step #3: Brainstorming by the team to determine likely drivers of inventory growth 10:04 Step #4: Initiation of an A3 Report template for the project (maintains visibility/accountability) 12:27 Step #5: Establish and enforce monthly meetings of the inventory team 13:19 Step #6: Publish the A3 Report to the organization (on a monthly basis) 14:36 The 6 steps quick review (recap)