August 01, 2023
With how the supply chain has become more complex every single day, businesses or organizations of all sizes struggle to meet the demands of customers worldwide. The number one reason? It is their poor inventory management. Oftentimes, the production capacity can’t exceed the minimum demands, but there are also cases where the stock piled up because of enormous production capacity and very little to no demands from customers.
This is an increasingly huge challenge faced by numerous businesses of all sizes. And because of that, Uniair Cargo wants to share the importance of lean principles in inventory management also known as “Lean Inventory Management” that serves the purpose of maximizing supply chain efficiency.
Talking about efficiency, we have also published several articles (Bahasa and English) in regard to increasing supply chain efficiency in today’s global market, see our article here:
Lean Inventory Management is an approach to inventory control that emphasizes efficiency and waste reduction. It is based on the principles of Lean manufacturing and involves minimizing inventory levels while ensuring that the right products are available when needed. This guide will cover the key concepts of Lean Inventory Management and provide practical tips for implementing it in businesses of all sizes.
You might want to read: When Should You Expand Your Business Internationally?
The term “lean” is derived from Japanese work ethics and quality management principles namely Seiri, Seiton, Seiso, Seiketsu, and Shitsuke. Just like the usual 6s or 5s “lean” principles which involves Sort, Set in Order, Shine, Standardize, and Sustain, the 5 key principles of Lean Inventory Management is pretty much the same. What are those 5 key principles of Lean Inventory Management?
The key principles of lean inventory management is as follow:
Before we begin, this supply chain article covers anything from Inbound Logistics to Outbound Logistics.
The cornerstone of Lean Inventory Management, JIT Inventory is a strategic approach that ensures resources are procured and produced precisely when they are needed, neither too early nor too late.
By eliminating excess stockpiles and reducing carrying costs, JIT Inventory optimizes the flow of materials through the supply chain, enhancing efficiency and responsiveness.
This will improve cash flow and reduce waste.
By leveraging data analytics and collaborating closely with suppliers, businesses can gain deep insights into market trends and customer preferences. This proactive approach enables timely adjustments to inventory levels, ensuring optimal stock without overstocking or experiencing stockouts.
Businesses must foster a culture of ongoing refinement, where every process, no matter how efficient, is subject to scrutiny and potential enhancement.
Regular evaluations of supply chain operations and active involvement of employees in problem-solving will drive continuous progress for your business.
This will also reduce lead times and streamline workflows.
Lean Inventory Management places great emphasis on waste reduction, known as Muda in the Lean philosophy. This principle identifies and eliminates non-value-added activities, processes, or materials that do not contribute to customer satisfaction.
You can use a few techniques to reduce waste and maximize efficiency such as Value Stream Mapping. This technique involves mapping the flow of goods to determine any kind of waste that is slowing down your growth.
The final key principle of Lean Inventory Management lies in the ability to adapt and respond swiftly to changing circumstances. Businesses must learn how to accommodate market shifts, customer demands, and unforeseen events.
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