Careful, Comprehensive Inventory Management – (Part 2)

As a memory aid, I use A56σ to represent such a careful, comprehensive, and corporate approach to inventory management.  Each component of A56σ is essential for achieving sustainable, continuous improvement in inventory efficiency.  There are five concepts which I will alliterate with the letter “A” and the tools of six sigma.  Below, is the second “A”.  Please see my previous post for the first “A”.

Account – for your action

This is perhaps the simplest, but yet most difficult aspect of careful, comprehensive inventory management.  When different functions of the business such as sales and manufacturing do not have harmonized goals, then inventory efficiency will suffer.  For example, if manufacturing is rewarded only for efficiency and overhead absorption, while sales is only rewarded for volume or even total margin dollars, and purchasing is rewarded for lowering per unit costs, then inventory is left to someone who does not have the ability to really influence it.  This is one of the benefits of a functional Sales and Operations Planning process that is supported by shared and consistent metrics across business functions.

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About Arnold Mark Wells
Industry, software, and consulting background. I help companies do the things about which I write. If you think it might make sense to explore one of these topics for your organization, I would be delighted to hear from you. I am employed by Opalytics.

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