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How can ‘lean inventory’ help your business?
Author: Benjamin Wang
Many companies are finding that lean inventory management is helping them improve a number of aspects to their business through reducing waste and keeping inventories lower. But what is lean inventory and what benefits can it deliver?
What is lean inventory?
Lean inventory management is a systemic approach that helps companies to cut down on waste, cost and effort as they constantly review and improve their processes.
There are five principles that lean inventory management is built upon:
Value: Before implementing lean inventory management, work out whether value can be generated by applying it to existing processes.
Flow: Understand how inventory moves in the warehouse so that business value and the value offered to customers can be properly assessed.
Pull: Only pull inventory when customers request it. Therefore, inventory only gets replaced as it is bought.
Responsiveness: Continually evaluate inventory flow to enable a good response and to quickly adapt to changes in the market.
Perfection: Keep refining inventory management processes so that quality, cycle time and efficiency can be improved and cost can be reduced.
Companies can use these principles to work out what lean inventory management methods would be best to make improvements. If done right, this lean inventory management can bring about a number of benefits.
What are the benefits of lean inventory?
One of the main things that comes from lean inventory management is the reduction of waste. Particularly with the pull principle, companies do not see excess inventory in their warehouses going unsold. As a result, this also means that companies see their costs reduced. Of course, reducing costs and waste should only go so far so as not to affect value for customers.
Other benefits to lean inventory management include improvements in the quality of companies’ output, on their cycle time and in their efficiency. This is due to an increase in standards for processes and materials and improved collaboration. All of this ultimately boosts the bottom line.
If you would like to learn about lean inventory and how it can help your supply chain. Get in touch with our team.