Inventory Management to Improve Cash Flow

January 17, 2020by Faber Infinite

Did you know, one of the world’s leading corrugated containers & plastic bag manufacturers was able to reduce inventory by $150 million by implementing a structured inventory management module? In this blog, we will discuss about Inventory Management to Improve Cash Flow.

One of the world’s leading corrugated containers & plastic bag manufacturers were facing some severe issues related to inventory. The organization had too much of the cash tied up in inventory. The lead times were too long, production costs were too high and delivery performance was not up to the mark.

The main motto of the organization was to become a world-class manufacturing organization and to become that. The management decided to establish an internal measurement process to become a World-class producer.

These simple internal measurements involved the reduction of aggregate inventory target and on the other hand, achieve an on-time delivery objective. Goals were made, measurements were standardized, and were then pushed down through the organization to convert them into division and plant goals.

Continuous Improvement for Inventory Management

After the implementation of a pilot plant, the organization began the journey with the training and goal setting for each plant. Teams were bifurcated for training on several different topics to implement the process at each plant.

The primary focus of the organization was to reduce the change over time to a single minute exchange of die. The teams were allowed to set the targets as per their choice and were also expected to achieve them.

Within a short span of time, inventory across the plants was reduced by $150 million. The lead times, quality of the product, delivery time, and profitability of the organization, all substantially improved. Most importantly; the culture of a continuous improvement journey was established and maintained.

Hence, as you can see, inventory management can not only help you reduce the unnecessary capital tied up with it. But can also help you improve the quality of the products, delivery time, and profitability of the organization. So, have you started implementing the Inventory management tools and techniques?

by Faber Infinite

Faber Infinite is an International Business Management Consulting Organization offering consulting solutions and services for Increase Profitability in Business.

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