![]() Similarly, MRP will be asking you to release work order 20 days before it is supposed to complete for sell or subsequent operation and will be driving 20 days’ Work in Progress (WIP) Inventory. For example, if you are using MRP and have 20 days of manufacturing lead time, it will take this 20 days into account to order raw materials for given supplier lead time. When considering the planning method you are using, you should consider manufacturing lead-time in the total planning lead-time. Whilst I have seen a lot of focus in reducing the total supply chain lead-time and/or supplier lead-time, there is, however, not enough focus in reducing the internal manufacturing lead-time. I have found this exercise very useful to present visually to the team involved to show how much inventory we should be carrying at each stage of supply chain. Starting from up steam of supply chain and map out the average lead-time to down stream of supply chain. ![]() The easiest way to understand total supply chain time is to perform high-level supply chain mapping. This in turn will reduce the risks related to holding inventory for longer periods of time. To reduce lead-time the throughput, WIP and cycle time will need to be measured in order to get a realistic estimation of a reduction in lead-time. Both a reduction in supplier lead-time and manufacturing lead-time will contribute to inventory reduction. Reduce Total Supply Chain Lead TimesĪ reduction in total supply chain lead-time will lead to products / materials not being held in stock for a long time. Inventory Optimization Tool in Excel Here is List of Inventory Reduction Strategies you can Try to Improve Inventory Turns 1. To help SCMDOJO Community we have developed an Inventory Optimization Tool in Excel that will do all all the optimization work for you in minutes & hours rather than days. ![]() Efficient and effective ways to reduce inventory go a long way in the successful running and survival of a business firm. Inventory management therefore plays a crucial role in balancing the benefits and disadvantages associated with holding inventory. ![]() However, maintaining inventory also involves holding or carrying costs along with opportunity cost. Therefore, identifying inventory reduction strategies becomes critical for supply chain and operations professionals. A lot of cash flow is committed to inventories so as to ensure a smooth flow of production to meet a demanding customer service level. Inventory comprises an important part of current assets, particularly in manufacturing industry. Continuous Improvement Inventory Management Supply Chain Strategy. ![]()
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