Category: Uncategorized

Inventory, Part II: Calculating Safety Stock Correctly

In our last blog we stated that there is no simple formula for calculating the safety stock required for a given fill rate if the reorder quantity is greater than one.  In this blog, I’ll provide detail on correct safety stock calculation and some considerations when trying to optimize safety stock for a set of parts…. Read more »

Inventory, Part 1: One Big Safety Stock Mistake to Avoid

Inventory is a great fascination for managers. Primarily because it is a fairly flexible asset that companies can use to manage their financial performance. This also makes inventory a source of poor control because short term financial reporting considerations often overrule good operations control practices. I worked at a company where inventory was stored in… Read more »

The Value-Added Fantasy: Don’t Waste Time and Effort. Provide Faster Response for Your Customers

“‘Eliminate Waste’ is a nonsensical slogan.1” – Shigeo Shingo Performance improvement strategies that revolve around the notion of reducing non-value-added activities continue to be popular. Unfortunately for the multitudes of companies relying on them, these strategies are seriously flawed and often result in huge wastes of time and effort. The “value-added” focus is one of… Read more »

In Favor of Buzzword Initiatives: How to Make Your Management Initiatives More Effective

At Factory Physics Inc., I have railed against buzzword initiatives for years. Buzzword initiatives are akin to death and taxes—not anything people like but they seem to be unavoidable.   Companies continually launch buzzword initiatives like rock concerts, e.g. Lean, SixSigma, Lean SixSigma, Theory of Constraints, Big Data, DDMRP, AI, and Blockchain to name a few. Note the early adopter in… Read more »

Three Highly Common Mistakes in Forecasting

Forecasting is often greatly misunderstood and also obfuscated by the allure of the latest technology. In Lord of the Rings, Saruman had the best technology available with the palantir (the “seeing stone”). However, his technology didn’t save him from making serious mistakes or from a bad end. Forecasting is a good thing. If your lead… Read more »

How to be Happier with ERP/MRP Planning and Run Your Operations Better

At a recent SAP user’s conference, a speaker discussed how his company (a Fortune 50 company) had challenges managing inventory and production scheduling.  They heeded management’s and SAP’s exhortation to respond to all MRP exception messages. The company hired Accenture as a third-party resource to manage approximately 25,000 MRP messages per week. At the end… Read more »

How to Address Supplier Variability for Best Possible Performance

Variability is abundantly prevalent in our world.  For example, we very rarely leave the house at the exact same time every day.  Why is that?  Variability in timing includes what we had for breakfast, whether or not we set the alarm clock or how late we stayed up the night before.  For this blog post,… Read more »

Five Practical Ways to Reduce Inventory, Improve Service and Reduce Cost Today

Successful managers apply practical science to quickly achieve predictable improvements. Imitating other competitors or “best practices” of companies in different industries is an uncertain path at best. Executives and managers are most successful by understanding and applying practical operations science concepts in their own unique business environments. See Factory Physics for Managers for a comprehensive description… Read more »