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Actual for You - Inventory Reduction Frequently Asked Questions
There is a class of management….equivalent, say, to 2nd and 1st lieutenants. They have no real management authority. They often cannot even recommend. They are almost always promoted from the ranks. If not, that is their genealogy. They receive no management training… Or, if they do, it has little or nothing to do with their jobs. I say this is so for most managers…and so I call this class of management ‘most-management’.Most-management has a distinct requirement to communicate. All management has that requirement (and all workers, too).There are accepted tokens of communication that should occur in the job. They often don’t occur (or are completely implicit). This is disastrous. But let’s look at the accepted tokens:Management makes statements of direction. They establish purpose
3. What is the difference between inventory optimization and inventory reduction?
Inventory optimization uses the existing constraints to calculate the required level of inventory for a desired level of availability.
Inventory reduction challenges the constraints to ensure that
So it’s been a while since you’ve played house or made art out of macaroni noodles—that doesn’t mean that you aren’t creative! With effort and continued practice, ANYONE can be creative, and ANYONE can use this creativity to set their company and product apart from their competitors.“Why is creativity so important?”Being creative means continually presenting yourself and your company in new and interesting ways, and enticing customers in a way that your competition can’t duplicate (if you’re good, they’ll try).Creativity is one of the strongest and most valuable traits you can have as a salesperson, because it increases your value within your company and among your customers. It is that value that will change you from an average salesperson to a superb salesperson. That distincti
Inventory management is the activity which ensures the availability of the inventory items in order to be able to service customers. In an MRO environment the customer will be the maintenance and production department; in a finished goods environment the customer is the external customer. Inventory management involves the coordination of purchasing, manufacturing and demand to ensure the required availability.
Inventory reduction is the activity that minimizes the cash investment in inventory while maintaining the availability promise of inventory management. Inventory reduction focuses on identifying those items where the inventory holding is in excess, given the current actual demand and supply characteristics, and then works to reduce the cash investment in these items. This means that a significant cash release can be achieved with no change in the inventory risk profile.
2. How does the different focus of inventory management and inventory reduction impact the outcome?
Because inventory management aims to ensure availability, the focus is primarily on eliminating stock outs, where the availability promise is not met.
Inventory reduction focuses on cash and eliminating any unnecessary investment in inventory with no change in the inventory risk profile. The logic is this: any stock out triggers an action to restock and to typically overstock in order to avoid a future stock out. Therefore, opportunities exist for inventory reduction that will not increase risk. Where the inventory is already overstocked there is no trigger to take action, hence a specific program of activity is required.
Eventually, inventory management must lead to an over investment of cash in inventory as people seek to eliminate stock outs, whereas, inventory reduction results in a minimized investment of cash while maintaining the availability promise.
3. What is the difference between inventory optimization and inventory reduction?
Inventory optimization uses the existing constraints to calculate the required level of inventory for a desired level of availability.
Inventory reduction challenges the constraints to ensure that
Government regulation and public awareness are external forces that have increased the social responsibility of business. But business decisions are made within the company. Two contrasting philosophies, or models, define the range of management attitudes toward social responsibility; the economic and the socioeconomic model.According to the traditional concept of business, a firm exists to produce quality goods and services, earn a reasonable profit and provide jobs. In line with this concept, the economic model of social responsibility holds that society will benefit more when business is left alone to produce and market profitable products that society needs. To the manager who adopts this traditional attitude, social responsibility is someone else's job. After all, stockholders invest in a corporati
Inventory reduction is the activity that minimizes the cash investment in inventory while maintaining the availability promise of inventory management. Inventory reduction focuses on identifying those items where the inventory holding is in excess, given the current actual demand and supply characteristics, and then works to reduce the cash investment in these items. This means that a significant cash release can be achieved with no change in the inventory risk profile.
2. How does the different focus of inventory management and inventory reduction impact the outcome?
Because inventory management aims to ensure availability, the focus is primarily on eliminating stock outs, where the availability promise is not met.
Inventory reduction focuses on cash and eliminating any unnecessary investment in inventory with no change in the inventory risk profile. The logic is this: any stock out triggers an action to restock and to typically overstock in order to avoid a future stock out. Therefore, opportunities exist for inventory reduction that will not increase risk. Where the inventory is already overstocked there is no trigger to take action, hence a specific program of activity is required.
Eventually, inventory management must lead to an over investment of cash in inventory as people seek to eliminate stock outs, whereas, inventory reduction results in a minimized investment of cash while maintaining the availability promise.
3. What is the difference between inventory optimization and inventory reduction?
Inventory optimization uses the existing constraints to calculate the required level of inventory for a desired level of availability.
Inventory reduction challenges the constraints to ensure that
In today’s capitalist world where security is one of the utmost concerns, the typical problem facing an individual is financial security. Money-related questions typically asked are: “Where can I keep my money? What is the best way to invest it and make it grow? Who can I borrow money from?” And the answer: a bank – a financial institution dealing with financial concerns.Banks are known to provide financial services, from storing assets (liquid or otherwise) to extending credit. From a bank customer’s point of view, this translates to services ranging from making deposits to asking for a loan. People are now even capable of paying their bills and most of their purchases thru different banking methods.Historically, banks have been seen as heartless and opportunistic. They were seen as vicious busi
2. How does the different focus of inventory management and inventory reduction impact the outcome?
Because inventory management aims to ensure availability, the focus is primarily on eliminating stock outs, where the availability promise is not met.
Inventory reduction focuses on cash and eliminating any unnecessary investment in inventory with no change in the inventory risk profile. The logic is this: any stock out triggers an action to restock and to typically overstock in order to avoid a future stock out. Therefore, opportunities exist for inventory reduction that will not increase risk. Where the inventory is already overstocked there is no trigger to take action, hence a specific program of activity is required.
Eventually, inventory management must lead to an over investment of cash in inventory as people seek to eliminate stock outs, whereas, inventory reduction results in a minimized investment of cash while maintaining the availability promise.
3. What is the difference between inventory optimization and inventory reduction?
Inventory optimization uses the existing constraints to calculate the required level of inventory for a desired level of availability.
Inventory reduction challenges the constraints to ensure that
When I was a small kid, I remember going to my Uncle Barry's house and be amazed at his paintings. His paintings looked so real, it was hard to distinguish them from photographs. I thought he was on the road to being famous.A few years later my uncle's wife passed away suddenly and he literally lost everything he owned. At the time, he owned the Gold's Gym in Huntington Beach, California. As it turned out, his wife had all the business sense and he just helped the customers. When she passed away, he sold the gym and was scammed by the new owners and never received anything beyond his down payment.Anyway, I thought he would be fine because his paintings were so good, I figured he could always make a great living with his paintings. To this day, my uncle has not sold more than 2 or 3 of his paintin
Eventually, inventory management must lead to an over investment of cash in inventory as people seek to eliminate stock outs, whereas, inventory reduction results in a minimized investment of cash while maintaining the availability promise.
3. What is the difference between inventory optimization and inventory reduction?
Inventory optimization uses the existing constraints to calculate the required level of inventory for a desired level of availability.
Inventory reduction challenges the constraints to ensure that
A conceptual gap still exists in the understanding of the principles and practices of place branding amongst Nigeria’s many state and local government officials. Despite the efforts at the centre to promote this novel concept that has been described by branding professionals as one of the fastest growing knowledge sectors in global branding and marketing, it appears that place branding is largely only linked and associated with the various activities embarked upon by the federal government, aimed at improving Nigeria’s image in the international community, and to position her as a good destination for tourism and investment in sub-saharan Africa.Since the Nigerian government launched the Nigeria Image Project in 2004, which was subsequently re-branded The Heart of Africa Project, not much has been seen
3. What is the difference between inventory optimization and inventory reduction?
Inventory optimization uses the existing constraints to calculate the required level of inventory for a desired level of availability.
Inventory reduction challenges the constraints to ensure that the result is an improvement to ‘what could be’, not just a recalculation of ‘what is’.
4. Why can’t we just use an inventory optimization program and gain those improvements?
Of course many companies will gain a benefit from using an inventory optimization program, however, the real issues are: is the benefit maximized, and is it sustainable?
On its own an inventory optimization program cannot achieve the same level of benefit as an inventory reduction program. This is because optimization programs just calculate the ‘what is’ and so only optimize an element of the total equation. Inventory reduction works on the ‘what could be’ and so minimizes the whole inventory investment.
With respect to sustainability, the ongoing achievement of a minimized inventory results from a change in the policies, procedures, measures and reporting that drive the inventory result. Optimization programs are calculation tools that don’t address these issues. An inventory reduction program ensures that all the relevant members of your team understand the impact of their decisions on inventory outcomes and sets up the policies, procedures, measures and reporting to ensure a sustainable result. Fundamentally, optimization is a tool that may be used in an inventory reduction program. In fact, if you use (or sell) an optimization program you should invest in our inventory reduction system to gain the long term impact!
5. There are lots of optimization programs but only one inventory reduction system, surely if your process was better, everyone would copy it?
Inventory optimization programs are very popular and have been around for many years but as mentioned above they are limited in their application. At Initiate Action we were the first to specifically identify the ‘7 Actions for Inventory Re
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