LeanCor Consulting Webinar: The Path to Inventory Reduction

June 24, 2015

Copyright LeanCor Supply Chain Group

Regional Vice President,

LeanCor Supply Chain Group

Principle,

LeanCor Board of Directors

Career Focus:

Focused entire career on third party logistics, sourcing,

materials management, transportation, and consulting.

Experience includes multiple international operational

launches:

Green and brown field start-ups at Toyota Motor

Manufacturing Indiana

Jabil Circuit manufacturing plants in Hungary and

China

Currently Responsible For:

Deploying lean solutions and operational

implementations for LeanCor Consulting customers

Providing strategic vision and organizational leadership

on LeanCor’s Board of Directors

Co-Author:

Building a Lean Fulfillment Stream (Lean Enterprise

Institute, 2010)

mailto:[email protected]



Strategy Manager, -Manufacturing and Global Supply Chain Division,

Bose Corporation

Lean Six Sigma Black Belt

Career Focus:

Joined Bose Corporation in 2004 as a new products and commodity specialist, focused on various mechanical and electrical commodities. In 2008, Katie led the SAP source-to-pay team for the global implementation of SAP in Japan. Her roles since then have focused on driving operational excellence within the division and the supply base.

Currently Responsible For:

Driving the Lean Fulfillment Stream strategy for the Global Supply Chain division and developing overall lean maturity for Bose



Lean, supply chain, six

sigma, and leadership

courses delivered in public,

private, and online settings

that develop people

capability and build a

culture of operational

excellence.

Project-based, end-to-end

supply chain solutions that

improve your processes,

reduce inventory and Total

Cost, and optimize your

network.

Custom, outsourced

transportation

management and

warehousing solutions that

optimize material flow and

exceed your business goals.

Trusted supply chain partner that specializes in lean principles to deliver

operational improvement.


Why has your organization struggled to reduce inventory?



Build to Order = No Overproduction…So what’s the problem?

Supply LT

+

< = Inventory

MLT + OL + < Customer LT = BTO Supply LT

Customer LT MLT + OL

…Here comes the “F” word



• Customer Fill Rate (SLA)

• # of DC’s (Lead Time to Customer)

• Production Frequency

• Supplier Sourcing

• Transportation Modes

• Replenishment Frequencies

• Purchasing Contracts

• Metrics – What We Measure

• Transportation Modes



• Cycle Stock – inventory needed to cover demand during replenishment interval

• Buffer Stock – inventory needed to cover demand due to common cause variation in the supply chain

• Safety Stock – inventory needed to cover demand due to special cause variation in the supply chain


Sell Less – reduce our demand

between replenishments

Increase velocity – replenish more

frequently

There is no third option X


What is the rhythm of your supply chain?

All supply chain activity should match this rhythm

Are you leveraging your current velocity?

Every part/product every interval

What is the impact to transportation cost?

Do we have the ability to measure Total Cost?


How are we performing? What are we measuring?

Customer Demand Variation

Transportation Variation

Lead Time Variation

Supplier Fill Rates

Consumption Variation

Inventory Discrepancies

Poor Quality

We hold inventory to protect our business against this variation. The only way to reduce inventory is to improve in these areas.

What source of supply chain variation causes you to hold the most inventory?


How are we performing? What are we measuring?

Customer Demand Variation

Transportation Variation

Lead Time Variation

Supplier Fill Rates

Consumption Variation

Inventory Discrepancies

Poor Quality


How much you hold is a

business decision.

The longer your lead times, the

more safety stock you should

hold.

You need to have visibility to

the use of safety stock and

determine root cause.

Look to reduce safety stock over

time.

Attention! Attention! You have used safety stock. Special cause

variation has occurred in your supply chain.


Katie Jenkins,

Strategy Manager

Manufacturing Global Supply Chain

Bose Inventory Challenge


Bose business is Changing – Customers are more demanding, frequent product refreshes, complex

product offerings, global customer base, increase need for flexibility

– Challenge: Reduce inventory and increase inventory turns

SoundLink® Color Bluetooth® speaker

SoundLink® Bluetooth® speaker III – NFL Collection

SoundDock® XT

QC®25 headphones

CineMate 15


What prevents us from turning our

inventory 50x a year?

o The Bose supply chain is setup to operate under a weekly cadence

o Lack of end-to-end visibility of supply chain performance

o Complexities are managed with Inventory

o High Instability in Supply Plan Signal

o Evidence of poor supplier on-time, right quantity delivery

o All Products Planned the same

o Metrics Align to Direct Cost not Total Cost


What Bose is doing about it

o Examine long lead-times with our supply base

o Gain Control of Supply base -Fill Rate

o Plan for every part and a plan for every product

o Stability in our Supply Signal

o Re-examine supplier shipping methods and practices

o Postponement capabilities to manage the complexity

o Total Cost Decision Making


1. Education and awareness. Inventory is a result of business decisions.

2. Put it in piles. Cycle Stock, Buffer Stock and Safety Stock.

3. Get rhythm. Understand the natural rhythm of your supply chain and work to

get all supply chain activities to match that rhythm. Begin to measure Every

Part/Product Every Interval.

4. Reduce variation. Improve the stability and performance of all supply chain

activities to reduce the need for Buffer Stock.

5. Determine safety stock. Make sure you know when it is used. When it is

used, make sure you know why. This is your business informing you that

something out of the ordinary has happened.


Kevin von Grabe

[email protected]

859.803.3858

Let’s connect on

Katie Jenkins

Let’s connect on






Supplier Performance: The Keys

to Collaboration

TUE, July 14 | 11:00 – 12:00 EDT

Register:

http://www.leancor.com/event/supplier-

performance-the-keys-to-collaboration/

Business

LeanCor Consulting Webinar: The Path to Inventory Reduction