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Inventory Management Using
Inventory
Plan, Do, Check, Act
Doug Howardell
San Gabriel Valley Chapter
Session Overview
PDCA Explained
Definition and Importance of Inventory
Management
The Plan, Do, Check, Act Cycle Applied to
Inventory Management
Inventory Management Using the Inventory Quality
Ratio
Case study results
Summary
Copyright 2008 Doug Howardell
626-390-6935 DHowardell@InventoryPerformance.com
PDCA Explained
Plan
Define the desired condition
Measure the current condition
Set improvement targets
Do
Take corrective action
Check
Track progress to target
Act
Identify root cause & correct
Copyright 2008 Doug Howardell
626-390-6935 DHowardell@InventoryPerformance.com
Defining Inventory Management
management : The organizational process that
includes strategic planning, setting objectives,
planning
directing resources, deploying the human and
directing
deploying
financial assets needed to achieve objectives, and
measuring results
measuring
inventory management : The branch of business
management concerned with planning and controlling
inventories.
aggregate inventory management : Establishing
the overall level (dollar value) of inventory desired
and implementing controls to achieve this goal.
Copyright 2008 Doug Howardell
626-390-6935 DHowardell@InventoryPerformance.com
Why is Inventory Management
Why
Important?
Important?
It takes cash – capital – to produce or acquire
inventory
That cash tied up in that inventory is not usable
for other parts of the business
– It is called “working capital”
Many companies barrow to support their working
capital needs
– A very real “cost” to the business
Every dollar in inventory reduction leads to a
dollar reduction in working capital
– Saves cost of capital
Copyright 2008 Doug Howardell
626-390-6935 DHowardell@InventoryPerformance.com
Importance of Business Benefits of
Importance
Supply Chain Management
Supply
72%
Increased Inventory Turns
67%
Decreased Carrying Costs
62%
Reduction in Cycle Times
59%...
