A few months ago, Fredrik and Samir worked with a tier 2 automotive supplier based in Europe. They were facing a large variation in demand and changes with short notice from there customer. The result of this variation was frequent re-planning and large inventories both on raw material and finished goods.
When approaching a problem, it’s always recommended to start to get to know the process. One way is to do a detailed process map. Create the process map whilst following the actual product on the shop floor to capture the true process. This is not a conference room activity!
This was the approach used in this assignment and it was soon clear that there was a large potential. The use of the simple tool process map revealed a possibility to reduce the lead time by 85%. The reduction in lead time enables the company to be more agile and responsive to changes in demand. Instead of producing to forecast it’s possible to produce to actual confirmed customer demand.
The proposal was to increase flexibility by reducing inventory trough creating smaller batches and a continuous flow trough production. There were no major investments needed to significantly reduce the inventory and risk for in currant stock.
The answer to the question: Can a process map help you to reduce your inventory?
Yes it can! The use of a simple tool like process map is great way to understand your lead times. By reducing lead time, you can unlock potential to reduce your inventory.