Back in 2016, we posted about Tesla’s ambitious plan to ramp up production of its consumer-grade Model 3 electric car to 500,000 vehicles a year by 2020. At the time, pretty much every analyst agreed that was an ambitious target for a manufacturer without solid experience mass-producing vehicles at that scale.
In the two years since, Tesla’s CEO Elon Musk has issued a number of other bold predictions. He’s championed a whole host of emerging technologies. He’s made the world feel like the future could resemble a sci-fi novel – were he to deliver on the herculean tasks of sending humans to mars, shifting the world to solar power production, and figuring out how to directly connect computers to human brains.
Taking a holistic approach in order to achieve Inventory TurnoverBreakthrough results meant that I needed to consider the End To End Supply Chain. As I thought through this approach there was really no other way if we were to achieve significant improvements to help the entire business in a short period of time.
In thinking about the End To End Supply Chain it was necessary to define all of the aspects that impact Inventory levels. In short I needed to be able to manage:
All of the levers that control the rate at which Inventory is brought in to the company
All of the levers that control the rate at which Inventory moves through the company
And all of the levers that control the rate at which Inventory moves out of the company
When I started my career the term “Supply Chain” had just been coined. As such it was many years before I actually heard of the term “Supply Chain Management”.
Regardless I pursued my interests and took on an increasingly diverse set of progressive jobs as time went on. Now as I look back on my career virtually everything I did falls under the banner of Supply Chain management.
The decision by President Trump to tell 3M to stop shipping masks to Canada and Latin America is astonishing given that all of humanity is facing the same crisis.
Supply issues started with chronic shortages of toilet paper, hand sanitizer and food goods of all kinds. Store shelves have been emptied of the most basic items that we all take for granted.
And then it quickly evolved to shortages of personal protective equipment (PPE) for our Healthcare professionals. The very people whose tireless efforts and personal sacrifices on the front lines of this pandemic don’t even have the basic equipment they need to do their jobs while protecting themselves and their patients.
I never knew what an N95 mask was, nor did I know that there were actually national stockpiles (now proven to be insufficient) of these masks and ventilators and other PPE.
Trump’s action with 3M raises questions for any country about what their Strategic Stockpiles should be and whether future sourcing decisions and actions should be based on parochial nationalistic needs or magnanimous global needs.
In my experience when you embark on driving any kind of Game Changing Transformation you will most likely also need to break barriers and change behaviours if not the Culture. As the saying goes, “the definition of insanity is doing the same thing and expecting different results”. So in order to get different results you may have to break through barriers and drive different behaviours from what are inherent in the current Culture.
Your organization is an ecosystem of policies, practices, processes and procedures that are the result of decisions, beliefs and behaviours. Over time much of this generally gets accepted as the way it’s always been done and is not open to challenge or to change. Therein sacred cows, whether real or perceived, can become obstacles to making the changes needed to derive different results from the status quo.
Having your Call to Action in Place, A Project Name and mandate, and a Holistic Approach are critical. But the “X” factor that you also need to have a strategy for is Cultural Change.
We launched the Global Inventory Turnover Breakthrough project on April 1st. It was not a joke. Our challenge was to improve Inventory turnover from 6.3 turns to over 8.6 turns within the year. This was a level of achievement that the company had never before reached, let alone thinking about going from Worst to First.
But we had the Call to Action. Our Inventory turnover was perennially the worst in our industry. Our Inventory levels were consuming an enormous amount of cash as well as creating a lot of expense in carrying charges. And this had the effect of driving our Return on Invested Capital to very low, unattractive levels. Further there were ongoing complaints that even though we had a lot of inventory we never had all of the right material that was needed.
We had the motivation to turn this situation around. What we didn’t know is that we were about to make history and go from Worst to First!
Inventory makes the world go round. Stockpiles of raw materials, components, sub assemblies, finished goods, returned goods, and reclaimed and refurbished materials enable all aspects of industry to function and all aspects of the economic engine to run.
Trillions and trillions of dollars of inventories exist all over the world in every conceivable form and in every conceivable channel. Inventory levels will determine whether any company will survive or die. Too much inventory can result in cash flow problems that lead to bankruptcy. Too little inventory can result in an irretrievable loss of business that can lead to business failure.
Given its incredible importance we’d like to explore what may seem to be a simple, yet complicated and truly strategic, question.
Everyone and every company has inventory of some kind or another. In your cupboards and closets, attics and basements at home you have an inventory of goods. At your place of work, whether that be in an office, on a manufacturing floor, or a warehouse, you are surrounded by inventory. And certainly, any store you go to, whether in person or online, has shelves stocked with inventory.
At Supply Chain Game Changer we believe in sharing experiences and expertise from people in every industry and from across the globe. As such we have introduced our “Seasoned Leadership in Action™” Interview series. This interview is with Vitor Ayres Angelelli, Head of Operations at Neogrid North America.
Online shoppers have come to expect the instant gratification of next-day delivery. Consumers’ willingness to wait to receive their orders has dwindled significantly in the past half-decade. If your eCommerce fulfillment process takes too long, you’ll lose sales. One of the best ways to shorten your delivery window is to reduce lead time.
A deeper understanding of what lead time is, its components, and how reducing it can help your business grow. In this guide, you’ll find everything you need to know about lead time and how to use it to optimize your order fulfillment.
The natural, and synthetic, rubber Supply Chain is another casualty of the Coronavirus pandemic. Our recent purchase of a new vehicle made us aware not only of the computer chip shortages impacting the new automobile sales market, but also the rubber market shortages threatening similar disruptions.
Rubber is used for tires, gloves, gaskets, clothing, adhesives, numerous industrial applications, hoses, water based applications (eg. diving equipment, flotation devices), and much more. It is an integral and indispensable part of our personal and professional lives.
Such pervasive usage and demand, combined with the potential for supply impacts, makes it important for us all to understand the natural and synthetic rubber Supply Chain.
Article written for Supply Chain Game Changer by, and permission to publish here provided by, Christina Morrison at https://www.top10erp.org/.
Imagine an asset that, instead of contributing to a business’s success, costs it money without producing return, makes it harder to get an accurate picture of performance and otherwise hinders its success.
It’s a scary picture for any business owner or employee—and for many, it’s all too real.