Better Inventory Management Strategy May Be Key to Waste Reduction

Published : July 22, 2015

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How is your product created? How does it travel from production to customer? With the substantial to-do list most supply chain professionals are faced with during average operations, a top-down view is not always a luxury they can afford to hunt down. If waste reduction efforts are in place, they are typically more geared towards actionable efforts like inventory accuracy as opposed to conceptual find-and-fix tasks.

Strategy is not a tool that should be neglected, however, in attempts to reduce waste. Knowing where it comes from is the first step to minimizing or eliminating the problem.

Waste in Materials

Once production is established, the pull to stay on the same old course can be strong. Everything is already set up, costs are predictable, solid data rests on predictability and accuracy. But stagnation is the nemesis of innovation. A forward-thinking company should always be seeking new ways to get the most out of their existing production materials, or, alternatively, consulting with R&D to find better alternatives.

When there is unavoidable waste, consider uses for that, as well—can your scrap be sold to a third party company? Recycled for carbon credits to satisfy eco-friendly manufacturing requirements? Creative applications may help your company salvage financial resources that would otherwise go to waste. Additionally, taking frequent stock of material approaches can also offer a boost in unexpected areas that support the supply chain, such as contributing more real-time data to improve inventory accuracy.

Waste in Transport and Storage

If you haven't exhausted all the possibilities of pairing your product with your customers, you may be overlooking a golden opportunity. Consider the case of IKEA: the ubiquitous furniture and home goods brand has eliminated much of the warehouse-to-consumer cost of doing business through innovations like DIY product development, warehousing within retail outlets and an on-site logistics person within each customer-accessible pseudo-warehouse.

While these applications obviously aren't feasible for every company, the spirit of ingenuity teaches an important lesson. IKEA hasn’t sacrificed quality or customer service, yet they’ve taken much of the work off the shoulders of employees. End customers travel to warehouse stores, shop for their desired product (pulling it off the shelves themselves), and typically transport the product to their home as well. IKEA has managed to get the customer to do much of the heavy lifting for them—both literally and figuratively—cutting down on costs.

How can your company make similar changes to evoke that kind of response from your own customer base?

Waste in Operations

Follow a product's transit through your warehouse. Where does it consume the most effort? It may be that the bins it is stocked in are placed in non-intuitive areas that disrupt flow on the floor. Perhaps the low-bid packaging you're using sacrifices protection and broken items in a penny wise/pound foolish approach. The methods your team uses to get their hands on that product and package it to leave the warehouse are just as important as the "tangibles," as well.

Working hours and trained employees are resources to be allocated, and if they're tied up with inefficient stocking, picking or packing practices, explains Larry Fast of Industry Week, you're losing money. Shore up the way your people approach a pallet and you may suddenly find yourself with that surplus of workers you've been aiming for—and with unexpected resources. Imagine all of the one-day projects that can be tackled instead.

Pulling your nose up from the grindstone isn't always easy, especially if you've managed to get a smooth workflow in place in your warehouse. Keep in mind that efforts towards reducing waste are directly linked to beneficial outcomes like inventory accuracy, however, and you'll find the second wind you need to tackle the difficult and many-armed issue of waste within your supply chain.

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Topics: Supply Chain Logistics

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