In today's tough economic conditions, many businesses are focused on generating and keeping cash to minimize borrowing. Three obvious areas of focus, as evidenced by your local, national and even international news, are reducing spending, eliminating inventory and cutting headcount; but the challenge is to maintain clients and provide excellent customer service despite fewer resources. In today's uncertain economy, businesses are looking to simplify their supply chains, including minimizing their supplier base. Only those suppliers with superior product quality, a proven track record of on-time, in-full service performance, and unparalleled customer service and responsiveness will survive.
So how does one eliminate wasteful inventory in order to save cash yet continue to deliver exceptional service? Now, more than ever, is the time to align your business improvement methodologies to drive a customer-focused mindset. Meet with your best customers and "Lead Users" to truly understand how your product or service helps them achieve their "desired outcomes"; meet with lost customers and non-cutomers to understand your competitors' strengths and weaknesses. Networking, not retrenchment, is vital in today's troubled economy for survival - - and growth.
Once you understand your customers' wants and needs (and potential customers' unmet, unarticulated needs) you must work to lean out your value streams to eliminate non value-added activities, reduce waste, and improve speed while improving the capability of your key business processes and products to eliminate defects and improve reliability. Understand that inventory is the outcome, planned or unplanned, of unstable and/or mis-aligned processes. Not all inventory is bad. Some inventory may be unavoidable depending on fluctuations in customer demand, your ability to forecast, and your own internal constraints that prevent quick reaction and response. You must work to understand all the forms of inventory in your supply chain (for example, raw materials, components, packaging, work-in-progress, semi-finished goods, sub-assemblies, finished goods, quality hold, rework, scrap, etc.), and the root causes of each inventory type (e.g., unknown requirements, inadequate specifications, unstable inputs, incapable process, lack of robust design, etc.).
Together Lean, Six Sigma, Total Quality and an engaged workforce all play important inter-connected roles in improving operational effectiveness and customer satisfaction, for short-term survival and longer-term growth.
