RE: den.list-d Digest V2002 #45 - Inventory

["Mike A Woolbert" <mawoolb@ppco.com>]

Real, in-process inventory is a passive residual of the manufacturing
system and is therefore a result.  Management programs that aim to reduce
inventory are generally a farce, as they are attempts to manage results,
instead of processes..

In-process inventory is inversely correlated to plant's mechanical
reliability.  We set forth a to reduce real, in-process inventory by 50%.
Our actions centered around improving reliability using Total Productive
Maintenance principles.  As reliability improved, inventory diminished
automatically.  In-process inventory is "just in case" inventory.  As the
probability of the up-stream and down-stream units operating properly
increased, the need for "just in case" inventory diminished.  The fifty
percent inventory reduction was a natural consequence of the process change
that improved reliability.  Inventory was planned as a consequence, but
never the focus of an overt program.

At the same time, we renegotiated the terms of our raw materials purchase,
so that our payment was due after the material had been processed, sold and
paid for.  This process change resulted in our accounting inventory having
a negative dollar value..

Thanks, Mike

"In a time of drastic change it is the learners who inherit the future.
The learned usually find themselves equipped to live in a world that not
longer exists."         Eric Hoffer