May 10, 2019 Growing & Complex Businesses en_US Discover the inventory management hacks manufacturers use to reduce their administrative workload by as much as 40 percent. https://quickbooks.intuit.com/cas/dam/IMAGE/A1OQF4Q8R/b889ef69ceef49a852ef0554dd10f08f.jpg https://quickbooks.intuit.com/r/growing-complex-businesses/3-inventory-management-strategies-that-reduce-administrative-work-by-40-percent 3 inventory management strategies that reduce administrative work by 40%
Growing & Complex Businesses

3 inventory management strategies that reduce administrative work by 40%

By Andrew McDermott May 10, 2019

Are you buried in busywork?

A survey by Harris Poll found more than 50 percent of manufacturing firms spent a significant amount of their time coping with processes. That’s right, instead of managing their inventory these firms spent most of their time juggling approvals, expenses and document management issues.

Sound familiar?

If you’re struggling with these issues you’re not alone. Research shows 83 percent of global manufacturers are struggling with this operational complexity.

Administrative challenges impact performance

Manufacturers are facing continual pressure to cut costs, but these administrative challenges move performance in the opposite direction. Expectations are high and schedules are tight. Yet manufacturers’ administrative workload continues to grow.

No surprise then that these firms listed the same pain points.

  • 63 percent of firms pushed for a reduced time-to-market
  • 71 percent pushed for inventory managers to cut costs
  • 70 percent expected firm-wide increases in productivity and efficiency

There’s a conflict here.

How do manufacturers go about resolving these conflicting expectations?

With inventory management hacks. Managers need simple strategies they can use to reduce their administrative workload. When managers hear this, the most common question they ask is, “Where do we start?”

To answer that question I turned to Mary Suemnicht, inventory manager for the Bemis manufacturing company. While Bemis is best known for their toilet seats, they produce and ship more than 100,000 units per day globally, across their various product lines.

I asked Mary about the inventory management strategies she used to reduce her administrative workload by an incredible 35 to 40 percent.

Strategy #1: design and map your process

At Bemis, Mary relies on value stream mapping to analyze and update her departments’ information and material flows. Using value stream mapping, she’s able to retrace their steps efficiently to identify the cause of a problem or breakdown.

“Let’s say we’re missing a whole pallet of corrugate,” Mary explains. “It’s a logical flow. The first place you look at is receiving. Did we receive the product just off our supplier’s invoice or did we physically verify the order our supplier sent to us?”

With this process, she’s able to retrace the steps accurately and verify they did indeed receive the product from their suppliers. With the right process in place, she sees the order was signed for, continued through her department and is being used appropriately by the right people.

Value stream mapping has minimized the amount of time anyone at Bemis spends dealing with mistakes and excessive administrative concerns because everyone knows where to look and how to retrace their steps when something goes wrong. There’s a paper trail to follow and a record of all activity.

Even the absence of activity is telling. A breakdown in their process triggers an immediate response.

Mary said, “It is a game changer because inventory is not just my responsibility. Inventory

is everybody’s responsibility.”

Strategy #2: optimize your planning horizon

What do you need to ramp up production in your company? How do you ensure that you’re ready to ramp up production on an as-needed basis? How do you do that without carrying excess inventory and increasing costs?

You create and optimize your planning horizon.

Your planning horizon is metrics driven. Using data, your team can identify your production and material requirements in the near future. The metrics may vary, depending on your industry. However, you’ll want to identify the data that drives production.

  • Sales forecasting
  • Actual sales
  • Shortages
  • Output goals
  • Schedule attainment

Your plan also needs to include adjustments and changes for the unexpected as well as contingencies for favorable and unfavorable events. Just how important is your planning horizon?

Mary says, “I would say the planning is 70 percent of it because the planning is your master schedule. It breaks down into your production schedule, which as you know, breaks down into your weekly manufacturing buckets. It breaks down your purchasing demands, your timeline, etc.”

Let’s say you optimize your planning horizon. You create your contingencies for favorable and unfavorable events. Then life comes along and shakes apart your plans.

How do you handle that?

You do what it takes to survive and grow. Can you add more shifts to your manufacturing? If you’re running five days a week can you add overtime and weekend shifts? Is there an opportunity to subcontract any of the steps in your manufacturing process?

Contingencies and preparation are essential.

Pre-emptive, forward-looking strategies like employee cross-training, seasonal employees and relationships with temp agencies are important layers in your planning horizon. The better prepared you are for the unexpected, the more flexibility you have to deal with favorable and unfavorable events.

In order for your contingency planning to be successful, you’ll need to build a network of internal support. How do you do that? You…

Strategy #3: earn buy-in consistently

This strategy is counterintuitive. When inexperienced manufacturers think of inventory management hacks they focus on process. Or they focus on impersonal details like workflows, software and documentation. Each of these details are important but they pale in comparison to people.

Inventory is everybody’s responsibility, remember?

Mary said, “It’s sort of like when you turn on the TV and listen to the news. You always hear about the houses that burned down, but you never hear about the homes that didn’t burn. I don’t hear how great inventory [as a department] is. I only hear how bad it is when we don’t have what we need.”

This is a subtle problem.

Manufacturing firms, like any other business, are focused on growth. Growth produces growing pains. Growing pains require improvement and change. Managers are aware of these problems. They’re consistently planning for these growing pains.

They’re working to optimize efficiency and improve production.

But their employees on the floor aren’t buying it. They aren’t buying it because many managers have forgotten to take the time to earn buy-in from their direct reports. As a result, employees struggle to move past their comfort zones and traditional habits.

They resist change and sabotage the process.

Why?

Patrick Lencioni, legendary management consultant and best selling author, explains:

“You can’t earn buy-in until each of the employees involved has had a chance to weigh-in.”

Consensus isn’t always possible but giving your employees an opportunity to be heard is doable.

It’s incredibly profound.

Here’s the problem.

Pushing for a weigh-in takes time. It can be frustrating, difficult and uncomfortable to mine for that conflict. But that’s what needs to be done. If you’re looking to reduce administrative workload by 40 percent as Mary did, you’ll need to pursue healthy conflict.

When you’re making a change you’ll need to give your team the chance to air their grievances.

This is how you earn buy-in.

Earning buy-in is simply you making sure that everyone on your team has what they need (and a chance to weigh-in) when they need it. It’s the detail many firms would prefer to ignore, but it’s also the strategy that leads to improved efficiency, increased productivity and overall growth.

What happens if you don’t earn buy-in consistently?

Instruction creep becomes a problem and busywork increases as each team, group or department begins creating their own set of rules on how they feel the work should be done. This creates operational silos and unnecessary turf wars as people, groups and teams struggle for control.

If you want consistent buy-in, encourage consistent weigh-in.

Administrative busywork isn’t mandatory

More than half of manufacturing firms are struggling under the weight of administrative challenges. They’re juggling approvals, expenses and excessive paperwork. The majority of manufacturers are struggling with these operational headaches.

The solution boils down to three things—people, planning, and tools.

These administrative challenges have a detrimental effect on your firm’s performance. If you’re like most manufacturers, you’re facing pressure to cut costs, reduce time-to-market and increase productivity.

It’s possible with the right strategies.

With clear planning and consistent buy-in, you’ll create the momentum you need to systematically reduce your administrative burden. And with effective tools that provide visibility and insights to stay ahead of the curve, your inventory management operations can shift from a weakness to a competitive advantage.

Andrew McDermott

Andrew McDermott is the co-founder of HooktoWin.com. His work has been featured on Entrepreneur Magazine, Fox Business, and other top 1000 sites. He shows business owners how to increase average order values by 20 to 40%, automatically. Read more