You’re planning an ambitious supply chain transformation. It’s a significant investment, and you need to justify it to your executive committee and shareholders.
You’re convinced that - you’ve validated it with realistic simulations - this transformation will allow you to reduce your inventories, thereby freeing up a substantial amount of cash and lowering your recurring operating costs.
So, you frame your investment case from this perspective, and as soon as it’s approved, you launch this major inventory reduction initiative.
Spoiler alert: you’re likely to fail!
Your challenge: building team momentum
A supply chain transformation is not merely a technological or methodological project. Simply adding digital tools, automation, and AI here and there is not the point.
If you believe you have too much inventory today - and you likely have evidence to support that - it’s because a chain of decisions led to this outcome. That decision-making chain involved people, driven by objectives, using tools, and applying processes that were more or less formal.
Inventory levels are just a symptom. You don’t cure a disease by treating the symptoms.
Your supply chain transformation will require changing the existing decision-making chains and, therefore, persuading the company’s stakeholders - members of your own team and other involved functions - to change their behaviours, aided by new processes, performance metrics, and technological tools.
“Reducing inventory” isn’t exactly a rallying cry!
“Let’s go ahead—you’ll see, it’s going to be great—we’re going to reduce inventory by 25%!”
The moment you, as a leader, utter that slogan, silent warning bells start ringing in your listeners’ minds.
Your salespeople are already picturing empty shelves.
Your production manager fears having to shut down machines due to a lack of supplies.
Your planners are already feeling the stress mount.
Your customers? Don’t even mention this initiative to them!
Your finance manager might be satisfied, but deep down, doubts are creeping in about the realism of the goal.
In short, resistance to change is kicking in everywhere, whether implicit or explicit - good luck!
Improving service: the unifying goal
If your motivation is instead to improve customer service, reduce lead times, minimize stockouts, and increase the service rate - everyone gets it, and you’ll have a hard time finding anyone opposed to it.
It makes sense, because that is the very purpose of your business, whether it’s manufacturing or retail: to provide the right products at the right time and in the right place for your customers. There is nothing more unifying.
Using resources wisely
You’ve put the church back in the center of the village: your goal is to satisfy customers with optimized flows.
Your transformation then takes on its full meaning:
- Continuously identify true customer demand
- Make the most of your resources—and especially your constraints—to meet that demand
- Reduce inefficiencies and noise (the waste caused by variables within your control)
You’ve redefined a project that’s bound to win support: better serving customers by making the most of our resources, thanks to data signals that help us improve our decision-making processes.
The beauty of the process is that if you do this, you’ll reduce your inventory—but shh, that will come naturally afterward!
To learn more about tips like this, sign up for the Intuiflow User Conference. Many manufacturers will be there to share their testimonials and best practices.
