Introducing Lean Six Sigma: Reducing Inventory Problems

Obsolete inventory can be a nightmare for a company. Unsold products keep occupying the place in the warehouse for months. Sooner or later those become outdated. Customers only want to purchase products which can be helpful to them. They will not buy any backdated product. The market is a competitive place. Newer products are arriving every day. Once a brand new product becomes an instant hit, older products will remain unsold for many days. Those products’ final destination would be at any charity or to any liquidator. Both options are harmful for a company. It will have to work really hard to patch up this loss. Companies follow different theories and concepts to get rid of this issue. Lean Six Sigma is one of those.

Definition

Lean Six Sigma (LSS) is one kind of method of finding and removing root causes. This will lead to preventing year-end loss for a company. Cost of any inventory can become a major headache if it is full of obsolete products. There are other several factors as well. Inability to adjust those is also another key problem. A company has a lot of experts in this field. Therefore, it is really important to do some market research before launching a product.

Higher to Lower

Key issue for the inventory problem has to be solved first. Forecasting the prospect of a product is the key. Sometimes poor quality of a product is also responsible for this headache. However, with LSS, higher-level problems can be modified and narrowed into lower-level problems. From a company’s point of view, an inventory is an asset. However, it should be filled with modern and latest products only. It is better not to keep products for more than a month there. Otherwise, it will create space and scheduling problems. An expert LSS team can help a company identify this problem in advance.

Demand Management

Unskilled practice in demand management is very detrimental to a company. There has been brief discussion on root causes. Forecasting modeling, retrieving the data etc require skilled hands and calm brains. Improvement in those factors will surely eliminate the obsolete inventory problems. This is not an easy task. It requires extreme patience. Many companies fail to achieve that. Analysis and reports have to be made regularly. Completing those tasks before the deadline will not be fruitful. A company needs to focus on this issue.

The Math

The LSS team follows some certain mathematical formulae to solve inventory problem. The first step is by eliminating the root cause. In order to do so, the evergreen Y=F(x) equation is followed. Inventory also reflects the situation of a company in the supply chain management. It can be related to manufacturing, marketing and so on. It also shows how a company is operated in terms of fixed and tight deadline.

System Accuracy

The benefits of LSS are actually relative. It depends on the way a company is implementing the issue. Cost reduction and clearing the space in the inventory require excessive research. This is how a company acquires higher system accuracy. Without being accurate, it would not be possible to establish a name in the market. Different relationship models have to be analyzed.