The reliability of stocks is an aspect often overlooked in logistics. Yet this is an area where you can make significant savings. One of the participants of our last Black Belt training managed to save 19,000 euros. This was no easy feat, as there are many complex factors that influence inventory reliability. Nevertheless, our participant managed to see clearly, thanks to the various techniques of Lean Six Sigma. Are you curious about how he approached the situation? Find out in this article.
Almost all logistics processes in a warehouse are under control or not depending on whether the stock is correct or not. Comparing the theoretical stock with the actual stock in a warehouse often results in huge stock differences. Before the project, these differences amounted to 87% of the total stock in our participant’s company. The objective of his practical mission was to reduce this percentage to a maximum of 1% of the total stock.
The importance of the baseline measure and the project team
‘To measure is to know’. This is why we started by recording the stock differences once a day, and no longer once a week as before. Our participant also formed a project team based on clear objectives. He expected to be able to make big improvements in the warehouse and in the IT department. Is that also one of your goals?
Improvements guaranteed by clear work instructions
In the first phase of the Lean Six Sigma project, our participant did daily analyzes of stock differences. Each difference in stock was communicated to all members of the project team, with an explanation of the consequences of that difference. The project team then set about investigating the possible causes of these differences. How do these stock differences appear? There are a hundred thousand ways of making a difference in inventory. During procurement, it is possible that more or less products are delivered than the number requested on the delivery note and that this difference is not recorded by the administrative service. It is also possible that damaged products were not taken out of stock or that returned products were not returned to stock.Unfortunately,
A series of improvements have been implemented on the basis of the identified causes. These improvements are documented through clear work instructions, visual management and the Poka Yoke principle. Poka Yoke is a Lean Six Sigma tool that is used to organize processes in such a way that it is almost impossible to make mistakes. An example: never store similar products in the same department.
Savings of € 19,000 and almost no more stock differences
The result of the project: the number of stock differences has sharply decreased and currently stands at 0.07% of the total stock. Our participant has therefore achieved his goal of reducing this percentage from 87% to 1%, and this within only three months! This fine result enabled him to save 19,000 euros.
Our participant not only saved money and solved his inventory problem, he also learned another important lesson from this project: he discovered that the causes of a problem are often due to unexpected, unlikely factors. Analysis of all the data yielded these surprising results.
Get into Lean Six Sigma too
We would like to congratulate our Black Belt participant on the result… and on his Black Belt certification!
Do you also want to eliminate stock differences using Lean Six Sigma? Or implement other improvements in your organization? Consult the training offer of The Lean Six Sigma Company. We offer training for all knowledge levels.