Six Sigma – Handling an Inventory Problem

Many corporations and businesses have a huge amount of money tied up in inventory. This inventory tends to depreciate quickly, especially if the product happens to be connected with technology, which usually means, the older they are, the less the inventory is worth. This represents an unnecessary loss on the books for the entire business. One way to combat this potential loss is to implement a Six Sigma project complete with Lean Black Belt training, to alleviate the problem.

Most major manufacturers operate in similar fashion when it comes to inventory. Salespeople make a deal, the customer fulfillment team places the order, the order is processed and the product is shipped to another warehouse in the chain to await delivery to the customer. It’s in this second warehouse where sometimes there is a hang-up in inventory management, creating a perfect spot for a Lean Six Sigma Black Belt project to investigate better ways to smooth out customer fulfillment. 

There are a number of reasons why inventory gets grid locked in the warehouse and the out of the control of the customer fulfillment team. These factors may include;

•    a pushed back delivery date

•    a lag in closing the deal

•    salesperson sends the machine before the customer is ready for it

•    the customer changes configurations and no longer needs the machine that it ordered

•    the salesperson, having lost that sale, proceeds to hang onto the machine in hopes of selling it to someone else in the market.

Implementing the Six Sigma Process would require the project team to look at the sales team behaviors as well as how this behavior affects company inventory. Sometimes the root cause is as simple as lack of motivation in lowering inventory in the warehouse in question. Another possible cause at the root could involve the failure to follow the regular monthly plans of how to move inventory out of the warehouse. This forces Lean Six Sigma Black Belts to create a newer and better plan, one that is easier to adhere to by sales and warehouse personnel.

Any successful plan would include an agreement by all personnel from management to the floor regarding the importance of cutting down on inventory. This agreement also involves an understanding of any financial impact involved on the company.  Better record keeping is essential in improved inventory management. One fix originating from the Six Sigma Process might include setting a deadline of 30 days, for either delivering the product to the customer or returning it for re tooling and re use.  The Six Sigma process would also mandate an increase in follow up with the customer to determine customer satisfaction.