Sonntag, 9. August 2020 ..:: Seminare » Inventory Cost Cutting - the PPI concept ::.. registrieren  anmelden


Inventory cost cutting - the PPI concept

 Workshop content minimieren

In recessionary times, companies cut back on their production and reduce inventories o a minimum in an attempt o preserve working capital. When the upturn eventually comes, many companies find themselves unprepared. The resultant poor customer service levels and loss of market share can cause permanent damage to some businesses. New techniques and tools for logistic control can help to reduce the impact of these problems, both at the bottom of a recession and in the slow climb out.


The approach and the workshops are based upon twenty years of practical experience in working in a number of different countries at various points in their economic cycles. The tools and techniques described here have been adopted by over 1000 companies in 20 countries world-wide.

Reducing stocks and cutting costs requires that an organisation actually gets to grips with its reasons for holding stock. A rule-of-thumb based on considerable experience suggests that a 4 per cent reduction in stock levels can achieve the same profit improvement as is realised by a 25 per cent increase in turnover!

With this potential for dramatic improvement in profitability, responsible logistics professionals have the motivation to ensure that all practical measures are being taken to release working capital through the reduction of inventory, coupled with increased productivity throughout the whole of the supply chain.

Naturally, the improvements cannot be achieved overnight. Indeed, they cannot be achieved at all without the right employees, motivation, team-building and management commitment, backed by well tried and tested techniques.

To achieve and maintain top results requires a sustained effort to:

Ø      identify and agree management priorities relating to the important issues

Ø      set clear project goals and introduce programmes to achieve these and

Ø      introduce firm controls over inventory levels.



Fig. 1


A vital pre-requisite is to introduce the process of continued review and improvement, including regular introduction of new ideas and methods aimed at reducing logistics costs, so that the process achieves its own momentum.


All personnel involved must understand and feel personally responsible for implementing the approach and achieving the targets set.



Fig. 2


The improvement techniques presented have been developed during 1500 individual projects. They are a blue-print for a practical approach to the challenge of permanent inventory control. The programme has three phases: BRIEFING, CHANGING and SAVING (see fig.1). Each of which is divided into three steps. It includes a hierarchy of detailed “checklists” aimed at assisting the process and identifying the correct analyses, key-factors, presentation methods and project steps.

Clearly, each individual step need not be followed exactly. Each controller and materials manager must identify what is correct in his organisation. The economic improvements evolve through three critical project phases:


Ø      identifying the initial situation (Briefing)

Ø      moving from present well-worn practices to a new materials management philosophy (Changing), and

Ø      when this has effectively been achieved and results are starting to accrue, then it is necessary to cement these new methods into the daily work of the organisation (Saving).


The first level of the structured checklist is shown in fig.2.

Logistics professionals have agreed that sustained success in optimising stock costs and net working capital requires a total logistics approach and necessitates many activities and actions by all involved along the supply chain.



Improvement processes


Whether new philosophies and concepts such as KAIZEN or LEAN-MANAGEMENT are introduced, or if the experiences of JUST-IN-TIME control or TIME BASED COMPETITION are used, the bottle-neck of all these excellent strategies and concepts is their implementation in detail, including the setting of personal responsibilities.

The speed of implementation and improvement is actually set by the market and the competition but must be achieved within reasonable logistic effort and costs. It is not enough to reach a one-off static improvement of (say) 10 per cent. Management effort must be invested to establish IMPROVEMENT PROCESSES that are continuous so that improvement becomes a standard.

The programme described here is not simply a set of checklists, but rather a call to action: a guide to starting the process. It is conceptually complete, mature and practically proven in numerous logistics projects and stock improvement programmes.

It contains a large number of ideas, suggestions and detailed checklists relating to a range of individual work-steps. But it has three fixed and binding phases:








Fig. 3



Fig. 4



Fig. 5


As with all structured methodologies, it is important to plan each stage in detail. On completion of each stage, the objectives for that stage, together with its results, must be reviewed as part of the planning process for the subsequent stages.

Using the techniques outlined above, a set of practical tools are delivered to the responsible personnel, enabling continuing, monitored, planned improvements to be made to the way in which working capital is employed within the supply chain throughout the organisation.



That’s it. Please ask for the next available Workshop-date, or ask for more info.









 Contact maximieren


 Kontakt minimieren

abbrechen   abschicken


(C) 2006-2015 Logistik Management Systeme   Nutzungsbedingungen  Datenschutzerklärung