Taking stock - it’s not always about inventory
business with insight just like inventory fuels effective logistics with
customer service - they share similar principals and habits worth remembering
to be effective.
In customer service, finding stock is out or misplaced is
a service failure. Even if you find it minutes later it could be too late and
the sale has gone. Or when you last needed a critical piece of information to
secure a deal or support a key decision, but struggled to retrieve it - then
remembered an hour later... too late, the deal evaded you. The latter is life’s
lesson on experience - you know - understanding what you needed to know, 30
seconds after you needed it. You won’t forget it the next time.
So why is it, after years of customer service failures,
so many professionals still forget to use the principals of Inventory Control
to get it right? Perhaps comparing these to the management of knowledge will
help commit them to memory.
Stock: We keep stock to buffer uncertainties in our plan - supplier
delays, demand peaks causing forecast inaccuracy, production batch size and
completion timing. We do this so we can pick available items from stock to
supply customer needs. We make or buy stock as needed from suppliers or our own
Warehousing: We use warehouses to keep the stock we need in an
organized way - layout, defined rack and bin locations, fast-movers nearer the
dispatch point, and slow-movers in the back.
With knowledge we also get “stock” in chunks from our own
experiences, books, articles and the Internet. When we need specific stock we
read relevant articles, and store this in our brain/memory, But without regular
retrieval, this knowledge goes to the back and requires more effort/thinking to
surface. To build knowledge inventory that aids retrieval, we store books on
organized shelves much like a warehouse. Or we store knowledge electronically
in memory on disks or chips. This is the same as putting stuff in a storeroom
to get it out the way but still “available”. Without better organization/access,
retrieving the right stuff is problematic. So electronically or digitally - we
structure data (the stock items) into Info-Cubes or Data Marts (the Bins)
within a Data Warehouse to facilitate rapid, relevant retrieval.
Stock Mix: Stock is held to protect customer service from plan inaccuracies
and market variability. So we hold more stock of items subject to more
variability. Not quite. We should hold more stock cover (in days of forward
demand/usage) of these items relative to the more predictable. Understanding
stock quantity v cover is critical. Cover is a factor of customer service plus related
safety stock planning. But, if you set service at 98% for every item, slow
movers will eat working capital (the money we have for stock) and we may not
afford enough for fast-mover cover (the ones we make most revenue from). This
is the effect of Stock Mix - a key area to get right. If not you’ll have too
much of the wrong stuff which becomes
dead stock you write off and too little of the right stuff - result horribly
poor service or additional working capital investment for extra stock.
Apply mix to knowledge. Focus too much on one area of
limited business interest could waste effort in balanced, effective business
execution - or it turns you into a guru/specialist if people need your info. Or
you may become an intellectual recluse (a scrap merchant) if they don’t.
Perhaps it’s time we checked our knowledge EOQ and MRP
process since - let’s face it, stock, like knowledge, only has value when you
need, use it or apply it. Plus availability and rapid retrieval when needed
maximizes the effect of both.
Contributed by: Doug
Hunter, Head of Product Services, Syspro