The impact of “good” inventory control on the cash flow of a business is well known, however, a simple structured approach to inventory management has a broader, deeper and more sustainable influence on the Company and its resources.

Based on the premise that inventory management is as much an attitude as a system, the following approach will have a positive impact on cash flow, presentation of the business, supplier relationships, workplace safety, wastage, production and installation time and the culture of the organisation.

Mitigate (the underpinning philosophy)

Workplace Health and Safety underpins workplace organization processes and reinforces the culture of the business through the framework that covers all functions on and off the operational premises. In the modern business environment it is crucial to have a corporate policy that encompasses Workplace Health and Safety, Training and Development and Environmental Management (WHST&E). By integrating these three aspects a business highlights its commitment to continuous improvement, risk management and corporate governance.

Arrange

Step one is the categorizing of all inventory, plant and equipment then prioritizing everything to identify what is required and what is not required. Disposal of surplus / redundant items is done in this phase. Alignment to the sequential flow of the manufacturing chain is essential to create efficiencies within the business and to ensure all items are utilized effectively.

Display

Step two – Establishing designated areas for all items ensures that all tools, consumables and inventory are clearly labeled and are easily accessible. Shadow boards and inventory storages are positioned with operational effectiveness, monitoring and safety as the driving factors. Plant and equipment have to be positioned in sequential order with sufficient space so they can be used effectively and safely. Positioning allows the implementation of the “total preventative maintenance” program.

Presentation

Step three – Maintaining a clean and tidy workplace (floors, work areas, plant and equipment) that is free of dirt, debris, operational residues and contaminants (oils, chemicals etc) promotes production quality and safety. It also facilitates the smooth implementation of maintenance programs. Other benefits of this phase are (1) early identification of potential risks, (2) ease of monitoring stock levels for reorder or management and (3) ability to promote business through client / supplier tours.

Organise

Step four is the documentation of all inventories, plant and equipment and the procedures associated with these. Documentation includes (1) standard operating procedures for the plant and equipment including TPM programs, (2) processes for maintaining the workplace and inventories, (3) schedules and activities for production and maintenance programs, (4) processes for use of consumables and inventories and (5) allocation of responsibilities. Inventory systems can be established to assist with the financial management of the business i.e. Just In Time purchasing, supplier agreements and stock minimums and maximums. Furthermore, through visual management and a clear set of processes any deviation from the standard can be quickly identified and rectified.

Measure

Step five drives the business to be disciplined in maintaining the standards and procedures set down and to focus on output quality and continuous improvement. This is achieved in monitoring and measuring all operational aspects of the production cycle to ensure all programs are implemented and inventories are kept within designated parameters. The philosophy of “what gets measured get managed effectively” guides this step however it is applied in a manner that everyone understands that a safe and profitable workplace returns rewards to everyone.