Six ways to reduce inventory

The purpose of this presentation is to help you reduce the inventory in your operation. We will accomplish that task by discussing six specific methods that companies have used successfully to reduce their inventory. One common attribute of these successes is that they also build teamwork among the people. Every business operation today is concerned with methods to improve customer service. The real trick is to accomplish that task without increasing inventory. We are all concerned with improving our skills at keeping inventory low.     

The impact of employee satisfaction on quality and profitability in high-contact service industries

The extant operations management literature has extensively investigated the associations among quality, customer satisfaction, and firm profitability. However, the influence of employee attributes on these performance dimensions has rarely been examined. In this study we investigate the impact of employee satisfaction on operational performance in high-contact service industries. Based on an empirical study of 206 service shops in Hong Kong, we examined the hypothesized relationships among employee satisfaction, service quality, customer satisfaction, and firm profitability. Using structural equations modeling, we found that employee satisfaction is significantly related to service quality and to customer satisfaction, while the latter in turn influences firm profitability. We also found that firm profitability has a moderate non-recursive effect on employee satisfaction, leading to a “satisfaction–quality–profit cycle”. Our empirical investigation suggests that employee satisfaction is an important consideration for operations managers to boost service quality and customer satisfaction. We provide empirical evidence that employee satisfaction plays a significant role in enhancing the operational performance of organizations in the high-contact service sector.     

Ways to reduce inventory

Almost every business today is looking for ways to reduce inventories. However, the unsaid goal is to reduce that inventory while at the same time maintain or improve customer service. Today, every business operation is concerned with methods to improve customer service. The real trick is to accomplish that task without increasing inventory. This article discusses how some of the leading companies accomplish the task of reducing inventory and increasing customer service at the same time.     

“牛鞭效应”下的供应链库存管理研究

为发挥库存在企业的运作过程中的作用。改善客户服务水平,在库存位置接近客户时,满足较高的客户服务要求。文章在讨论供应链库存管理中牛鞭效应的基础上,主要研究供应链库存管理办法,提出了供应商的库存管理、联合库存管理和利用第三方物流供应商来管理库存三种方法。使得适当的库存存在不仅保证销售活动的顺利进行,而且提高了实际销售量,有助于降低采购和运输成本,产生一定的经济效益。     

Servitization: Disentangling the impact of service business model innovation on manufacturing firm performance

As manufacturing businesses operate in an ever more competitive, global economy where products are easily commoditized, innovating by adding services to the core product offering has become a popular strategy. Contrary to the economic benefits expected, recent findings pinpoint implementation hurdles that lead to a potential performance decline, the so-called ‘servitization paradox’. In this paper, we analyze this paradox by disentangling the value creation and value appropriation processes of 44 national subsidiaries of a global manufacturing firm turned product-service provider, in the 2001–2007 period. Our findings show that the firm under study is able to successfully transcend the inherent substitution of products by services and to enact complementary sales dynamics between the two activities. Moreover, labor-intensive services such as maintenance, which imply higher levels of customer proximity, further enhance product sales. Empirical results also reveal a positive yet non-linear relationship between the scale of service activities and profitability: while initial levels of servicing result in a steep increase in profitability, a period of relative decline is observed before the positive relationship between the scale of services and profitability re-emerges. These findings suggest the presence of initial short-term gains but also indicate the existence of a ‘profitability’ hurdle; profitable growth seems feasible only to the extent that investments in service capability are translated into economies of scale. In helping to clarify the performance implications of service innovation, our findings suggest pathways to sustainable growth through servitization for manufacturing firms.     

基于库存管理ABC分析的运输与库存整合

运输与库存整合优化是供应链管理中的重要研究课题。论文研究由一个供应商和多个零售商组成的分销系统,在库存实行ABC管理的基础上,零售商采取周期订货策略。在每个零售商处的客户需求是随机的且服从一定的概率分布。我们的目标是在满足给定的客户服务水平的条件下。寻求该供应链运输和库存总费用的最小化。通过对库存水平及它们与客户随机需求变量之间的关系分析,得到最优的订货策略。     

如何在降低库存成本的同时取得满意客户服务质量

库存水平与顾客服务质量是两个效益悖反的指标,如何能以较合理的库存水平实现较高的顾客服务质量呢? 文中通过客户的 ABC 分析、产品的 ABC 分析以及产品-客户九象限图分析,探讨了解决这个问题的方法.     

Irregular workloads with MRP systems: Some causes and consequences

Material Requirements Planning (MRP) systems have been widely applied in industry to better manage multiproduct, multistage production environments. Although many applications have been quite successful, much is still left to the planner's intuition as to how to assure that master schedules, component lot sizes, and priorities realistically conform to the capacity limits at individual work centers. Capacity issues may indeed be the soft spot in MRP logic.This paper explores some possible causes of irregular workload patterns when using an MRP system. Better insight on which factors cause temporary bottlenecks could help managers better assess the vulnerability of their plants to this problem. It might also suggest ways of dampening peaks and valleys. The problem setting is a multistage environment; several products are made from various subassemblies and parts. Each shop order is routed through one or more capacitated work centers. An order is delayed either by temporary capacity shortages or the unavailability of components. Of course, the second delay can be caused by capacity problems previously encountered by the shop orders of its components.Seven experimental factors are tested with a large-scale simulator, and five performance measures are analyzed. The factors are the number of levels in the bill of material, the average load on the shop, the average lot size, the choice of priority rule, demand variability, the use of a gateway department, and the degree of equipment specialization. We have one measure of customer service, two for inventory, and two for workload. The workload measures are unconventional, since our interest is when workload variability occurs and how it affects inventory and customer service.The simulator has been developed over the course of eight years, and since this study has been further enhanced to handle many more factors. The simulator was validated recently with real data at two manufacturing plants. It is quite general, in that the bills of material, shop configuration, routings, worker efficiencies, and operating rules can be changed as desired.An initial screening experiment was performed, whereupon the average load and priority rules were not statistically significant at even the .05 level. A full factorial analysis with two replications was then conducted on the five remaining factors. Multivariate analysis of variance (MANOVA) and analysis of variance (ANOVA) statistical tests have been performed.The results confirm that workload variability can have a detrimental impact on customer service and inventory. The following structural changes to the manufacturing system can be beneficial, but tend to be more difficult to achieve. More BOM levels improve customer service, but increase inventory and capacity bottlenecks. Resource flexibility is a powerful tool to reduce workload variability. Capacity slack averaging much over 10% is wasteful, having no benefits for inventory and customer service. In general, revising the routing patterns only, such as creating more dominant paths, will not give big payoffs. The following procedural changes are easier to implement. Master schedules which smooth aggregate resources are an excellent device to reduce workload variability. Even with a smooth MPS, debilitating workload variability can still occur due to the design of the BOM, lot size, and leadtime offset parameters. Selecting a priority rule does not seem to be of overriding importance compared to master scheduling and component lot sizing. These findings must be considered within the context of the range of plant environments encompassed by this study.     

An analytical theory of multi-echelon production/distribution systems

In this paper, we study inventory control problems arising in multi-echelon production/distribution chains. In these chains, material is delivered by outside suppliers, proceeds through a number of manufacturing stages, and is distributed finally among a number of local warehouses in order to meet market demand. Each stage requires a fixed leadtime; furthermore, we assume a stochastic, stationary end-item demand process.
The problem to balance inventory levels and service degrees can be modelled and analyzed by defining appropriate cost functions. Under an average cost criterion, we study the three most important structures arising in multi-echelon systems: assembly systems, serial systems and distribution systems. For all three systems, it is possible to prove exact decomposition results which reduce complex multi-dimensional control problems to simple one-dimensional problems. In addition, we establish the optimality of base-stock control policies.     

Strategic segmentation in front-line services: matching customers,employees and human resource systems

This paper examines variation in the use of high involvement work practices in service and sales operations. I argue that the relationship between the customer and front-line service provider is a central feature that distinguishes production-level service activities from manufacturing. In particular, through strategic segmentation, firms are able to segment customers by their demand characteristics and to match the complexity and potential revenue stream of the customer to the skills of employees and the human resource system that shapes the customer–employee interface. Unlike manufacturing, where high involvement systems have emerged in a wide variety of product markets, therefore, service organizations are likely to use high involvement systems only to serve higher value-added customers because of the high costs of these systems and the labour-intensive nature of services. Data from a nationally random sample of 354 call centres in US telecommunications documents this pattern: from classic mass production approaches for back office workers and increasingly for front office residential service agents, to greater involvement for small business service providers and high involvement practices for middle-market service agents.     

库存管理中的安全技术

持有合适的安全库存是企业在成本节约和满足客户需求间的权衡,因此确定合适的安全库存量对于企业甚至整个供应链来说都非常重要。文章研究了确定安全库存时需要注意的三个事项:一是需要区分周期服务水平CSL和产品补给率fr;二是区分季节性库存与安全库存;三是需要重视少数异常值的发现和对安全库存的影响。     

Operations change interactions in a service environment: Attitudes,behaviors, and profitability

An attitudinal and behavioral change program was developed and implemented in a service operations function. Changes were (1) stabilizing operations management (reducing turnover) and (2) improving attitudes and behaviors of employees with strong union affiliations in a common carrier trucking terminal when compared to similar employees in a control terminal undergoing no planned change. Management turnover was reduced. Other results from the eighteen-month longitudinal study indicated that employee attitudes in both groups remained negative toward work, management, and the company throughout the study period. Behaviors relating to attitudes — particularly turnover, absenteeism, and accident rates—improved at the experimental terminal, even though expressed attitudes remained negative. Operating efficiencies and profitability improved at the experimental terminal. It was found that these employees, pick-up and delivery drivers, retain positive attitudes toward customers and customers the same toward them, in spite of the drivers' negative attitudes toward the company. The operative service employee appeared to discriminate between attitudes toward the company and the customer; the drivers' negative attiudes toward most everything (except the customer) not affecting the customer's perceptions of the driver or the company.     

Taking care of the customer

Taking care of the customer while running an efficient manufacturing operation is a challenge. This article describes the success one contract manufacturer had in developing a customer service department to manage a growing and diverse customer base. Balancing customer and plant requirements during a period of organizational change is discussed.     

Operations related groups (ORGs): A clustering procedure for production/inventory systems

Many production/inventory systems contain thousands of stock keeping units (SKUs). In general, it is not computationally (or conceptually) feasible to consider every one of these items individually in the development of control polices and strategies. Our objective here is to develop a methodology for defining groups to support strategic planning for the operations function. Accordingly, such groups should take into consideration all product characteristics which have a significant impact on the particular operations management problem of interest. These characteristics can include many of the attributes which are used in other functional groupings and will most certainly go beyond the cost and volume attributes used in ABC analysis.The ORG methodology is based on statistical clustering and can utilize a full range of operationally significant item attributes. It considers both statistical measures of discrimination and the operational consequences associated with implementing policies derived on the basis of group membership. The main departure of this analysis from earlier work is: 1) the approach can handle any combination of item attribute information that is important for strategy purposes, 2) management's interest in defining groups on the basis of operational factors can be accommodated, 3) statistical discrimination is considered directly, 4) group definition reflects the performance of management policies which are based (in part) on group membership, and 5) the method can be applied successfully to systems with a large number of SKUs.The specific application which motivated development of the ORG methodology was an analysis of distribution strategy for the service parts division of a major automobile manufacturer. The manufacturer was interested in developing optimal inventory stocking policies, which took into account the complexities of its multiechelon distribution network, supplier relationships and customer service targets for each market segment. This manufacturer stocked over 300,000 part numbers in an extensive network with approximately 50 distribution centers and thousands of dealer locations (i.e., 1.5 million SKU/ location combinations). The results of this application indicated that the advantage of using operationally relevant data for grouping and for defining generic, group-based policies for controlling inventory can be substantial. The ORG methodology can be of value to operations managers in industries with a large number of diverse items.     

Achieve inventory reduction and improve customer service?

Is it really possible to achieve significant reductions in your manufacturing inventories while improving customer service? If you really want to achieve significant inventory reductions, focus on the root causes, and develop countermeasures and a work plan, to execute your countermeasures. Include measurements for recording your progress, and deploy your countermeasures until they are no longer required, or until new ones are needed.     

The production performance benefits from JIT implementation

The intense competition in the current marketplace has forced firms to reexamine their methods of doing business. The US manufacturers have struggled with growing trade deficits and outsourced operations, while strong market competitors have emerged, using superior manufacturing practices in the form of just-in-time (JIT) and continuous process improvement. Although proponents cite the many benefits of JIT adoption, its implementation rate in the US has been relatively conservative. This study uses survey responses from executives at 95 JIT-practicing firms to better understand the benefits that firms have experienced through JIT adoption, and whether a more comprehensive implementation is worthwhile. The research results demonstrate that implementing the quality, continuous improvement, and waste reduction practices embodied in the JIT philosophy can enhance firm competitiveness. JIT implementation improves performance through lower inventory levels, reduced quality costs, and greater customer responsiveness. This study indicates that JIT is a vital manufacturing strategy to build and sustain competitive advantage.     

供应商管理库存对顾客服务水平影响的研究

在知识经济时代,传统的库存管理思想已经不能满足市场发展的需要,强调供应链整体合作是库存理论的进一步发展趋势。而供应商管理库存是未来供应链库存管理的一种重要模式,受到越来越多理论界的重视和研究。而库存管理思想对顾客服务水平有什么影响,却很少有人对此做出模型研究。本文基于提前期对此展开讨论,提出供应商管理库存能够提高补给周期供给水平(CSL)和产品供给率(Fr),降低供应链中总成本,保证整条链快速响应顾客需求,提高顾客服务水平。     

基于QFD方法的服务型制造企业服务质量改进研究

构建基于QFD方法的服务型制造企业服务质量改进研究模型,通过SPSS软件,对实例Y公司顾客需求的权重进行主成分分析,在此基础上运用灰色理论和模糊数学相结合的灰色模糊方法对Y公司服务质量进行评价,然后结合测评结果运用QFD方法,找到Y公司应该着力加强的服务措施。研究结果表明,权重分数较高的服务措施要素是进行服务补救、信息系统、员工素质、办事效率和培训,即要Y公司满足客户质量需求必须关注的要素,这些要素的好坏,直接决定了企业客户需求是否得到了满足。这类研究方法,对类似的服务型制造企业服务质量改进的研究,同样有很大的借鉴意义。     

关于连锁超市配送质量问题的研究

文中阐述了连锁超市配送中心、物流质量管理、服务质量管理等相关的概念与理论,描述了连锁超市配送中心目前运营的现状,提出了配送服务普遍存在的问题,如商品破损、交货延迟、顾客抱怨等。并总结了配送服务质量出现问题的原因,简单概括了外包因素、流程因素、设施配备因素等。以顾客满意度为评价主体,建立连锁超市配送中心配送服务质量指标体系。最后提出了流程改善、加强信息自动化、完善外包管理等建议来说明如何提高质量管理。     

基于顾客服务水平的物流网络优化问题

文章利用优化方法讨论了供应链中由零售商向供应商订购货物,同时又要满足顾客的不确定性需求的物流网络设计问题。文中引入了顾客服务水平的概念,通过顾客的服务水平来控制库存,从而影响每次货物的订货量,并讨论了顾客需求的概率在已知和未知两种情况下,如何来确定零售商的订货量和供应商的批发价从而使得共同获利最大。此外,对顾客服务水平和零售价进行了分析,找出两者之间的关系。