Ramlee Ibrahim & Associates

Some years ago, I was the new director of materials for a company suffering from poor inventory accuracy – probably because we had no performance measurements for inventory accuracy and none of the areas generating inventory transactions reported to the director of materials.

One day, while I was in the President’s office, his coveted performance measurement landed on his desk. He rushed through the remainder of our conversation. His eagerness to view these latest reports gave me an idea. Because he wouldn’t surrender control of those areas generating most of the inventory transactions, would he, I asked, consider adding inventory measurements to hold appropriate supervisors accountable? He said yes.

I needed a performance measurement that would identify responsibility even if we didn’t know the cause of the error. I decided to copy a measurement I had heard about. A few days later, the president explained the measurement in a shop floor supervisor meeting.

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Several weeks back, I shared about the physical inventory disaster I witnessed at a Thai company. Here’s how the story ends…

Where to start? To be honest I could have started any place and made progress. However, I decided to start witha an aggressive attitude change about physical inventory. All departments had to embrace ownership. The company issued a letter listing the many failures of the recent inventory requesting suggestions on how to do better. Many people made suggestions; it was obvious there was a nucleus of concerned employees and managers. For the first time in the corporation’s history, operations and finance worked together to solve a problem inherent to both. These people were given tasks such as training and writing procedures and, in doing os, they learned how to work together.

We agreed to take a small physical inventory each month, in a selected area, prior to the “big one”. We started with stores for the first month and added an area each suceeding month. This helped people become trained and confident as accuracy improved. (more…)