Uncovering Opportunity through Lean Assessments
When we are contacted by a prospective new client for consulting services, we typically recommend starting with a Lean Assessment. Assessments are a fast and painless way to uncover opportunities to improve your business with a plan for efficiently implementing those improvements.
During the Assessment we talk to people from across the organization, tour the facilities, and review operational data (inventory, staffing, sales, customers, and more). The output from an Assessment are clearly defined projects to improve the business, outlined in detail, so that the organization can implement them on their own or they can have Supply Velocity facilitate the project implementation.
One of the greatest benefits of having a Lean Assessment conducted by outside experts, is that you can get a holistic unbiased view of opportunities. It is not uncommon for Clients to come to us and say they need help with X, but after our Assessment we identify that Y and Z are really causing the problem or need to be tackled before X can be improved.
Case Study – Manufacturer
A good example of this is with a manufacturer who came to Supply Velocity because they were struggling to meet customer expected lead times. They wanted Supply Velocity to help them implement a Sales & Operations Planning (S&OP) process. Customer expected lead times for the majority of their business necessitated them to ship from stock and they thought S&OP would help solve inventory related issues.
Before jumping into an S&OP implementation, we recommended our Assessment. During the Assessment we learned that they did not have accurate inventory (raw materials or finished goods) in their ERP system. In addition to inaccurate inventory, they did not have clear target stocking levels for raw materials or finished goods, nor did they use standard inventory calculations to set inventory levels. They did have a top down demand forecast, but it was not to the SKU level, so did not inform production on what inventory to produce. The result was a disconnect between sales and manufacturing, low in-stock rates, and subsequent customer service issues.
The result of this Assessment was that yes, this organization could benefit from an S&OP process, but they had significant work to do before they could successfully implement S&OP. We recommended two projects to tackle before S&OP:
Inventory Accuracy Process Improvement
This project will improve their inventory tracking processes and ensure the inventory in their ERP system was accurate and trusted throughout the organization
This project will create a SKU level demand forecast, and a model to use the forecast to calculate safety stock, target inventory levels and recommended production quantities. This will help the organization improve their customer lead times and create a structure for the S&OP process to continue to improve this metric.
Once these two projects are completed the implementation of S&OP will be much smoother, will be sustainable and will have significantly greater benefit to the organization.
While our recommendations often reinforce things the client was expecting, it is those recommendations that they were not expecting or asking for, that provide the greatest value from the Assessment. When you work day in and day out in an organization it is hard to see solutions to daily struggles.