Flow Management

The flow is what generates money - not the stock

We're not saying that stocks are a waste, just that they are a cost, and should be used mainly as a buffer against variation and uncertainty of delivery times and sales. There is no point in building systems and models that focus on finding the optimum in warehousing costs. The flow is what generates money, and the flow is what needs to be managed, not the warehouse.

Efficient flows give you a competitive edge and help raise revenue. Flow costs are reduced by minimizing handling and shortening lead times.

Lower inventory levels by reducing uncertainty

In order to lower inventory levels and manage the flow efficiently, you must do something about the uncertainty. This might mean better machine maintenance in order to make production more reliable, shorter lead times in order to reduce dependence of uncertain forecasts, or a closer collaboration with suppliers and customers to avoid being surprised by increases or decreases in demand.