Fall 2013 Issue of Horizons

MANUFACTURING & DISTRIBUTION

replenishment, lower overall inventory and increased cash flow.

First, we must look at replenishment lead time, which is the total time it takes to replenish inventory from the source. Lean asks us to find ways to trim the various elements of this lead time. Reduction of replenishment lead time will allow us to react more quickly to the variability of customer demand and become less reliant on forecasting and our ERP system. Second, think about reducing order quantities. Order quantities have a direct impact on costs

Finally, determine what your target inventory level should be for each SKU. Set up inventory buffers to account for customer variability and monitor the target inventory levels at each location to determine if the right amount of stock is on hand. Spend more time managing replenishment lead time and target inventory levels and less time on day-to-day purchasing and transferring goods between locations. While we may not be able to eliminate inventory from the equation, we can certainly seek to reduce the sizable investment of cash it requires while still meeting customer demand. Changing the mindset from push to pull thinking can have a significant impact on your business.

and flexibility. Larger order quantities require increased storage costs and often result in obsolete inventory. Smaller order

Learn & Connect with the RubinBrown M&D Group RubinBrown M&D Blog

www.RubinBrownMandD.com

Follow RubinBrown M&D on Twitter @RubinBrownMandD

quantities result in more frequent

RubinBrown’s Manufacturing & Distribution Services Group RubinBrown’s Manufacturing & Distribution Services Group is nationally recognized for superior assurance, tax and consulting expertise coupled with solid international business knowledge, exceptional inventory management and process improvement services.

Jim Mather, CPA – St. Louis Partner-In-Charge Manufacturing & Distribution Services Group 314.290.3470 jim.mather@rubinbrown.com

Mike Lewis, CPA – St. Louis Partner Manufacturing & Distribution Services Group 314.290.3391 mike.lewis@rubinbrown.com

Ben Barnes, CPA – St. Louis Partner-In-Charge Private Equity Services Group 314.678.3531 ben.barnes@rubinbrown.com

Todd Pleimann, CPA – Kansas City Managing Partner, Kansas City Office 913.499.4411 todd.pleimann@rubinbrown.com

Rick Feldt, CPA – St. Louis Partner Manufacturing & Distribution Services Group 314.290.3220 rick.feldt@rubinbrown.com

Russ White, CPA – Denver Partner Manufacturing & Distribution Services Group 303.952.1247 russ.white@rubinbrown.com

page 32 | horizons Fall 2013