A few weeks ago, I posted about a 5S workshop I recently conducted.  I cross-posted the same article on a LinkedIn discussion group.  I got several responses, but this one was especially interesting.  It's long but you'll like reading it.

I had mentioned the value of 5S in reducing raw material inventories.  Here's the response. 

Having several years of wire and cable experience, it is amazing the batch mentality that still exists in this business. SMED has not been necessarily embraced and therefore long runs are still encouraged. I wonder how everyone felt about two years ago when copper prices went through the roof about these practices.

I am also a former procurement officer with a military/defense contractor. Our shop, which manufactured highly one off, custom equipment ran extremely lean with regards to raw material inventory.Based on COGS our active raw material turns were typically above 20Xper year while our total turns were in the low teens. The reasons for this discrepancy were caused by engineering changes to BOM's that were never communicated back to procurement such that custom equipment that was procured never to be used could either be returned, repurposed or otherwise reserved and written off. Over a period of several years prior to my arrival, this stockpiling blossomed into an inventory valued at over $1 Million dollars (50% of all inventory). Ever tried to unload an unused C-band satellite dish that's 6 years old when the current technology is now HD. Oh, there may also be ITAR rules that apply that prevent you from selling it anywhere outside the country as well. How about a custom ordered truck chassis with an international,non-emission compliant engine package that was purchased based on a pending contract that never actually materialized (a $100,000 dollar paper weight). Who is on the hook for that one because the contract negotiators couldn't live with the original lead times and therefore bet that by promising a shorter lead time (and ordering the truck) they would win the bid. WRONG.

I agonized over this truly broken process and begged the engineering and contracts department to sit with procurement to improve the BOM process to reduce and/or eliminate these unnecessary spends but senior management couldn't develop the disciplines (didn't want to) and wanted to remain flexible (lazy) in their design choices. That's fine,but realize that there is a cost to doing that, especially when your dealing with one of a kind custom ordered equipment. Their attitude was, just push it back to the vendor, if they want our business,they'll eat it. Problem was, this vendor was a sole source for this technology. Not too many options at this point.

Its easy for people that are in the chain to just make edicts, but until they understand the whole process and landscape and ask the question WHY, things like this will continue to happen. Keeping ones head in the sand hoping problems will go away isn't an effective way to manage. It takes teamwork and understanding by all involved to arrive at a best balanced solution. But then again, what do I know.