Most people who have worked in the Automotive sector for any length of time know that the subject of how to manage inventory is one of constant discussion and debate. Having too much adds cost and risk and not having enough adds cost and risk. Why is it so hard to get it right?
A major reason it is so difficult to right-size inventory is how improvement is approached by management. The inventory numbers are delivered to the management team on a predetermined schedule. Where do the numbers come from? To make it somewhat simple, the numbers come from the manufacturing plants that use inventory, from warehouses that hold inventory, and from the supply chain group that moves inventory.
What does a typical management team do when the numbers are too high? They demand a reduction in the amount of inventory. Of whom is this demand made? The manufacturing plants, warehousing, and supply chain most commonly receive the order to reduce inventory on hand.