Inventory Cycle

This issue of the inventory cycle belongs to our Inventory Management workshop, to know more, we are at your service.

Let's see what this is about:

A cycle is a process that repeats itself over and over again.

A process is a sequence of steps that lead to achieving a goal.

The purpose of the inventory cycle is to ensure that the products purchased by the customers exist when they are required.

Of course, there are differences in the way an inventory cycle achieves its goal. For example, an inventory cycle could ensure the existence of the required products at the time they are required and, however, not help the business get the benefit it wants. How can this happen? There are several reasons, for example, were the purchases made at convenient prices? Did you get the right amount of merchandise at your travel speed? Is there any assurance that an excess of goods was not acquired? Are you sure that the cost of the goods received was agreed upon?

What is meant is that the inventory cycle always exists even if we do not realize it. The goods always follow a route or process although not always the one that we wanted. There are very effective cycles and others very deficient.

A poor cycle is characterized by leaks on all sides. An effective cycle, however, does not leak.

LEAVES IN THE INVENTORY CYCLE

Throughout the entire inventory cycle, there are often leaks: the supplier that sold us much more than we needed, the items that were collected and never arrived, the goods that mysteriously disappeared, orders that were delivered with "pylon ", Travel of materials that were not registered, etc.

It would seem that leaks are a normal part of the building materials business and are considered a necessary evil. It is very obvious that the problem of leakage lies in the lack of controls and, however, very little is done to have such controls. Why?

The reason is in the way of thinking about leaks and control, in the beliefs about these issues.

"I'm always going to steal"

"Business that does not give you to steal is not business"

"To avoid having problems with my people, better stay there" (although he has noticed that they are being robbed)

"People are indispensable and irreplaceable"

"Out of sight, out of mind"

With beliefs like these it is easy to understand why controls are not established and cannot be expected to improve the situation. At the end of the day "this is the way things are".

The first step to establishing control is to question the beliefs that explain the actions or the lack of them. If the way of thinking was another, another would be the situation as well. Serious control actions are much more likely to occur and leakage is reduced if beliefs such as the above are replaced by ones like these:

"The occasion makes the thief"

"The reason there are inventory leaks is because 100% control is not met in the inventory cycle"

"The reason I do not have controls is because I do not even know how much they're stealing me and that's why I was not scared"

These expressions are the reflection of beliefs totally opposite to the previous ones. In these it is clearly understood that lack of control is the responsibility of oneself.

On the other hand, besides seeing the leaks not as a necessary evil but as something that can be avoided, you need to reflect on your managerial responsibility:

• You have a double role: you are a shareholder and you are a manager.
• A manager must give the shareholder profitability.
• Leaks reduce shareholder profitability.
• Therefore, leak control is a managerial responsibility.
• On the other hand, the checks cost time and money.
• If the manager creates an environment of commitment, collaboration and creativity and also fairly compensates his employees, he will need fewer controls because people will not feel like "charging for Chinese."

In short, the problem of lack of control is not just a matter of methods and procedures, it is a matter that requires a comprehensive approach that begins with the very way of seeing the problem.

In the light of these reflections we address some recommendations to exercise control over the different steps of the inventory process.