Our safety-stock model is correct and comprehensive, providing optimal safety stock levels for your service-level and financial-performance targets. We include all the factors that affect safety stock and service level, and apply the proper statistical techniques to them. We do not utilize the usual stockout-event-based metric, but the same quantity-based fill-rate criterion that most companies use to measure actual service-level performance during a month, quarter or year. Our calculations represent the right-skewed and sporadic patterns typical of real demand data. Our model also includes past-due demand and its disruptions, probability [...]]]> Many of you are looking for a correct, comprehensive safety-stock calculation. My company’s approach is based on more than 15 years of development and testing. As we have learned through extensive experience, optimized safety stock requires more than a formula. We use complex demand–data modeling and calculations. We provide a service, not a spreadsheet. You send us your data. We send you the results.

Our safety-stock model is correct and comprehensive, providing optimal safety stock levels for your service-level and financial-performance targets. We include all the factors that affect safety stock and service level, and apply the proper statistical techniques to them. We do not utilize the usual stockout-event-based metric, but the same quantity-based fill-rate criterion that most companies use to measure actual service-level performance during a month, quarter or year. Our calculations represent the right-skewed and sporadic patterns typical of real demand data. Our model also includes past-due demand and its disruptions, probability of past-due-demand cancellation, lead time, reorder quantity (MOQ, EOQ, etc.), package size and reorder-review frequency. Finally, our results provide a high degree of confidence, typically 95%, of consistently achieving your target service levels without costly expediting.

For more details, see our white papers at www.topdownleansystems.com/white.htm. Page 16 of the “Common Safety Stock Calculations” white paper has examples of our safety-stock analysis. Also, see how you do on our Safety Stock Quiz, at www.topdownleansystems.com/quiz.htm.

To demonstrate the power of our approach, we would be happy to calculate and analyze safety-stock levels for a sample of your inventory items at no charge. Send me data on up to 30 of your items, and we will send you results – safety stock quantity and safety stock days for each item. Our analysis also includes each item’s range of expected actual performance for fill rate; average reorder and on-order quantities; average quantity on-hand, days on-hand and inventory turnover; average daily demand and demand activity percentage.

We require this data for each item: Item identifier, target fill rate, reorder quantity (MOQ, EOQ, batch size, lot size, etc.) or reorder frequency, package size (order multiple), lead time, probability of past-due-demand cancellation, days in actual service-level measurement cycle, and as much historical daily time-series demand as possible (three years is best, two is better, one is good). We perform extensive pre-screening on your input data to identify potential issues and to avoid “garbage in, garbage out.”

Send me your contact information via www.topdownleansystems.com/contact.php. I’ll provide you with a file containing input-data examples. Of course, I’ll be happy to explain our model in more detail and to answer your questions, at your request.

David McPhetrige, TopDown Lean Systems

©CLEARbrick, Inc. Carmen Brickner is an expert in culture change, specializing in organizations undertaking continuous improvement and team-based approaches.

“Managing change” is an oxymoron. And anything with ‘moron’ in it can’t be good for the bottom line!

We can’t manage change because we can’t anticipate and control all the variables that are yet to present themselves. And we can’t make people change because each of us has the inalienable right to decide if and when and how we will react to any situation. But we do know why people do or do not choose to change.

We can help them OPT for change by providing Outcome, Path and Tracking.

OUTCOME

People need to know where they are going if you expect them to get there. The difficulty many managers have when implementing a culture change such as Lean or Six Sigma, is that they don’t really know exactly what the outcome will be. Disciplines of engineering and accounting neither attract nor reward people who are [...]]]> Guest author Carmen Brickner of CLEARbrick, Inc.

“Managing change” is an oxymoron. And anything with ‘moron’ in it can’t be good for the bottom line!

We can’t manage change because we can’t anticipate and control all the variables that are yet to present themselves. And we can’t make people change because each of us has the inalienable right to decide if and when and how we will react to any situation. But we do know why people do or do not choose to change.

We can help them OPT for change by providing Outcome, Path and Tracking.

OUTCOME

People need to know where they are going if you expect them to get there. The difficulty many managers have when implementing a culture change such as Lean or Six Sigma, is that they don’t really know exactly what the outcome will be. Disciplines of engineering and accounting neither attract nor reward people who are comfortable with approximations.

Yet there are principles, models and resources to help you imagine what your organization’s desired future will embody. Most managers share just the results such as bottom line or delivery impacts. That is great, but too high level and does not reduce the fear of the personal impact on them. In order to create an image in which people can see themselves participating, you have to describe what it will actually look like, how you will all work together, how your own job will change along with theirs, and why it is important.

PATH

Once the destination has been defined, you need to build the path for them to get there. This is the tactical level of change. Eisenhower said “Plans are nothing; planning is everything.” Plans can be helpful, but they must be flexible. I agree that the real power is in the process of planning. We refine our vision, we are forced to come up with answers for questions we had overlooked, and we have to face contingencies and risks.

You need to define:

• Where you are now
• How quickly you want to move and what is required at each level
• Who will do what, when and where
• What the scope of authority and boundaries will be for teams and individuals
• How you will create the infrastructure – teams, systems, communications
• What people will need to know and how you will educate them.

TRACKING

Just as an airplane or ship constantly measures its position against plan to make small continuous adjustments, you need to have metrics and milestones to ensure desired progress and timely interventions.

The key metrics for change are all easily tracked in simple logs. Again, I use an acronym to aid memory – KITE:

• Knowledge – who knows what, can teach what, is certified in what
• Ideas – how many submitted, how many implemented, originating person/area
• Teams – participation and roles, leadership, facilitation, what areas are and are not ‘in the game’
• Events – areas, types of events, dates, results, lessons learned.

Tracking progress allows you to provide feedback, coaching, training, and plan changes. The real payoff, however, comes when this information is used by future teams or if it helps you identify areas and leadership that are rich in talent or resistant to change.

It is hard to succeed if you don’t know the rules of the game. They feel unsafe, lack trust in you and become resentful if they think you will be evaluating their performance on some unspoken and fuzzy target. They feel sandbagged!

If you let people know what a successful OUTCOME will look like, the PATH to get there and support them by TRACKING their progress and sharing constructive feedback, you greatly increase the chances of achieving change.

©CLEARbrick, Inc. Carmen Brickner is an expert in culture change, specializing in organizations undertaking continuous improvement and team-based approaches.

The annual operating plan sometimes is developed and displayed using the X-Matrix.  Establish the results of goals for next year, take the strategies and tie them to tactics, make sure the tactics can be measured (targets) and have individuals assigned ownership of tactics and targets.

Little gets done without marching orders, i.e. a Charter.  The basic document of the hoshin process is the team charter. The A3 format connects the targets (goals) to the tactics and provides another level of critical thinking about execution.  The team charter is a contact between the company to  provide support and resources and the team and team members to do the hard work of problem solving, applying the scientific method, and running experiments on the management operating system.

What gets measured gets better, and [...]]]> Well its getting to be that time of year again… What did I promise to deliver this year, what do we need to do next year?

The annual operating plan sometimes is developed and displayed using the X-Matrix.  Establish the results of goals for next year, take the strategies and tie them to tactics, make sure the tactics can be measured (targets) and have individuals assigned ownership of tactics and targets.

Little gets done without marching orders, i.e. a Charter.  The basic document of the hoshin process is the team charter. The A3 format connects the targets (goals) to the tactics and provides another level of critical thinking about execution.  The team charter is a contact between the company to  provide support and resources and the team and team members to do the hard work of problem solving, applying the scientific method, and running experiments on the management operating system.

What gets measured gets better, and so we set plans and track key performance indicators.

Ready to make your hoshin for next year?