While seeing these struggles listed always reminds leaders that they need to address these issues, it seems so easy to slip back into the day-to-day routine and place actual solutions on the back burner. Why does this happen? One reason is the organizational structure of some companies where procurement is not reporting to the CFO, but that’s another post in itself. You also have an issue with the WIIFM (what’s in it for me) question that occurs in the minds of everyday employees like your materials managers. The day-to-day of a materials manager, or purchasing manager doesn’t always include thinking of ways to preserve working capital and the costs associated with carrying inventory.
You’ve heard the definition of insanity, I’m sure. If not, I’ll remind you: it’s doing the same thing(s) over and over again and expecting different results. That’s what is happening in our supply chains everywhere. There are so many issues that need to be addressed, and it would actually benefit the company in a huge way if they were. But, people get the ‘tomorrow’ syndrome. This is where everything that needs to be handled, but isn’t an urgent issue and gets labeled as “I’ll do it tomorrow”. So what is the resolve here? The resolve would first be to align all goals of the company with cross functional teams. This means finance and supply chain teams need to work closer together to manage the goals of reducing inventory, lowering carrying costs, and improving working capital. Sounds like a lot of work, but focusing on those efforts from a financial aspect has a great trickledown effect on the day-to-day life of a materials manager. The key here is to be aligned. There are too many leaders out there who are over complicating their own model. Always stick to the basics, and know that there are supply chain solutions out there for these exact situations.
Take a company like EDX, for example. Remember the long list we discussed in the first paragraph? Yep, EDX is around specifically for those issues companies are facing today. With 25 years of experience, EDX manages the entire life cycle of inventory to support your production and service demands. They provide BOM Monitoring for all critical components of your build so you stay ahead of obsolescence, they provide Inventory Ownership Solutions to support production and service demands for multiple years, and have an established exit strategy for excess and obsolete inventory that maximizes ROI. Everything they do is designed to improve working capital, reduce inventory, and minimize the cost associated with carrying inventory.
In conclusion, not all these issues are due to org charts and aligned goals. Sometimes it’s simply because there just isn’t enough time in a day to warrant spending time dealing with excess materials and reducing inventory. With this mindset, it’s not always important to seek outside assistance for lowering your carrying costs. After all, you’re just trying to get through the day…every day. But, let’s use the dishes analogy for this one : if you keep putting the dishes in the sink to wash them tomorrow, eventually the task of cleaning them becomes more and more overwhelming as the days pass. Think about it…What are your current supply chain struggles?
EDX’s Inventory Ownership Solutions improves the working capital positions of our customers while reducing annual inventory carrying costs by as much as 50%. EDX will purchase, own, warehouse and fulfill inventory anywhere in the world for a period of up to 10 years.