Art Koch’s Profit Chain® Tips
The Supply Chain Revolution: Unlocking the Sustainable Profit Chain
Volume 5 | Number 19 | November 2024

Continuing my What’s Inside the Book series – here I share what you’ll find in Chapter 8: The Art of Equalization: Achieving Balance in Materials and Inventory Control.

The Art of Equalization: Achieving Balance in Materials and Inventory Control

In Chapter 8, Art Koch discusses the importance of achieving balance in supply chain management (SCM), especially in materials and inventory control, by drawing a parallel to the essential scuba diving technique of equalization. Much like divers need to adjust to underwater pressure, businesses need to manage their materials and inventory carefully to maintain smooth production cycles. The chapter outlines key strategies to simplify SCM, improve inventory accuracy, and foster collaboration across departments to achieve high operational excellence.

SCM Complexity and Misconceptions

• SCM is often oversimplified as merely buying, receiving, and shipping, but it’s an intricate network of processes that needs careful management.
• True SCM integrates strategic sourcing, demand planning, inventory control, and distribution, all working toward improving total cost of ownership (TCO).

The Importance of Inventory Accuracy

• Inventory accuracy is critical for smooth operations, as inaccuracies disrupt production and customer satisfaction.
• Achieving 99.9% accuracy greatly increases the likelihood of meeting production demands and reduces costly shortages.

Six Hacks for World-Class Inventory Management

• Strategies such as securing access to materials, automating receiving, and improving bill of materials (BOM) accuracy are vital for achieving high inventory accuracy and reducing errors in the production process.

Cross-Department Collaboration

• The key to solving SCM challenges lies in breaking down silos and fostering teamwork across departments like materials, manufacturing, and customer service.
• A focus on root causes rather than symptoms leads to better outcomes, as seen in real-world examples.

Actionable Steps for Improving SCM

• The chapter emphasizes daily visual management, inventory pull systems, and simplified reporting to ensure that materials flow efficiently through production, reducing lead times and improving overall performance.

Watch the video below for Chapter 8: The Art of Equalization.

Carpe Diem,

Art Koch