How Cloud BI Eliminates Barriers to Lean Inventory Management
How Cloud BI Eliminates Barriers to Lean Inventory Management
One of the tenets of process quality is that if you cannot measure it,You cannot manage it.' Making the lean transformation requires a well-defined materials procurement process and key performance metrics to guide the transformation process.
The Metrics required for lean Inventory Management includes:
Supplier scorecards with overall performance numbers derived from delivery performance, purchase-price variance and quality
Inventory performance including inventory turns, current and estimated excess/obsolete and zero demand inventory
Materials lead time information including lead time variability by supplier Understanding what metrics to look for is only the first step for businesses that are interested in lean inventory management. The real challenge is bridging the gap between knowing what metrics are needed and getting the actual numbers. This is also the gap between the information needed by business and what IT can deliver.
The barriers to getting the required metrics are:
Lack of effective communication between business and IT.
Inability to translate business requirements to technical requirements.
Lack of domain expertise. Creating the metrics needed for lean Inventory Management requires extensive business knowledge and a deep understanding of ERP table structure on the part of IT. This includes:
Understanding what data is needed within ERP to create metrics
Knowing how to get the required data, from what tables
Being able to define the metrics
Processing the data and calculating the metrics
The result is expensive software and hardware, overburdened IT, and consultants trying to make sense of ERP data by producing a sea of reports and lagging indicators that ultimately do not meet the requirements of businesses trying to improve inventory performance.
Combining domain expertise with technical ERP knowledge, cloud BI solutions eliminate barriers to understanding inventory performance by providing best practice metrics based on ERP data, out-of-the-box. Also, cloud BI enables business users to navigate a business data model of ERP information from which they can easily create or customize actionable metrics or reports with the right level of detail. Manufacturing companies that are interested in improving inventory management and reducing IT workload should consider using a cloud BI solution to get better insights into factors that contribute inventory performance.