Inventory optimization using Lean Six-Sigma

Abstract:

We live in a society where all the things around us are changing day by day. Almost all companies search to improve their management and one way for this is lean management .The hardest thing in Logistics is to be able to constrain ALL of suppliers to respond in time for increases and decreases of demand, so the company can deliver the orders to its customers in time and keep the inventory at a low level as it is specified also in the second Muda of Lean management. That hardest part is when the company negotiated a contract with a customer for 2 weeks lead time while a contract with a supplier has 12 weeks lead time. The purpose of this paper is to show how to manage a low inventory level, taking into account the disturbances at the demand's level of company's customer, by applying The Six Sigma DMAIC methodology. This is done by Managing in ERP SAP a section named Master Data to make possible that company’s suppliers to react quickly at the fluctuation’s demand. The proposed model is tested in a Romanian company. Firstly, we have identified the main issues that produce the higher level of inventory and secondly we measure for a period the data of these problems. In the third part we find out the root causes and finally find solutions to improve and control.