A client wanted to cut their inventory from $6.5 million to $4.5 million this year. We devised several strategies to do that, and then I suggested they put a “United Way” thermometer on the wall of the purchasing department to track progress toward their goal. One of the people in the department took a poster board and created a nice thermometer and hung it on the wall. Each week they posted the total inventory balance on the chart, and whether the total inventory actually went up or down. My client referred to it as their “cheesy thermometer.”
The impact was amazing. Simply being able to see the score had a big impact on people’s activities toward inventory reduction and the results have come quickly. Just last month they reduced inventory by $1.2 million. They’ve had a few reversals, but seeing the score prompted an even stronger resolve to hit the goal. They’ve identified where the final reductions will occur, which should put them past their objective, and when that happens, the CFO has agreed to buy them all dinner. Maybe they’ll have cheesy pizza to celebrate.
© 2014 – Rick Pay – All Rights Reserved