Reducing Order Quantity
The connection between the reduction in inventory and the order quantity is quite obvious. By bringing the number of items to be produced down, one will have to spare fewer resources to create the required amount of items. Therefore, the less the production volume is, the less the reduction in the company’s resources is. Moreover, the specified step may involve a significant drop in the number of types of devices needed to product eh goods in question. Consequently, a decrease in the costs associated with the production process is expected. For example, a software-producing firm may consider bringing the number of created software down.
Adopting a Centralized Distribution System
Defined as a management system in which the company’s key transactions are carried out through different media outlets, primarily the ones that involve the use of modern media, the centralized distribution system (CDS) is a crucial addition to the array of the corporate strategies to follow in the environment of the global economy (Bretzke & Barkawi, 2012). Seeing that the tool in question allows for the use of digital tools, a range of inventory including physical tools and equipment can be dismissed as inferior to the IT devices and approaches. For instance, an organization may consider the use of an official site as the means for customers to reach the organization and order the desired products as opposed to calling the office in a specific location for the same purpose.
Using Common Parts for Different Products
Certain processes carried out in the company’s setting may share certain steps; therefore, the same tools can be applied to carry out these stages. Consequently, the amount of inventory utilized for the needs related to the production process can be reduced significantly by using the same tools for carrying out various steps of the production. For instance, the same tool can be adopted at different quality control stages to evaluate the compliance of the product with the existing quality requirements. For instance, the same test can be used for measuring the efficacy of different departments of the company.
One must bear in mind, though, that the stages of the production process may differ significantly in the accuracy and, therefore, the quality of the output; hence, the tools adopted at a certain stage may need remodeling and updating so that they could be applied to a similar stage on an upper level and lead to high-quality results. The remodeling of the tools in question can be viewed as a possibility of maintaining the required quality standards of the production process; however, the above-mentioned change will require extra costs to be taken.
Reducing Lead Time
Last but definitely not least, a drop in the lead time may trigger a significant decrease in the amount of inventory incorporated into the production process. Typically identified das the time lapse between the planning process and the implementation of the plan (Hansen & Mowen, 2012), lead time can be reduced by distributing the roles and responsibilities among the staff in a more expeditious manner, as an example. As a result, the use of the necessary inventory is likely to be forced up, which will cause the unnecessary equipment to be removed from the lineup or, at the very least, used as rarely as possible. Consequently, a drop in the depreciation rates is expected.
Reference List
Bretzke, W.-R., & Barkawi, A. (2012). Sustainable logistics: Responses to a global challenge. Berlin: Springer Science & Business Media. Web.
Hansen, D., & Mowen, M. (2012). Cornerstones of cost management. Boston, Massachusetts: Cengage Learning. Web.