“The Libero Way”
ASSESS – EDUCATE – IMPLEMENT – REVIEW
At Libero our goal is simple – to support you in reducing and optimising your inventory.
Our approach has been shaped by over 40 years combined experience in manufacturing, most notably during our time working together at Honeywell, where we spent several years working under the Honeywell Operating System (HOS), which was itself inspired by the Toyota Production System (TPS).
The Libero Way is underpinned by the following set of core beliefs:
Reducing and optimising your inventory will deliver numerous benefits, primarily:
- Reduced Cost
- Increased Cash
- Reduced Backorder
- Increased OTIF
The Libero Way utilises the following 9 enablers, falling into 3 main categories, to deliver sustainable inventory reduction and optimisation:
PEOPLE
Senior Management Engagement
Inventory reduction and optimisation initiatives must be driven from the top. Without buy-in and support from senior management they will fail.
Dedicated Resource
Often, inventory is everybody’s responsibility and consequently becomes nobody’s responsibility. Inventory requires dedicated resource to manage it. Ideally this resource should be independent from Sales, Operations, Finance and Supply Chain to avoid prioritising the conflicting objectives of one function over another.
Closer to the Problem, Closer to the Solution
Your best resource for understanding your inventory is your people, particularly your warehouse team and your shopfloor teams. They are the ones who are physically handing your inventory – they see the challenges and opportunities, they have valuable ideas and insight which should be utilised.
PROCESS
SIOP
Many organisations have an S&OP process, but few have SIOP. At Libero we encourage you to bring INVENTORY into your S&OP and make it a key pillar of your monthly cycle.
PFEP
Plan for Every Part (PFEP) uses your data to put science into your inventory management. It is a proven, repeatable process that brings structure and rigour to managing inventory, reducing your reliance on people and the often arbitrary decisions they can make.
Data
Inventory decisions are mainly driven by the data in your MRP/ERP system. Clean up your data and you will go a long way to cleaning up your inventory.
MEASUREMENT
Metrics
At Libero we focus on ITTR (Inventory to Turnover Ratio) and DOS (Days of Supply) as our key metrics. Whist headline inventory value is important, it must be measured in the context and the current and projected size if the organisation. We believe inventory turns is an ineffective and outdated measure. All key inventory metrics should be reported daily and be visible to everybody within your organisation.
SLOBs
Your organisation will by carrying a lot of Slow Moving and Obsolete Stock – these SLOBs are weighing you down. You need to be realistic about your SLOBs and aggressively target them and remove them – too often SLOBs are left to rot in warehouses because of inertia, finger pointing, wishful thinking and a lack of courage to tackle them head on.
Projections
At Libero we believe one of the most effective tools for driving inventory reduction is your inventory projection report. It enables you to see where you are heading, and course correct where required. You have all the information required to project where your inventory is heading – we will help you utilise this to drive inventory down.