Global Supply Chain Ch. 16

A higher-than-anticipated finished-goods inventory level may mean that a increase in customer demand is occurring.

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Carrying costs do not vary with the level of inventory, which makes these costs fixed.

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Decisions in lean must be based on the opinions or preferences of influential individuals, as well as on facts and data.

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If WIP builds up at a workstation, a scheduler should not have to reroute the flow of material to another work center.

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In a pull system, an upstream work center or operation will create output regardless whether a downstream center directly requests that output.

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It is harder to increase a material release by 10 percent or carry safety stock to cover supplier quality problems than to correct the root cause of a problem.

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Lean is an easy approach to implement.

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Most cost accounting systems are capable of identifying and assigning the true costs related to maintaining physical inventory.

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Most inventory waste results from underlying problems that blue collar workers have failed to correct.

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Production inventory consumes a minor portion of inventory investment.

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Purchasers should not accept any of the blame for delivery uncertainty.

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Record integrity exists when the physical inventory on hand exceeds the electronic record on hand, regardless of the quantity of inventory.

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Suppliers seldom offer quantity discounts to encourage larger orders from purchasers.

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Supply chains are insensitive to changes in markets, including changes in the availability of material supply as well as price changes.

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The ability to plan material requirements accurately increases as order-cycle time lengthens.

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Very few organizations use distributors to provide at least some portion of their inventory requirements, particularly maintenance, repair, and operating supplies.

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When firms produce goods in anticipation of future customer orders, they are operating in a just-in-time environment.

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A logical place to begin when managing inventory investment is to make sure there is agreement between physical and electronic inventory.

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A major step toward eliminating delivery uncertainty is a commitment to stable release schedules with realistic (but not overly generous) supplier lead times.

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According to JIT, inspection is a waste of both time and personnel caused by defects.

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According to Shook, lean is a philosophy that seeks to shorten the time between when the customer order and the shipment to the customer by eliminating waste.

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Anything less than perfect quality leads to waste.

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Continuous improvement involves small, daily improvements that ensure that the process in moving forward.

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Even in an era of just-in-time production, almost all firms hold some level of preproduction inventory

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From the financial accounting perspective, inventory has historically been considered a current asset

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It is often difficult to quantify the total costs associated with ordering and carrying physical inventory

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Ordering costs are a composite of the costs associated with the release of a material order.

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Shortening the material pipeline in terms of time between suppliers and a buyer can reduce the average amount of inventory in a system.

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Specifying customized parts when standardized parts are available adversely affects material inventory because customized parts are usually more expensive.

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Suppliers that cannot meet delivery schedules create delivery uncertainty

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The advantage of consignment to the buyer is the ability to defer ownership and avoid committing working capital and incurring carrying charges.

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The most basic and the easiest inventory-related cost to quantify and track is unit cost.

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The true cost of MRO inventory often goes unnoticed because firms fail to track these items with the same intensity as production inventory.

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The underlying emphases of lean- to eliminate all forms of uncertainty and waste - are relevant to all organizations, regardless of the specific planning and control tools that are used.

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Unnecessary inventory usually results from one thing: uncertainty.

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WIP is incomplete - it has not yet been transformed to a saleable finished good.

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