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Minimizing Inventory Liabilities

Gaining a competitive advantage in an increasingly demanding marketplace can be as simple as reducing supplier lead times, while minimizing inventory liabilities associated with large batch orders. Most domestic manufacturing operations will define lead-time as, “the time from when a manufacturing order is transmitted until the order is received by the customer.” Defining lead-time in this manner provides no metric to supplier performance and has less relevance in a world where order fulfillment management is critical to OEM success.

Alexandria Industries has implemented a domestically developed, internationally known manufacturing philosophy—Quick Response Manufacturing (QRM). QRM relentlessly pursues the reduction of lead-time in all aspects of our operations. Comprehensive lead-time reduction allows OEMs to minimize inventory levels and liabilities.

Organizations such as Trek Bicycle and John Deere Corporation have promoted the operational and financial benefits of QRM since its introduction in 1998. Since then, they have pushed organizations like Alexandria Industries to pursue this journey to gain a competitive advantage in the global marketplace.

A QRM driven organization competes by generating overall cost savings to their customers and minimizing these operational liabilities:

  • Product inventories
  • Storage space that could be used for revenue generating activities
  • Damage and product/component obsolescence
  • Forecast inaccuracies
    • With long lead times and problems associated with forecasting, companies are subject to the added costs of expediting shipping, time and money; order rescheduling or cancellations and their associated costs; excess inventories; loss of production due to stock-outs
  • Poor cash flow
  • The more inventory carried, the fewer inventory turns that can be generated, with less money available for other revenue generating purposes

QRM provides operational advantages, as well as financial benefits for customers. Alexandria Industries has developed an in-depth QRM presentation that can be given at your facility to educate the appropriate personnel within your organization. If you are interested in a presentation, or simply want to learn more about the 10 QRM principles, and how they can positively affect your organization, please do not hesitate to contact your sales specialist.