Frequently Asked Questions: Transforming Inventory Management for Factories

We’ve been talking a lot about digital transformation for the factory—specifically optimizing your factory management processes to make sure inventory is in the right place at the right time for your teams. In our dialogues with industry experts and innovators—as recently as last week in an IndustryWeek webinar featuring our team and Mike Louderback, VP of Operational Excellence at Morgan Advanced Materials—we’ve heard a lot of excellent questions about this transformation. 

Here are the most common factory management inquiries and subsequent answers from the pros. 

ON TOP OF RISING COMPLEXITY OVERALL, I THINK OUR SPECIFIC INDUSTRY IS VERY COMPLEX WITH TENS OF THOUSANDS OF SKUS AND MULTIPLE ERP SYSTEMS. ANY ADVICE FOR HOW TO MAKE MEANINGFUL PROGRESS DESPITE ALL THAT COMPLEXITY?  

Our go-to rule: Don’t try to “eat the elephant” all at once; follow the tried-and-true 80-20 rule, and focus on the top 20 percent driving 80 percent of your opportunity. And the important part here is to stay hyper-focused on top priorities: This is where the combination of transparency in data, standardized work tied to goals, and actionable intelligence shines. You need a way to see the information at your fingertips, and automation to help analyze it and surface up the most important things every day. There have been tremendous improvements in technology recently that help manufacturers operationalize this 80-20 rule, and pick out the needles from the haystack for teams to focus on every day. 

WITH SO MUCH TECHNOLOGY OUT THERE, WHY DO YOU THINK SO MANY MANUFACTURERS ARE STILL PRIMARILY USING SPREADSHEETS TO MANAGE INVENTORY?

For a long time, there simply weren’t many factory management technology options available, or the existing options were ignored or not up to snuff. So teams have been forced to rely on manual, error-prone spreadsheets—a particularly hindering choice that doesn’t scale well across teams, a critical capability for today’s environment. If and when companies do explore new technologies, it may feel easier to stick with manual techniques simply because inertia is involved—processes at rest will stay at rest unless acted upon by an outside force. Compounded by the fact that modernizing factory management can be considered a latent need, many leaders don’t prioritize the “better way.” 

It comes down to proven change management strategies, easy-to-use technology, and a leadership team excited to embark on the journey. Mike Louderback from Morgan Advanced Materials answered this question in the live webinar: “With so much going on in technology and ERP systems, it’s difficult sometimes to pick that one solution and then get everyone on board with deploying it. Because there are so many options, leadership has to say, ‘We want to do something better.’ But before you push it out, you have to pilot. I’ve done this at other businesses as well. For folks who are struggling with understanding why we picked a system, pilot programs are a way to let them see it, critique it, and get on board faster.”

DID TECHNOLOGY AND STANDARD PROCESSES BETTER EQUIP TEAMS TO HANDLE COVID-19?

According to Mike, previously established standardization made the necessary COVID-19 pivot much easier. His advice? “Standardization is the best way to mitigate risk, so as quickly as you can, start to standardize your processes right now.” The team had layered accountability, documented processes, and the systems already in place to shift online. Morgan was able to go from a very hands-on organization to one that leaned on technology to launch sites, build a strategy deployment, and run daily operations all remotely. 

The lesson here: Unpredictable shifts will happen again, so putting this foundation in place now can prevent headaches, loss of efficiency, and financial burdens later. 

WITH SO MANY DIFFERENT OPTIONS AND TECHNOLOGY PROVIDERS OUT THERE, HOW CAN I ENSURE THAT I PICK THE RIGHT PARTNER FOR MY BUSINESS? WHAT KINDS OF QUESTIONS SHOULD I BE ASKING? 

In the webinar, Mike highlighted the need to find a partner who’s in it for the long haul, because a digital transformation journey is not quick. The important thing here is differentiating just a vendor from a true partner. Some questions might look like: 

  1. How quickly do customers typically see ROI on your solution? 
  2. Do you have pilot or proof-of-concept programs? 
  3. What does the implementation period look like? How long will it take? Who from your organization will we have on our team? 
  4. Are you working with other manufacturers of my size and complexity? Can I speak to one of your customers with a similar business problem? 
  5. How often do you launch platform updates? How do you stay in tune with market trends and the needs of your customers? 

I KNOW YOU ALL TALKED A BIT ABOUT CHANGE, BUT DO YOU HAVE ANY ADVICE ON TRAINING AND CHANGE MANAGEMENT WITH KEY TEAM MEMBERS STILL WORKING REMOTELY? 

You don’t have to train everyone…at first. Focus first on the change agents and subject matter experts in your organization. Train those folks, and they’ll help champion the transformation efforts and spread the culture of improvement.  Mike and his team at Morgan enlist the help of subject matter experts to train the other trainers. “If the business is already aligned in structure, they have the opportunity to move even faster,” he said.

For times when teams are working remotely, make sure any platform or process you choose can be shared virtually. Your tool of choice should allow you to share views of information consistently and easily.

OUR DATA IS IN REALLY BAD SHAPE. HOW HAVE OTHER COMPANIES TACKLED THIS PROBLEM WHEN IMPLEMENTING NEW TECHNOLOGY THAT RELIES ON THAT DATA?

The hard reality is that the bad data is driving your day-to-day business decisions and affecting your operation—whether or not you add technology to the mix. Ultimately, an interactive approach that’s focused on the biggest data outliers first is your best bet to get data corrected. Look for technology that can help you quickly identify this bad data, and then empower the processes and workflows to help correct it. LeanDNA believes in the importance of prioritizing data clean up above everything else, and our team helps hundreds of sites identify and resolve data anomalies. 

HOW CAN I GET MY EXECUTIVE LEADERSHIP TEAM ON BOARD TO START A PROJECT LIKE THIS—EVEN AT A SINGLE SITE? ANY TIPS OR TRICKS TO HELP BRING AN INITIATIVE LIKE THIS TO THE TOP OF THE PRIORITY LIST? 

We hear this all the time: “I love this, but I can’t get my [insert executive champion] on board.” We have three pieces of advice (and an eBook to guide the conversation with your team): 

  1. Executives are all about results and the bottom line, so build a business case and demonstrate the ROI. Be conservative, but be willing to sign up for the impact.
  2. Maybe even more importantly, estimate the opportunity cost of doing nothing against the cost of a problem or new platform.
  3. Show that you can minimize risk by starting small and scaling the program. If you pilot with a small number of sites, clearly identify your success metrics, track results, frequently communicate with your team and stakeholders, assign a strong project lead, and make a case for scaling it out to other areas of the business for even greater impact. 

HOW CAN WE RESOLVE THE FACTORY MANAGEMENT CAPABILITIES GAP? WHAT’S A SPECIFIC TOOL? WHAT ELSE DO WE HAVE TO DO TO OVERCOME THE LIMITATIONS OF THE CURRENT ERP SYSTEM?

When looking at how to utilize their 10 ERP systems, the Morgan team uncovered inaccurate data. Mike’s advice was to first embark on a journey to clean up those systems and look critically at how you’re using them. “The quickest thing you can do is use a tool like LeanDNA, or a BI tool, to extract data. We chose LeanDNA because we can extract the data and find errors while also setting the system up for proactive supply chain analytics.”


Looking for more information? Listen to the full webinar that details why, how, and when your company should transition into a factory-centric strategy for inventory optimization. Or reach out directly to get a LeanDNA demo. In times like these, the long-term benefits of acting now will pay off quicker than you might think.