Monday, December 19, 2011

Missing the Inventory Target at Target & Lessons Learned

by LeanBlog.org: Mark Graban
a consultant, author, and speaker in the “lean healthcare” methodology, focused on improving quality and patient safety, improving access, reducing costs, and fully engaging healthcare professionals. 
on December 19, 2011
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Over the weekend, I went to a local Texas Target store to buy a Christmas-themed gift card. I checked a few registers and all I could find were for new babies, birthdays, or “LOVE.” Not a single Christmas, winter, or holiday gift card to be found in the entire front of the store, the grocery area, or the greeting cards area.
My point here is not just to complain, but to illustrate some important inventory management points for our own workplaces.

Managing inventory for the holiday season has got to be a tough balancing act for many businesses. When you have seasonal inventory that would expire, you don’t want to have too much (the waste of inventory), but you also don’t want to lose sales by not having enough.
Target almost lost a sale, had I not found a generic themeless gift card. I would have gone and purchased a card somewhere else. So I wonder – how many gift card sales did they lose on Saturday?
When we look at the balancing act, here’s the argument for having way TOO MUCH inventory of gift cards:
  • Gift cards are small
  • Gift cards are cheap to produce
  • Extra gift cards could easily be stored until next year (assuming they weren’t printed with “2011″ on them)
Target should manage their holiday gift inventory so that they never run out. The same applies in hospital stockrooms. We don’t want nurses and other providers being delayed (with the corresponding delays in patient care) because they can’t find simple, small, inexpensive things like gauze or other supplies. When items are small and cheap (or urgently needed), hospitals should err on the side of having a bit “too much” inventory without having an infinite amount.
It’s a common misperception that Lean is “all about low inventory.” It’s really all about making sure the customer gets what they need, easily – whether that’s a shopper in a store or a nurse trying to get supplies from a stockroom.

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