What are we going to see in this article?
- How the PDCA Cycle Works
- Understanding Inventory Management Problems
- Using the PDCA Cycle to Improve Your Inventory Control
- PDCA Cycle Sheet
- Inventory Control Worksheet
O PDCA Cycle it is one of the most famous quality tools and aims to ensure continuous process improvement. The acronym comes from the English terms Plan (Plan), Do (Execute), Check (Check) and Act (Actuar), and these are precisely the stages in which the cycle develops.
In theory, stock management seems a simple thing. A company needs to get the products purchased, store them and deliver them at the time of sale. The problem is that in practice you are discovering problems that a management course would not have anticipated possible. There are a number of challenges in inventory management, but I've separated the ones I consider most common below.
Stock is stranded - you were interested in a product, considered that it has synergies with your customers for resale. He talked to the supplier and the minimum circulation he accepts to sell is 1.000 units. It's a lot for your store, but you really believed in the potential of that product and decided to make a first purchase to test it. Put it in the window and he doesn't sell at all. There is gone storage space and available working capital that you committed to the transaction and will not recover anytime soon.
Shopping and Stock Do not Talk - the person in charge purchases purchases units of products that are not missing and forgets the products that are coming out the most. Or buy the same amount of the two, just by thinking only part of the process, forgetting the sales. Another common mistake is the one responsible for the purchases making large orders, not knowing that the space available for the stock is full.
There is a mismatch of stock - by not having correctly noted the inputs and outputs of products, whether by purchases, sales, returns or losses, your control tool (notebook, spreadsheet, system, etc) shows a different number of products in relation to what actually there is. Sometimes you may also be sinning at this because you do not have any tools for it.
I do not know when to buy a product - a customer asks for a product, you go in stock and realize that it is the last unit. So you remember that the delivery time for this supplier is at least 30 days. Congratulations! 30 will be days without selling that product. You should have made an 30 request days before, but your process is flawed.
My co-workers are robbing me - who has a retail also knows that this is a common problem. But one must understand if this is a flaw in the process or sheer bad faith.
All of the problems listed above are likely to be solved or at least greatly reduced through optimization of the inventory management process. That's where you need to know. What is PDCA and what are its 4 steps,
The application of the PDCA cycle is somewhat simple:
- You start by naming the main problem of the process being optimized.
- It then maps the main causes of the problem.
- He draws up plans of action to solve the causes of the problem.
- Execute the action plans and check if they helped improve the process, making it faster and / or less costly.
- Checks if the issue is resolved. If not, restart the cycle. If yes, start the cycle for another problem
I'll illustrate this article with the problem "My products run out because I do not know when to buy more," but you can use the method for any of the problems listed above, or others that affect your business more. Make a business diagnosis, to find out which problem to focus on before.
Mapping the causes:
The causes can be related to materials, inaccurate methods, labor-unqualified, machinery and equipment, environment and measurement. We put notes on the side of the causes to understand what we will act first.
From the mapped causes, we will draw and control the action plans:
Then it is necessary to check how the action plans are helping in solving the problem:
In the end, you need to understand not only whether the problem has been solved, but also whether the inventory process has improved as a whole.
- How much do you estimate you lost before you started the PDCA Cycle?
- Have the proposed solutions increased its cost?
- Has the process gotten faster or slower?
If you conclude that it was worth implementing the solutions you had planned, restart the cycle by picking up a new problem this time:
If you believe the problem has not been resolved, or the solution set can still be improved, restart the cycle for the same problem.
If you have enjoyed the wonders that the PDCA cycle can do for your management processes, we have a ready-to-use spreadsheet and even the images used as an example were taken from it. Start using today!
To keep your inventory up-to-date, you need to use a product entry and exit control tool. Take stock of your inventory on a regular basis and study the deadlines to buy.
If you are interested, our Inventory Control ready worksheet automates a lot of this work.