Inventories Quotes
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If we cut our batch sizes in half, then I guess that at any one time we’d have half the work-in-process on the floor. I guess that means we’d only need half the investment in work-in-process to keep the plant working. If we could work it out with our vendors, we could conceivably cut all our inventories in half, and by cutting our inventories in half, we reduce the amount of cash tied up at any one time, which eases the pressure on cash flow.
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The goal is not to improve one measurement in isolation. The goal is to reduce operational expenses AND reduce inventories and increase throughput simultaneously.
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Flow means that inventories in the operation are moving. When inventory is not moving, inventory accumulates. Accumulation of inventory takes up space. Therefore, an intuitive way to achieve better flow is to limit the space allowed for inventory to accumulate. To achieve better flow, Ford limited the space allotted for work-in-process between each two work centers.
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That’s how Jonah knew. He was using the measurements in the crude form of simple questions to see if his hunch about the robots was correct: did we sell any more products (i.e., did our throughput go up?); did we lay off anybody (did our operational expense go down?); and the last, exactly what he said: did our inventories go down?
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Overall, I think what the sales number is telling us is that the consumer is starting to take up some of the slack we're seeing in the trade sector and inventories.
