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You are here: Home / VMI / The 5S System: Inventory Management with Lean Principles

The 5S System: Inventory Management with Lean Principles

June 29, 2020 By Birmingham Fastener

    

5s-system-lean-manufacturing

What is the 5S System or the Five Lean Principles?

As lean manufacturing experts using the 5S system, Birmingham Fastener can help your OEM or other business maximize efficiency and reduce wasteful spending by optimizing your inventory levels and developing an inventory management strategy.

The 5S System, or the Five Lean Principles, started as a manufacturing methodology to improve management. Other industries have discovered that the five principles can be leveraged to improve any business. Let’s discuss how our vendor managed inventory service, Birmingham Fastener Managed Inventory (BFMI) uses the 5S System when developing the best strategy for your business.

1. Defining Value

The first step to taking a lean approach to inventory management is recognizing what value your business offers your customers. Understanding the value of your product, how it serves your customers, and its importance is vital. This tells you how much a customer will pay and what the true need is for each product. 

BFMI can help you identify the value of your inventory and help you keep a constant stock of your most valuable products, while trimming the fat of your less valuable products. Not only does this eliminate waste and free up storage space, but this also helps you allocate your budget and be able to continuously replenish valuable product.

2. Mapping the Value Stream

The value stream identifies all activities that contribute to the value of your product. When we map the value stream, we’re looking at each step of production, from manufacturing and stocking to packaging and shipping. We work with you to understand the product’s cycle and identify areas where there is no connection to the end value. From there, we help you eliminate unnecessary steps in your supply chain to maximize efficiency and reduce waste. This also provides increased value to your customer by expediting orders.

3. Creating Flow

Once we identify and map value, we create a sensible, efficient workflow that streamlines processes and improves your production process. BFMI can help you create and implement strategies that ensures productivity throughout your operation. This could include reverse engineering, creating cross-functional teams, and using both real-time and historical data to identify areas of improvement.

4. Establishing a Pull

Mismanaging your inventory often results in wasted space, wasted resources, and wasted money. To avoid dead stock and help you maximize a return on investment, BFMI focuses on LEAN inventory management practices. 

Rather than a push-system where you have a massive overstock of items that takes up space in your warehouse, a pull based vendor managed inventory (VMI) system allows you to balance supply and demand. We help keep inventory levels optimal by studying your business and learning what quantity levels should be maintained for each item.

5. Pursuing Perfection

Once we have implemented strategies to eliminate wasteful stock, optimize inventory levels, and improve your total cost of ownership (TCO), we work to perpetuate perfection and help you maintain a lean system. Working with a partner like BFMI provides peace of mind by continually monitoring progress and productivity to ensure your business continues progressing. 

Our results speak for themselves. BFMI helps partners improve their TCO by 10-30%, specifically in areas including:

  • Purchase volume
  • Freight consumption
  • Inventory footprint
  • Vendor consolidation
  • Working capital improvement
  • Labor

We offer immediate solutions to our customers’ supply chains, and we look forward to helping you apply these five lean principles to your business.

***

BFMI can help you optimize your inventory with the 5S System! Call or contact today!

 

 

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Filed Under: VMI, manufacturing

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