How To Reduce Materials Inventory by Refining Your Value Stream

When you're talking about "working smarter," you're really talking about ways to do things faster, more efficiently, and ultimately more profitably. At the same time, you don't want your process improvements to have a negative impact on customer satisfaction.

For example, you might determine that a certain maintenance task wouldn't have to be done every single time a crew visits a site. However, if the client wants it done every single visit, ignoring their wishes certainly couldn't be construed as "working smarter," could it?

A very important concept when it comes to working smarter is "value stream." The value stream is the series of steps that occur in order to provide the product or service—and shopping experience—the customer desires. Thus, any steps in the process that a customer does not value and would not pay for are to be considered waste. Thus, you should do everything in your power to eliminate those steps—or at least improve the way you perform them so you can save time and money.

Madison Planting & Design Group in Canton, MS, is constantly scrutinizing its value stream. Owner Kirk Cameron says one area in particular has had a major impact on his company.

Reduce your materials inventory

MPDG has taken "held inventory" out of its value stream altogether. The goal is to greatly reduce the amount of capital tied up in excess inventory, in addition to reducing the time crews spend gathering and loading materials.

Cameron explains, "We used to have a lot of inventory sitting around our yard, sometimes up to $150,000 worth. We got that down to around $75,000, and then started the process of eliminating it altogether."

MPDG no longer "stocks up" on popular items. Instead, the operations manager emails a purchase order to their supplier when a new job is scheduled. The supplier then gathers the needed materials for that specific job. Sometimes materials are shipped directly to jobsites. However, it's more common for the materials to be shipped in bundles-by-order to MPDG's yard. Deliveries take place every two weeks.

The bundling method is still quite advantageous. It's much easier for a crew to load up the needed materials when embarking on a new job, since everything is already together. And materials are still being ordered only when needed for a job—otherwise known as just-in-time inventory planning, another important concept of working smarter.

Cameron says that in order to make this approach work, he decided to narrow his buying down to a single supplier. This makes it much easier for his operations manager to manage. Furthermore, MPDG becomes a much more valuable customer in the eyes of the supplier, encouraging the supplier to do whatever it takes (within reason) to comply.

Greatly reducing held inventory is just one value stream improvement MPDG has made over the past few years. They've also reorganized their yard to help reduce downtime by 50%. Crews now follow a very specific flow in the evening to unload debris, load bulk materials like topsoil and pine straw, load plant materials, re-fuel trucks and park them. Crews are then on the road within minutes the next morning since everything is ready to go. The loading/unloading process now takes about 45 minutes as opposed to 90.

“I could back through our value stream again today and find more ways to cut and tweak," Cameron recognizes. "My advice is to be diligent and never give up. Always look for ways to increase value to the customer. We provide value when we physically change their property. Anything beyond that—fueling up, loading up, paperwork—doesn’t matter to them."

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