A BOOK THAT HAS MADE AN IMPACT
ON MY CAREER:
I enjoyed reading The Goal: A Process of Ongoing Improvement by Eliyahu M. Goldratt
and Jeff Cox. It is about a factory going through many process improvements, focusing
primarily on such financial measures as cash flow, return on investment and profit. It
helped me to learn how to manage bottlenecks.
Cash is king for any company, and inventory optimization is a key driver to improve cash flow.
Poor inventory practices lead to high
working capital, and excess inventory
results in high holding costs and risk of
I work for a mining company, and from a
financial perspective, mining is a cyclical
industry that depends on price variations
of metals. Our management team
looks to improve financial performance
every year. Thus, it is important for us
to optimize inventory and avoid adding
To improve the company’s cash flow, we
have developed new initiatives, namely,
implementation of collaborative planning
with internal customers and careful
evaluation of new inventory additions.
In the past, we added materials to
our inventory after the completion of
capital projects. Because there wasn’t a
structured process to manage inventory
additions to support new equipment,
we experienced low service levels and
unnecessary high inventory investment.
Now, key stakeholders work together to
ensure the right materials are requested,
ordered and maintained in inventory.
After validating the bill of materials from
suppliers, the equipment maintenance
team submits requests for needed
items to materials management. That
information is analyzed against historical
data relating to similar equipment.
Then, the appropriate new materials
are added, and inventory-optimizing
tools are used to determine the right
quantities. Finally, these materials are
ordered, received and stored.
Collaborative planning has helped us
avoid false demand and understand
internal customer needs — resulting
in an increase in service levels and an
avoidance of excess inventory. It has
been key to improving cash flows.
ABHILASH KOTHI, MBA, MS