Technische Unie: is inventory management a game of chance?

technische unie 180pxThe inventory management department and the trading department are responsible for placing the majority of Technische Unie’s orders at its suppliers. The orders are based on an estimation of the coming period’s sales. Because the quantities ordered for many of the items are intended to last for the whole month, purchases need to think 8 weeks ahead in the case of a 4-week lead time. This makes it seem like a game of chance.

Deepening and broadening the knowledge

In an attempt to remove the element of luck, forecasts are used based on statistical analysis of the sales figures over the past five years. The order quantities and order moments are calculated every night by the Infor Demand software package. This automated calculation process has been in place for years.

But as with all machinery, a great operator is needed to achieve great performance. Furthermore, there are countless items that have less than 5 years of sales history, or even none at all, which is why Technische Unie went in search of a way to both deepen and broaden its knowledge.

Inventory management training

In 2010, stock controllers from the inventory management department and the trading department attended a training course on inventory management. The course was held by Involvation at the Technische Unie facility in Amstelveen.

The course entailed a total of 8 sessions for 8 participants. Each session took place at the end of the working day and concluded with a number of tasks being issued as homework in preparation for the next session. These tasks produced interesting discussions within the departments about the right solutions, and those discussions alone would have made the course worthwhile. Different notions about inventory costs and order costs became clearly apparent, and the challenge lies in finding the right balance between them. The simulation software that the participants could access from a laptop during the course also helped to provide valuable insights into the consequences of changing settings. The various options for managing inventory provided plenty of food for thought and work is continuing on these even now that the course has ended.

Els van der Lelij from Involvation handled the topics with plenty of enthusiasm and consistently steered the discussions in the right direction. At the end of the course, she awarded a certificate of inventory management to each participant.

Not a game of chance after all

The company expects that the new knowledge its employees have gained will enable a further improvement to quality. In Wikipedia, the description states: “A game of chance may have some skill element to it. However, chance generally plays a greater role in determining the outcome than skill”. And Wiktionary defines it as: “A game in which the outcome is at least partly determined by random variables rather than strictly by strategy.”

At Technische Unie, it is definitely no longer a game of chance, but rather a daily game of tactics to satisfy as many customers at the lowest possible costs.

Any intelligent fool can make things bigger and more complex. It takes a touch of genius - and a lot of courage - to move in the opposite direction
Albert Einstein