Inventory Turnover is the number of times your inventory cycles or turns over in a year. Inventory turnover can help an organization understand how efficiently their inventory is supporting sales. The inventory turnover number implies how often inventory was bought and sold throughout the year. Low inventory turnover numbers often hint at overstocking, obsolescence or unstable processes. A high inventory turnover can also be dangerous if it is depleting reserves to quickly.
How to calculate:
Inventory turnover is calculated by dividing the cost of goods sold by the average amount of inventory.
Red tags are a visual tool that is used during the sorting phase of a 5S initiative. In the sorting phase of 5S, items are either gotten rid of, kept or placed in a red tag auction area. The red tag is used for items that are either gotten rid of or placed in auction. Please note we suggest if a clear decision has been made to "get rid" of the item, just get rid of it.
General process of red tagging items:
Best Practices are a technique used in benchmarking. The technique measures similar items, activities or services and is used as a measurement or performance standard. Defining best practices is often used in continuous improvement to set new standards or improve on current practices.
Hard Savings are the tangible and identifiable savings as opposed to that realized from not spending. If we look at hard savings from a project perspective it can be defined as those savings that allow the organization, team or department to do "more" or the "same" amount of work with the same or less resource use.
Examples of Hard Savings:
Question: What is one other type of hard savings that you can think of? Have you ever had to document hard savings?
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Soft savings are the intangible benefits that result from projects or initiatives. Soft savings are much harder to quantify than hard savings.
Examples of soft savings:
Soft savings can often be made harder. While the savings are hard to quantify soft savings can often add up and if all the dots are connected correctly and your audience can understand, they sometimes can be as valuable as hard savings.
A baseline refers to a measurement that establishes a basis for other future state measures. The baseline is usually the initial set of measurements, observations or data collected which is used for a comparison or a benchmark for improvements. It is sometimes referred to as as a current state.
Susan needed to be able to type 90 words per minute to qualify for the job she wanted. In order for her to see where she was at currently her husband established a baseline measurement by having her type as many words as she could in one minute. Susans average score was 94 words per minute.
Tim was tasked with improving the cycle time of the shops ID and Pack process. His goal was to improve the time by 2 minutes which would make the new cycle time 3 minutes from the baseline.
A supplier is any party that provides or supplies goods or services. Suppliers can be both internal, meaning that the supplier is upstream of your process step or external like in the case of a contractor, subcontractor or vendor. Suppliers provide specialized inputs or deliverables to downstream process steps.
John makes valve covers and passes them onto Bill who then polishes the valve covers. Bill then sends the valve covers to Martha who packages the valve covers and ships them from Valves Made Easy to Valve's R' Us. Who are the Internal Suppliers in this process and who is the External Supplier in the Process?
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