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How six sigma can help solve inventory problems

blueprints23266599.jpgIf you have a large amount of your money tied up in your inventory, and are losing money because it is depreciating quickly, or just not moving fast enough, six sigma can help. The longer an inventory sits, the more money you lose. One way to combat the problem of lost money is through implementing a six sigma project. Six sigma projects help address the problems, and alleviate it, streamlining things, and helping you, your employees, and your business be more efficient and profitable.

First, determine what it is that is making it so your inventory is not moving fast enough. Are there problems with your fulfillment team, are orders getting backed up in the processing stage? What is it that is slowing things down and costing you money? With the six sigma process you look at the behaviors of the various sets of employees to determine how they effect the problems you are having with your inventory. Evaluate the process from the first step, through the last, and figure out where the bottle neck is happening.

Second, once you identify the problem area, figure out why that area is having problems? Are you not moving inventory because your sales team is not motivated? Are they not closing the deal fast enough? Are their instructions to the fulfillment team poor, or misunderstood? You have to figure out the underlying reasons for the bottleneck. For example, maybe your sales team is not motivated, and thus the inventory is not moving because no one is really pushing it.

Third, once the problems has been identified, you create a new plan to make it easier to move merchandise, either by helping the sales team get motivated, or by making things more streamline for warehouse personnel. Basically, you address the problem head on. The six sigma plan to do so would include some kind of agreement between all the personnel, from management to the newest hire. This agreement would specify the importance of moving inventory, and the financial impact that it has on the company. The better the employees understand, the more effective it is going to be.

It is important to keep track of the agreements, and the effects of them, that way they can be tweaked to reach the best possible solution. For example, maybe your sales team needs more incentive, so you can take them off salary, and have them work for commission. Their financial productivity is now directly linked to yours. Maybe you need to set up a bonus scale to encourage more sales closer to the end of the week when they are getting antsy to go home.

The six sigma model will help you find ways to motivate and inspire your team from the floor up, to help you move inventory and be more productive and financially sound.

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