Back in the early days of American JIT manufacturing, a colleague asked me what would be the proper number of inventory turns for car parts going into an auto assembly plant we were overhauling. Back then magic numbers were, for me at least, much more important than they are now. This was a Big 3 plant, so magic numbers were important to them, too.
After a little research, done by pre-web methods, I found the name of the materials honcho at a new Nissan truck assembly plant in the Southeast. I figured that he'd have my answer and, being an American, he would share it with me on the phone.
It turned out I was right. He was one of the most helpful guys I've ever met, and the conversation was a turning point in my career.
I called his number around lunchtime, because that is a good time to find people at their desks. He answered himself, and I told him what I was up to. “I'm helping some guys overhaul a Midwestern auto plant and we'd like to know what your company sees as the right number of inventory turns to maintain in order to produce the best financial and logistical results.”
“Huh,” he said. “I never thought about it that way.”
After a short pause for Oxygen, I asked, “How do you think about it?” My magic number hopes were fading fast.
“Well,” he replied, “Let me give you an example – how about wiper blades?”
“Great,” I said.
“When we put the plant together, we knew we’d need wiper blades, and we knew we wouldn’t want to depend on delivery from Japan. Moreover we wouldn't want to own enough wiper blade inventory to support a 12,000 mile supply chain.
“Here's what we did: First we looked around and found a guy near here who makes wiper blades. Then we sent in a couple of engineers to help him bring his process up to Nissan standards. Finally, we bought him a new Nissan pickup with two bed liners. Each bed liner can be lifted out and stood in a rack next to the truck assembly line. A bed liner contains the right blades to cover any day's assembly mix.
“Each day it is the wiper blade plant manager's responsibility to deliver a full rack to the assembly line one hour before we start. He takes yesterday's rack back to his plant and has it refilled to support assembly tomorrow.
“There's no storeroom, no backup inventory, no shipping time or cost. How many turns on inventory is that?”
“Don't know,” I said, “But it sure is the right way to handle wiper blades. The plant manager himself delivers them?”
“Yup,” he replied. “And if we have any quality or service problems, we hand him the samples and review the issue directly with him, right then. We don't get a lot of problems.” I could hear him smiling.
The next morning our team met to discuss our new, plant-wide magic number for inventory turns. We settled in with our first cup of coffee and my colleague turned to me, “Have you figured out how many inventory turns we should rebuild this plant for?”
“Yup,” I said.
“Well,” he demanded impatiently, “What is the number?”
“We don’t really think about it that way,” I explained patiently.