Minimizing Inventory Liabilities

Gaining a competitive advantage in an increasingly demanding marketplace can be as simple as reducing supplier lead times, while minimizing inventory liabilities associated with large batch orders. Most domestic manufacturing operations will define lead-time as, “the time from when a manufacturing order is transmitted until the order is received by the customer.” Defining lead-time in this manner provides no metric to supplier performance and has less relevance in a world where order fulfillment management is critical to OEM success.

Alexandria Extrusion Company (AEC) has implemented a domestically developed, internationally known manufacturing philosophy of Quick Response Manufacturing (QRM). QRM relentlessly pursues the reduction of lead-time in all aspects of AEC’s operations. The reduction of component lead-time enables OEM’s to minimize inventory levels, thus resulting in the minimization of inventory liabilities.

Organizations such as Trek Bicycle and John Deere Corporation have promoted the operational and financial benefits of QRM since its introduction in 1998, and since then have pushed organizations like Alexandria Extrusion Company to pursue this journey to compete in a global marketplace.

A QRM driven organization can compete in a global marketplace by providing overall cost savings to their customers by minimizing these operational liabilities:

• Product inventories
• Storage space that could be used for revenue generating activities
• Damage and product/component obsolescence
• Forecast inaccuracies
	• With long lead times and problems associated with forecasting, companies are subject to the added costs of:
		• Expediting costs, both time and money
		• Order rescheduling or cancellations and their associated costs
		• Excess inventories
		• Loss of production due to stock-outs
• Poor cash flow
	• The more inventory that is carried, the fewer inventory turns that can be generated, with less money available for other revenue generating purposes.

The implementation of QRM at Alexandria Extrusion Company has provided operational advantages as well as financial benefit for their customers. Alexandria Extrusion Company has developed an in-depth QRM presentation that can be held at your facility to educate the appropriate personnel within your organization. If you are interested in a presentation or simply want to learn more about the 10 QRM philosophies and how they can positively affect your organization, please do not hesitate to contact your sales specialist. Please visit our web site www.alexandriaextrusion.com/aec/qrm for more information.

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Alexandria Extrusion Company | 401 County Road 22 NW | Alexandria, MN 56308 • Phone: 320-763-6537 • Fax: 320-763-9250