Stock management by exception in replenishment mode (Kanban system

Good management practice dictates that companies with – industrial or distributor – inventories must manage their levels as closely as possible. In particular, if there is a reduction in bank credit, the Finance Departments must imperatively request reductions in Working Capital Requirement (the famous "WCR"), and in particular inventory reductions. While the Finance Department can set the amount in Euros of the desired reduction, it is up to the Operational Departments (Supply Chain in particular) to determine how to achieve it.

The easiest solution – is to apply the same discount rate everywhere, for example – 20% on all – references. It has the advantage of simplicity, and requires very little work on the part of stockers and schedulers. It's as if they were managing a single item. But it can also be the worst, leading to serial shortages and the need for urgent action to resolve them, all of which can only be counter-productive.

At the other end of the spectrum, we could review all the articles. The colossal workload (there are often several thousand, even tens of thousands of references) means that many throw in the towel before they've even started. Those who don't often get discouraged along the way... or only do it once in their career. Analyzing all the references is also incompatible with the speed of results required, unless resources are placed in parallel.

However, the responsible manager cannot bring himself to fall from Charybdis ("quickly and badly") into Scylla (giving up in the face of the supposed scale of the task), and he needs to determine the most appropriate approach, i.e. the one that will enable both – and – the expected reductions to be achieved quickly:

• without compromising service levels;

• without disrupting the entire production system;

• and without requiring a considerable workload.

We propose here to give an example of what such an approach might look like, based both on academic and managerial best practices, on the one hand, and on the ease of support provided by the latest generations of decision-making tools, on the other.