Two things that have been on my mind a lot lately are running and kanban. So naturally I can find all sorts of linkages between the 2. Since my wife and I have been running regularly and longer distances, Aleve has become a regular part of our routine. And we go through the stuff pretty fast.
So the problem with Aleve is that you can buy small bottles at the drug or grocery store or big bottles at Costco. The big bottles at Costco cost much less on a per-pill basis (about half the cost of the small bottles), but this requires us to carry a lot of inventory and turn it less often. More frequent trips to the drug store to buy smaller bottles would keep inventory turning faster but would result in a huge purchase price variance (PPV). So this is a classic case of inventory vs. PPV. The Costco option offers a substantial discount at the cost of a very high minimum order quantity (MOQ). Naturally I choose the higher MOQ over the PPV hit. (We can debate the wisdom of that.)
So now I have another classic problem: how to implement kanban for a material with a very high MOQ. Needless to say, keeping 2 huge bottles of Aleve would be way excessive; so a 2-card system is out. A 1-card system with a reorder point would be better. And what I was surprised and impressed to realize is that Sheree has already set this up.
We simply buy the big bottle at Costco, take out enough to fill the small bottle and put it in the back of the medicine cabinet. We then put the big bottle in front and work out of that until it’s empty. That’s the trigger to buy more. The quantity in the small bottle will then carry us through lead time. (We only go to Costco about once a month.) Any leftover pills in the small bottle are removed before refilling and placed in the big bottle in order to maintain FIFO.
A simple everyday solution to a simple everyday problem.
So the problem with Aleve is that you can buy small bottles at the drug or grocery store or big bottles at Costco. The big bottles at Costco cost much less on a per-pill basis (about half the cost of the small bottles), but this requires us to carry a lot of inventory and turn it less often. More frequent trips to the drug store to buy smaller bottles would keep inventory turning faster but would result in a huge purchase price variance (PPV). So this is a classic case of inventory vs. PPV. The Costco option offers a substantial discount at the cost of a very high minimum order quantity (MOQ). Naturally I choose the higher MOQ over the PPV hit. (We can debate the wisdom of that.)
So now I have another classic problem: how to implement kanban for a material with a very high MOQ. Needless to say, keeping 2 huge bottles of Aleve would be way excessive; so a 2-card system is out. A 1-card system with a reorder point would be better. And what I was surprised and impressed to realize is that Sheree has already set this up.
We simply buy the big bottle at Costco, take out enough to fill the small bottle and put it in the back of the medicine cabinet. We then put the big bottle in front and work out of that until it’s empty. That’s the trigger to buy more. The quantity in the small bottle will then carry us through lead time. (We only go to Costco about once a month.) Any leftover pills in the small bottle are removed before refilling and placed in the big bottle in order to maintain FIFO.
A simple everyday solution to a simple everyday problem.
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