After identifying the inventory management challenges and understanding their underlying causes, Sarah proceeds to map out the various components and relationships within her inventory system. By creating a visual representation of the system, Sarah gains clarity on how different elements interact and influence one another. Here’s how Sarah approaches this step:

1. Identifying Components: Sarah begins by identifying all the key components of her inventory management system. This includes tangible elements such as inventory levels, sales channels, suppliers, warehouses, and transportation logistics, as well as intangible elements such as demand forecasting methods, ordering policies, and communication channels.
2. Visual Representation: Sarah creates a visual map or diagram of her inventory system, using symbols, arrows, and labels to represent different components and their relationships. This could take the form of a flowchart, a network diagram, or a causal loop diagram, depending on the complexity of the system and Sarah’s preferences.
3. Linkages and Relationships: Sarah maps out the linkages and relationships between different components of the inventory system. For example, she identifies how customer demand drives sales, which in turn influences inventory levels and reorder decisions. She also considers how factors such as lead times, order quantities, and safety stock levels impact inventory replenishment and stockout risks.
4. Feedback Loops: Sarah highlights feedback loops within the inventory system, indicating how changes in one part of the system can affect other parts over time. For example, she identifies the “reorder point” feedback loop, where declining inventory levels trigger replenishment orders, which in turn affect future inventory levels and ordering decisions.
5. External Influences: Sarah incorporates external influences and factors that impact her inventory system, such as market demand trends, supplier performance, competitor actions, and regulatory requirements. By including these external elements in her system map, Sarah acknowledges the dynamic and interconnected nature of her business environment.
6. Hierarchical Structure: Sarah considers the hierarchical structure of her inventory system, recognizing that it consists of subsystems nested within larger systems. For example, her inventory management process may be part of a broader supply chain system, which in turn is influenced by macroeconomic trends and global trade dynamics.
7. Visualization Tools: Sarah may use specialized software tools or applications to create her system map, or she may opt for simpler visualization techniques such as whiteboards, sticky notes, or pen and paper. The goal is to create a visual representation that is clear, intuitive, and easy to understand for herself and her team.

By mapping out her inventory management system in this way, Sarah gains valuable insights into its structure, dynamics, and interdependencies. This visual representation serves as a useful reference tool for diagnosing problems, identifying improvement opportunities, and communicating with stakeholders across her business.