To gain a competitive edge in today’s marketplace, manufacturing companies need to have an efficient and effective inventory management system. Left unattended, inventory can quickly change from a company asset to an unwanted liability.
Understanding your Customer’s Delivery Tolerance Level is essential since it contributes heavily to the inventory strategy and segmentation of make-to-stock, make-to-order, and adapt-to-order or configured-to-order products.
Warehouse optimization involves implementing the ideal layout for utilizing space and conducting warehousing functions as efficiently as possible. Efficiency gains lead to an indirect cost reduction.
Challenges related to inventory accuracy, redundant processes, picking for production, picking for shipping, and the streamlining of processes can be overcome by a combination of automated material handling systems, barcoding, automated data collection, process redesign, and alignment of your ERP system.
A robust Sales and Operations Planning process is vital for bringing together key functional departments — Sales, Marketing, Engineering, and Operations — in order to determine how best to manage company resources and make future investments. It makes the following possible:
While most companies understand that inventory can become a liability if not properly managed, many inventory management strategies and reduction programs fall short of expectations. More often than not, this is because the scope of the strategy is too narrowly focused or the reduction program is executed out of sequence.
The following outlines the suggested approach and sequence of execution that enables our customers to implement a strong value chain in which they can deploy a solid inventory management strategy that meets their objectives and expectations.
A well designed inventory management program increases inventory accuracy. This reduces stock-outs and urgent ordering for unplanned demand.
Ensuring that only the right parts are being made enables you to avoid tying up precious manufacturing resources and cash.
When you can clearly see the right level of inventory to hold, this allows you to only order or produce needed parts.
Keep customers happy with on-time delivery by knowing you have the necessary raw material of sub-assemblies in stock.
Anticipating customer demand through inventory management best practices allows material and operations to flow more consistently thorough the stop. This reduction of process stop/start due to material directly impacts your lead time.
A good inventory management program addresses quality issues by integrating a supplier management program.
