I miss telling stories during these pieces, as we’ve been focused on the hard and fast stories of manufacturers recently, but an experience I had lately really made me wonder. Those of you who have been reading my blogs long enough know that I am a coffee drinker. It’s my main vice. Other than coffee, I’m pretty healthy, but I really do like me some joe.
I prefer the local coffee shop to the mainstream corporate one, but I had an experience recently that made me wonder about inventory. (Yes, I think about this stuff all the time.) I was traveling and had to use a Starbucks. It was the middle of the afternoon and so I didn’t want to go all caffeine. I already knew I was tired and wanted a warm drink, but not anything to keep me up.
And Starbucks was out of ingredients. This was not the regular “we’re only releasing this flavor at this time of year” seasonality. (And no, I’m not a flavored coffee person anyway. Just plain please.) But I do love a good hot tea now and again and they make one with honey and mint that I love. Today wasn’t my day, though, and they didn’t have it in.
It wasn’t the only thing they were out of, either. It made me think of the problem of sourcing and stocking the right amount of everything. If Starbucks is having that issue, and I tend to think of them as having all the data they need to get the ordering right, then everyone else must be struggling, too, right?
All manufacturers have 1 thing in common. You have the unenviable task of coordinating a constantly moving flow of people, processes and materials. Even in the world of process manufacturing, recent disruptions in the supply chain brought the same challenges to the fore. Where you used to process goods without disruption, you may now be facing shortages that force you to move work. Where you make (or stock) many different products, the work your team does is constantly changing. They pick different sizes and quantities. They perform different tasks. They may do a job for an hour or a day. You may need them to do things the same or very specifically differently.
Without a proper system to coordinate it, you are relying on man- and womanpower to do the heavy lifting. When just one thing goes wrong (and one thing always goes wrong) in the shop, the amount of coordination and re-coordination your team has to do to keep up can get overwhelming very quickly. Humans are not equipped to do this work fast enough for you to avoid disruption and cost.
Why not give them the tools to do their jobs?
We’ve been talking about the people, processes, and materials you use to do your work. Materials take many forms: things you buy from vendors and use in production, from your customers that you use to complete your work, that you make and source to others, that you make and source to other steps in your process, tools that you use in your work and even the written steps that you use to do your work. Today, we’re talking about hard goods – your inventory of tools, parts and materials.
While this hasn’t always been the case, we talk about inventory management and control with every single prospect we interact with today. They all need tighter control over their inventory. Things have gotten more expensive, and availability has been a constant challenge during and post-COVID. Control internally brings about the calm they are not seeing externally.
WHAT IS INVENTORY CONTROL?
True inventory control begins with keeping your inventory of tools, parts and materials in the right quantities or volumes to fill the orders or jobs you have. This is critical to make sure that you are not overstocking items, increasing the dollars you have just sitting on the shelves, or under-stocking and driving up rush shipping fees. Inventory is a delicate thing, as you have to understand the volumes you need of each item you have; each will have its own upper and lower thresholds to maximize availability and minimize costs.
So many of you that we talk to need or want to discuss just avoiding inventory counts and that’s a baseline for us. You perform inventory counts because you don’t have what you need, you don’t know what that is and you don’t know how to get there. The fine line of how to control inventory can get so much more granular and give you so much more information.
For us, inventory control begins with normalizing what you have. You should know the average quantities you should carry for each item you stock based on your prior usage. This means that you need usage reports for the inventory you have currently – what you’ve used in the last month and how much. Most of you rely on purchase records to stock and this can make a current problem worse. If you purchased 25 of something last month and know that you have done so every other month this year, you will do so again until someone tells you stop. We want to know how you know to stop doing so. Is it that someone reports you have so much that it’s stacking up in the aisles? If so, you are overspending for sure and who knows when you’ll use that next.
No, you need to know actual usage, so you can tailor your counts to be what you actually need and will use. For instance, take a customer we have that sources raw materials in various colors. For them, stock of particular color counts is critical for particular months. Think pink for October and Breast Cancer Awareness and gold for March and the Oscars. These colors are useless to them the rest of the year; their customers just don’t buy anything in that color other than for those specific times of year. How difficult is it to track how much of that you should purchase and when? Do you know if you need the pink in July or September and how much did their customers actually purchase last year? This is where a system to track that becomes very important.
Once you have basic counts done, you can start digging in with more sophisticated control over inventory including availability to the work center where you need it most. We’ll talk about that further next week.
Would you like your team to have the accurate material information and inventory counts they need (and want) to be more effective at their jobs and get work done correctly and efficiently the first time? Saving the company time and money. Let us show you how. Click the button above to start the process. Or if you have a question, reach out to info@cimx.com. We are always happy to help.
Contact CIMx Software to see how a Manufacturing Execution System can improve production control for you.