Inventory Management – Now there’s a topic that can get every manufacturer’s heart pumping! If you’re looking to optimize your operations, reduce costs, and meet customer demands, you need to be managing your inventory better than most. When you implement a robust inventory management system, you can ensure that materials are available when needed, production runs smoothly, and resources are used efficiently.
At ProShop, we’ve developed our platform to integrate effective inventory management tools with our procurement and work order management tools to provide a fully integrated solution that is used by hundreds of manufacturing businesses each day to get more jobs completed in less time with better results. At the core of those functions within ProShop are the following core concepts that inform the inventory management process.
8 Proven Techniques for Better Inventory Management
1. A robust job-planning process to identify job-related inventory requirements:
Yep, it sounds a bit obvious, doesn’t it? Yet so many manufacturing teams today don’t invest the degree of care needed during the job-planning process.
- They don’t outline specific procurement and inventory requirements.
- There’s no planning, scheduling, and material management for each step of the job.
- Job planning and inventory management teams work in disconnected silos.
Integrated job planning and inventory management features create better coordination among purchasers, project planners, shop floor leads, and schedulers. A well-planned job-planning process ensures existing inventory is used effectively. Materials are ordered on time, and any long-lead items are identified and planned for to minimize production delays.
2. A procurement dashboard to see purchase requirements and urgency
When job-planners identify purchase requirements during the planning stage, they need some visibility mechanism in place. Without that clarity, things can be easily missed, or ordered way too late.
Implementing a real-time data tracking dashboard provides:
- Real-time information about purchase requirements
- Full traceability into existing inventory levels
- Reports on outstanding orders, and future order requirements
- Insights for procurement teams to make better decisions that align with production requirements.
As a side-benefit, this can go a long way to reducing the risk of overstocking and understocking. In fewer words: an effective dashboard helps purchasers to prioritize urgent needs and manage supplier relationships more effectively.
3. Make the lead times well defined and visible
Understanding and defining the lead times for purchased goods is crucial to avoid production delays. You’ll plan accordingly if purchased goods are taking longer than expected.
When all relevant departments have visibility on lead times, it keeps everyone on the same page. Manufacturers need to ensure timely procurement that aligns with customer due-dates. Proper lead time management involves regularly reviewing and updating order status, as well as considering factors such as supplier reliability.
Lead time status is available from many different views within ProShop, giving real time visibility to various departments. ProShop’s vendor-performance tracking system also identifies supplier performance against criteria such as on-time delivery, informing the vendor selection process for more reliability.
4. Accurate inventory allocations for active jobs
Being able to specifically allocate inventoried goods such as hardware, raw materials, or sub-components to an active job ensures those items aren’t allocated elsewhere by mistake. When the job goes live, one of the first steps should be to manage bill-of-material (BOM) requirements. Pull from inventory where possible, focusing on:
- Relevant traceability information
- Lots numbers
- Material certs
- Review before creating purchase demand
Deliberately earmark those inventory items as soon as possible. It’s the best way to keep up-to-date inventory records. Also, it keeps inventoried materials from being consumed elsewhere due to a lack of communication. Again, having your inventory management and work order management systems integrated is a massive benefit. This ensures that up-to-the-minute information about inventory requirements and allocations is available across departments:
- Planners
- Purchasers
- Project managers
- Production leads
- Etc.
5. Knowing when to initiate transactions to purchase or build to inventory
Waiting until items are needed for the job is too late when it comes to initiating a build-to-inventory (BTI) work order or a vendor purchase order (PO). Effective inventory management requires:
- Knowing the right time to initiate transactions to purchase or build to inventory.
- Having visibility into shop demand for various items on specified timelines.
- Defining reorder points and alerts to ensure that inventory is replenished just in time to meet production needs.
By initiating transactions at the right time (not too early, and not too late), manufacturers can avoid stock outs while also minimizing the carrying costs associated with ordering too far in advance.
6. Proactive inventory planning to meet future demand
Forecasting future inventory requirements is essential for maintaining balance and avoiding excess or insufficient stock. By analyzing historical production data and sales forecasts, manufacturers can make educated predictions about future demand.
ProShop’s allocations and build scenarios features takes the guesswork out of planning for customer purchase orders. Accurate inventory planning ensures that materials are available when needed, without tying up precious cash in excessive inventory.
7. Make it easy to validate current inventory levels
Accurate inventory counts are paramount to making informed decisions. While formal inventory counts are necessary, they can be time-consuming, disruptive, and infrequent. Providing employees with easy ways to validate inventory levels can streamline operations and reduce errors.
ProShop’s COTS module has functionality to quickly and easily verify quantities to allow for quick and efficient inventory checks. These tools enable employees to verify inventory levels on the go, ensuring that records remain accurate without the need for frequent formal inventory counting processes.
8. Inventory management within one central business management system
This point has been mentioned several times throughout this article, but it’s worth driving home the point. Successful inventory management becomes so much more attainable when done within a central business management platform like ProShop.
You need accurate and consistent data for reliable inventory management outside of an integrated system. Relying on spreadsheets or disconnected databases can lead to costly errors and take way longer to complete simple tasks.
Manufacturers that implement an integrated inventory management system within their enterprise resource planning (ERP) software and Manufacturing Execution System (MES) simply experience better results. This integration provides a single source of truth for inventory and operational data, streamlining operations and improving decision-making.
Conclusion
Unfortunately, inventory mis-management is a problem in many businesses today. Mistakes made with inventory management often cause issues down the line, affecting on-time delivery and customer satisfaction. In many cases, this is a result of inadequate systems and a lack of planning and communication between teams.
Manufacturers who are aiming to enhance operational efficiency, reduce costs, and meet customer demands need to have a robust system in place. Implementing the strategies outlined above will go a long way in realizing a more streamlined and efficient inventory management process.
ProShop’s COTS and Work Order management systems work together to provide real-time visibility into inventory and procurement requirements. Book a call today and speak with our team about the benefits of a fully integrated system for managing your manufacturing work-flows!