Welcome back to our series about supply inefficiencies. In this video, we want to talk about hidden labor costs that could be draining your budget.
If you are purchasing and warehousing your inventory on-site, you should be aware of labor costs that are significantly contributing to your total cost of ownership, or TCO. From the time a production forecast hits a purchasing manager’s inbox, until the time that part is consumed on the production floor, there is some degree of associated labor cost from several different departments.
First, consider the administrative labor hours spent in just the procurement process. This would include vetting a new supplier, negotiating price, managing sample approval, generating purchase orders and processing payment. Now, multiply this internal time factor across all the parts you have in inventory!
Next, consider the labor hours spent once the product arrives. You have tasks such as receiving, inspection, stocking, kitting and subassembly, and moving parts from stock to the point of use. All of these non-value-added activities could be running up your TCO tab at an exponential rate daily.
Come back to Falcon Fastening soon. Our next episode will take a closer look at carrying costs.
Falcon’s Reliable Stock™ lean VMI program delivers 100% production uptime efficiency and reduces your lead times, while lowering your overall inventory investment in class C production components and fastening supplies. Talk to us today and find out how you could be saving time and money.
Michelle is the Marketing Manager at Falcon Fastening Solutions, Inc. She is focused in communicating value to Falcon's customers, contacts and audiences by sharing the company's unique approach to fastening and class C production component supply.
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SCMEP and Falcon Fastening Solutions are partnering to bring you Value Engineering Fundamentals. A 50% discount is offered to qualified attendees. SC manufacturers please call 864-288-5687 to find out if you qualify. If you are located outside of SC, please call 1-800-438-0332. Related Posts:10 Signs of a Good VMI Program March 31, 2014 How to Calculate Overall Equipment Effectiveness (OEE) March 4, 2015 How Vendor Consolidation Can Improve Inventory Management April 30, 2015 Read more →