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.
Thanks for watching!