Inventory management can be complicated, confusing and time-consuming, dragging down lean manufacturing efforts for original equipment manufacturers (OEMs). Thankfully, however, there are numerous ways to improve your inventory policies, making it easier to keep track of all the materials and parts you need for production. When you have an efficient management system, you'll spend less on parts, have fewer items taking up space in the factory and generally be able to improve overall operations. Improving this aspect of your supply chain can be as easy as trimming the fat to get rid of unnecessary steps, employing more advanced software or even bringing in expert help to get things organized.
1. Simplify the supply chain
In a survey conducted by Chief Supply Chain Officer Insights, the vast majority of participating firms indicated their supply chains were either somewhat complex (41.7 percent) or very complex (24.1 percent). The more complicated and involved the supply chain is, the harder it will be to manage the various elements and keep everything running smoothly. You can take steps such as consolidating your suppliers through the use of a vendor managed inventory (VMI) program or transferring subassembly builds to suppliers, so complex parts arrive ready-to-use, saving time in the production process and leaving you with fewer individual items to keep track of in your inventory. Rather than order 15 different class C components from 15 different manufacturers, you can order one preassembled part from one source, requiring less time filling out purchase orders, sorting through shipments and organizing the warehouse.
2. Outsource the task to experts
A VMI program could be one of the most effective options to take control of your inventory. With a VMI program, a third-party supplier physically removes your inventory to an off-site location and leaves only enough class C components and other supplies at the factory that are needed for the current build. Without a warehouse full of supplies that needs constant maintenance and attention, factory workers can focus on production itself, and managers will have much better visibility of operations, making it easier to spot issues and work toward lean manufacturing goals. When on-site inventory levels get low, the supplier will already be shipping replenishments to prevent stockouts and production downtime. The third-party vendor monitors production trends and ensures the necessary inventory is always readily available.
3. Employ inventory optimization tools
Odds are that you're not keeping track of your inventory on paper anymore, but if you're still using company-generated spreadsheets or other basic technology to keep track of your inventory, it may be time to invest in more advanced software. Modern Materials Handling reported that companies are increasingly looking to inventory optimization software that can deliver far more detailed results than any spreadsheet.
"These optimization tools take into account demand variability, supply variability and replenishment parameters to determine how much inventory to hold in order to guard against that variability," Dave Wheeler, principal of supply chain services for St. Onge, a consulting company, told MMH.
With the ability to reduce the risk of over or under-ordering inventory, you can offset the cost of the initial investment of purchasing, installing and learning to use the software. The main advantage of this specialized software is that it is able to do the calculations and produce the results that would otherwise have to be done manually, saving a lot of time and effort, and reducing the risk of error.