4 Dos and Don’ts of Inventory Management for All Manufacturing Operations

4 Dos and Don’ts of Inventory Management for All Manufacturing Operations

Author: | Published: 11 Apr 2019

dos and donts for Inventory Management and manufacturingThe current power crisis in South Africa is teaching all of its citizens a few lessons in inventory, distribution and asset management. Here’s how these lessons translate into better inventory management for all manufacturing operations.  

1 – Forecasting Demand

 

Do: Forecasting demand for national power, is like forecasting inventory of finished-goods – look at relevant growth statistics for the markets you serve, work out the timing and ensure manufacturing/supply capacity will be available to match.

 

Don’t: Ignore the demand statistics, deliberate for years, prevent competition, and mismanage your labour.

 

2 – Enabling Supply

 

Do: Check forecasts for products/commodities and build or buy production/distribution capacity to ensure customers are supplied with what they need, on-time, at a fair price and via a channel that suits them. Build can mean new technology from scratch or alternatively maintain existing capacity, adding technology improvements to gain more throughput/output as well as longer productive-life until a replacement is on-stream.

 

Don’t: Plan on building old technology in a changing environment (global warming and emission control), while simultaneously using existing spare-capacity (designed to be left available for maintenance/upgrade) preventing necessary maintenance, with an eventual reduced ability to supply.

3 – Product Inventory Management

 

Do: Ensure your Sales & Operations Plan team are regularly checking forecast sales vs stock on hand vs production capacity. This relies on accurate Bills of Material/Formulations, reorder and supply lead-time management.

 

Don’t: Wait for your finished goods stock to run out before attempting to begin the reordering process.

 

4 – Asset Inventory Management

 

Do: Ensure OEM and supplier relationships are managed over time to prevent disruption. Work with suppliers so they understand your preventive maintenance schedules and can plan to meet these. Plan to stock the right mix of consumable and long lead-time spares locally. Be aware long-supply lead-times (up to 18 months) are required for design-for-you-only spares/assemblies.

 

Don’t: Forget to leave gaps for maintenance, rely on breakdown repairs as they happen, and only order spares at this time. This will result in cannibalizing of existing equipment and “robbing Peter to pay Paul”, eroding away useable capacity.

 

Do: Source, plan and use transport/warehousing appropriately, locating plants where labour exists, put DCs in centers of high demand or easy transport. Taking a true supply chain approach from “seed to weed”.

 

Don’t: Pick locations based solely on the proximity of raw materials, creating the need for expensive, unbudgeted logistical expenditure.

 

These are tough national lessons and issues which we have to resolve. There are skills a-plenty, just don’t pick your mate, pick experts who can teach/share. Use investment wisely and you never have to learn these lessons again.


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