Is your manufacturing process keeping up with your demand?Manufacturers have complex environments. Discover how having the right inventory management software will improve your business processes.
The world of manufacturing has been affected in many ways by the COVID-19 pandemic, from limited access to raw materials to significant increases in consumer demand. Without the appropriate processes to support businesses at a stock item level, the production of products can come to a complete halt – costing you money!
Let’s look at a few manufacturing business processes to efficiently manage stock and keep up with demand.
Bill of Material Accuracy
The bill of materials (BOM) is the blueprint for each finished product and is an essential part of the manufacturing planning process. This hierarchical list of components assists in driving the procurement and logistics for each product in your business. Having accurate BOMs is a prerequisite to ensuring any planning solution operates effectively.
Manufacturing businesses can have thousands of items ranging from raw materials, components, and sub-assemblies. Being out of stock of any of these items can lead to stockouts of the finished goods. Accurately managing these items is critical to your inventory management process.
As raw materials for Australian and New Zealand manufacturers are mostly imported, businesses need to have procedures in place to manage potential disruptions in the supply chain. Such procedures include:
- Setting safety stock levels at the highest affordable fill rate, to minimise stock-outs,
- Setting up exception reports to warn of any future material shortages with daily alerts.
Setting override rules for your inventory policies.
The word “policy” is generally defined as “a set of guidelines that determine the actions to achieve a specific objective”. An inventory policy provides the guidelines that define the inventory model, which determines the investment in inventory your business needs.
On top of the basic inventory policy setting, you need to set up specific policy override rules for raw materials and sub-assemblies that go into multiple finished products. These rules include setting your required fill rate and your safety stock days for each raw material, to ensure you do not run out of these items.
Continue to review your data.
Even if you have automated processes in place, you will need to continuously review your data for potential stock-outs. By identifying your BOMs and setting your inventory policy overrides, you can specifically filter for raw materials and sub-assemblies. This will help you determine what could disrupt your current policies and inventory levels. For example, supplier lead times might increase, and while this is out of your control, you will have reviewed and adapted your policy for the impacted raw materials.
Understanding your capacity.
In manufacturing, understanding your capacity plays a vital role in meeting customer demands. Businesses need a longer-range plan and understand if there could be any capacity issues in the future. This view provides visibility over what the business will manufacture on which work-centre or production lines for a specified period (for example, across the next 12 weeks). The ability to model capacity bottlenecks allows you to produce extra in periods of downturn or arrange for additional shifts where required.
Invest in Inventory management software.
We have mentioned some of the most important processes involved in successfully managing inventory in a complex manufacturing environment. Now imagine trying to track over 20,000 items with complex dependent demand in an Excel spreadsheet!
Investing in inventory management software like Netstock, reduces the risk of stock-outs by exploring dependent demand for raw materials, components and identifying where you will have future shortages. This allows you to get ahead and enables you to take action in a timely manner, reducing the risk that you are unable to supply or sell your stock.
Want to optimise your inventory?
If your current processes and systems do not support your inventory needs, then now is the time to explore alternative solutions to ensure your business remains competitive. Without the appropriate inventory management tools and features, it’s difficult to stock and manufacture goods in line with consumer demands. Having too much or not enough stock on hand will cost your business, either through missed sales or increased holding expenses.
If you want to explore how inventory management tools can help you optimise your supply chain and manufacturing processes, watch the full recording of our recent webinar with NETSTOCK. For more information, contact us by emailing email@example.com, or by calling 1300 857 464 (AU) or 0800 436 774 (NZ). For more interesting video content visit our Youtube channel.