The “Sugar” in Your Shop

Do you remember the gag that first took off in the 1950’s and 60’s where kids would put a piece of saran wrap over the large lid of a sugar shaker at a diner and place salt on top before screwing the lid back on? If you weren’t alive in the 50’s, you may have at least seen it in movies. The next person to use the shaker for their coffee got a rude awakening and a salty cup of joe. It was relatively harmless.

On your shop, those situations may not be harmful to people, but clearly put a dent in your bottom line. Let me make this real with a couple of real-life manufacturing stories. Prospects and customers we’ve talked to and helped.

Let’s say you make parts from raw materials that appear similar to the naked eye. For our customers that use steel, the raw product comes in sheets, billets, blooms, pipes, ingots or wires. They may not use it that way. For instance, billets are rolled into rods, bars and wires. So let’s take the example of the steel rod. You may use that as a raw material in manufacturing. To the naked eye, the 1/8” and the 5/32” rods may look exactly identical to the naked eye. Put that into a machine to bend or form it into your end product, and the differential force required on those two materials in completely different. The result of using the wrong one? Scrap.

Next, let’s look at a material that degrades. Epoxy or adhesive of some kind is in many manufacturing plants we work with. These usually have a “use by” date or some best practices on the amount of time the substance can be exposed to air before it loses its ability to perform as you need it to, often referred to as “open rate” or “checked-out time”. In this case, your team may pull the right item but at the wrong time – past its usable life. While they can read the expiration date on the label, not all will. And it’s almost impossible to keep paper records that record the number of actual uses of that product in your shop over time.

Production Operations

We say this all the time; production is a living, breathing thing. Production moves, constantly. It doesn’t always move in the right direction. Often times, you notice the movement only when things are going “not according to plan.” And if you’re running your shop on paper using Microsoft Word, Excel or Powerpoint to communicate with your team, you cannot help these two situations. People will pull the wrong material. Mostly, this is done harmlessly. However, the issue you see on your bottom line as a result is not so innocent.

Inventory is real money to you. The money you have tied up in inventory is usually a large portion of your operating expense spend. The dollar value of what you have “sitting on the shelf” can equal or exceed the dollar value of what you sell. Knowing that it’s available when you need it, used properly and monitored over time should be job one for you.

Paperless Manufacturing

Moving to a digital system is the only way to really control your inventory. You need to know:

• the type of inventory each member of your team needs today
• the exact amount required to do the job, including any planned overages for waste in the process
• when they need it there
• where it is currently
• how much you have
• where else you need that same type of material

This is just a start to the list of a real inventory management system. Realistically, you need it to tie into both demand and supply. The supply side of this is what your team is making. If you’re able to track WIP inventory – products or sub-assemblies that you’re making in production that will be shipped, stored or held until needed in the future – you are way ahead of the game.

We all need sugar to make icing; definitely not salt. And the icing on this cake is that if you get a system to manage all your raw materials, WIP inventory and finished goods from the original to completed form, you are in business to make money. All of a sudden, you can track the real costs of materials across your organization. You can determine periodic usage of materials across your shop and know how much “sugar” you need to stock and when.

There are real advantages of moving to a digital tool for manufacturers. And, if you’re in the small to mid-size market, we have unique products and services priced and built just for you. Because getting control of your shop and its performance shouldn’t drain your cashflow. Find out more about the tools and programs we have by reaching out to one of our team members. Let’s start the discussion today.