The Three Areas of Your Shop – Inventory Continued

Inventory is important not just for the amount you have, but where it’s located. I’m constantly amazed at the speed that Amazon has been able to advertise sending items to people. Get it next day, same day. It must be based on the original location of the item and I’m wondering if Amazon is really an inventory company, placing the right amounts of products at local warehouses to enable faster and more readily available products to customers.

For you, perhaps it’s more about location on the shop floor or what to source in the front shelves of inventory and what to store in the back. I’m often chagrined at the stacks of boxes we see on shelves, on other boxes, in hallways and aisles at manufacturers. There’s someone there who knows where everything is. Similar to other roles in your business, you may just be hoping you never lose that resource and that they don’t get hit by the proverbial bus, a nod to Joseph Conrad’s 1907 novel The Secret Agent to explain a pure accident.

You need more. You need more control, more information, more ability to know what’s where. You need a system that truly helps you with not just sourcing the materials, products, ingredients, and parts you need to do your work, but also with the amounts, location, current availability, and control over what job, run or order are using them.

WHY COUNT INVENTORY?

Inventory counts are the basis for control in inventory. Auditors will often ask for these yearly or will sample count what you have until they prove that your numbers look accurate. However, many of you do regular counts to control inventory. That’s where it’s not right. It’s important to know what you have. It’s critical to spend as little of your people’s time as possible doing it.

Inventory counts can go beyond the current details of what you have on the shelves. You can use the information to count your usage over time (say a year) and know what you need and when. We used the example last week of a customer that needed to source specific colors of their raw materials at times of the year for various holidays, but at no other point. For situations like these, it’s critical to know what you need and when you need it and history can help.

For things you use more regularly than that, setting minimum and maximum thresholds can give you some control over what you buy, what you have, and when you stock it. When you have that kind of control over your procurement, you can also avoid rush shipping fees and be better equipped to purchase in the right volumes to get discounts. When you’re rush purchasing, there’s just no time to do the right job to get those.

AVAILABILITY OF WHAT YOU HAVE

Availability in manufacturing is specific. Where a storefront may talk availability to purchase and thus total count, you’re more worried about what you have and where you need it. This can shift hourly, depending on when you get customer orders and when you initiate the work on your shop floor. More recently, shifts and holes in the supply chain and in the labor force are pushing you to be more flexible. I was talking with a manufacturer the other day that sends their production team out to the field for work as well as in the shop and, for them, a particular individual with a specialty that’s required to start the build process can be the difference between a good day and a hard day if they’re not in the office.

You simply have to be responsive to things going on in your environment, from things going wrong on the shop floor, to shifts in the schedule, machine maintenance and even the organization required to host a safety meeting in areas. Quantity is just one piece of a moving puzzle that you’re dealing with every day and you need to know that every piece of that puzzle is properly sized and placed to get your work done.

Availability for us is more than just how much do you have. We want you to know that you have the proper quantity of the proper item(s) at the proper place for the work to be done. We want to make sure that if you have serialized, lot-based or customer-committed materials, you have as much as you need as well. For instance, if you have a customer that requires a particular set of safety or review of the inventory you use for their work, or a higher quality (expense) category than you usually use, we want you to know that you have enough of that particular item for the job from that customer when it comes in.

THE VALUE OF WHAT YOU HAVE