Managing inventory in a low-volume, high-mix manufacturing environment can be challenging. You need to balance customer demand, product variety, lead time, and inventory costs. In this article, you will learn some strategies and best practices to optimize your inventory management and achieve lean manufacturing goals.
The first step is to define the different types of inventory you have in your manufacturing process. Typically, you can classify inventory into three categories: raw materials, work-in-progress, and finished goods. Each category has different characteristics and requirements, such as supplier reliability, production cycle, storage space, and quality control. By defining your inventory types, you can identify the sources of waste, variability, and inefficiency in your inventory flow.
In my experience, the classification need to be refined further by similar qualities within the the three categories mentioned. This allows for easier cross referencing within large skus.
A pull system is a lean manufacturing principle that aims to reduce inventory levels and increase customer responsiveness. It means that you only produce and deliver what the customer orders, when they order it, and in the exact quantity they need. To implement a pull system, you need to establish a clear communication channel between your customers, your suppliers, and your production team. You also need to use tools such as kanban cards, reorder points, and visual signals to trigger production and replenishment.
Creating a color coded dashboard with milestones will provide a road map of where we are in the communication channel. Items at risk should be highlighted in yellow, those on on track should be green and those behind schedule should be red. This helps with visibility as well as accountability.
Batch size is the number of units you produce or order at one time. It affects your inventory turnover, lead time, and quality. In a low-volume, high-mix manufacturing environment, you want to optimize your batch size to avoid overproduction, excess inventory, and obsolescence. To optimize your batch size, you need to consider factors such as customer demand, product complexity, setup time, and machine capacity. You can use formulas such as the economic order quantity (EOQ) or the economic production quantity (EPQ) to calculate the optimal batch size.
ABC analysis is a method of prioritizing your inventory items based on their value, frequency, and impact. It helps you allocate your resources and attention to the most important items and reduce the waste and cost of the less important ones. To apply ABC analysis, you need to categorize your inventory items into three groups: A, B, and C. A items are the most valuable, frequent, and impactful, and they require the most control and monitoring. B items are the intermediate ones, and they require moderate control and monitoring. C items are the least valuable, frequent, and impactful, and they require the least control and monitoring.
Inventory software is a tool that helps you track, manage, and optimize your inventory levels and processes. It can help you automate tasks such as ordering, receiving, storing, and shipping inventory items. It can also provide you with real-time data and insights on your inventory performance, such as inventory turnover, fill rate, stockout rate, and inventory accuracy. By using inventory software, you can improve your inventory visibility, efficiency, and profitability.
One way to get a handle on inventory management, is accurate tracking of inventory movement and lifecycle from inception to point of final consumption. Invest in a ERP system that allow for signature tracking as well as inventory tracking for quick resolution in cases where physical transactions do not match the system records. Utilize these root cause findings to Provide feedback, improve processes and personnel resources.
Continuous improvement is a mindset and a practice that aims to constantly monitor, measure, and improve your inventory management and manufacturing processes. It involves identifying problems, root causes, and solutions, and implementing changes and feedback loops. By applying continuous improvement, you can eliminate waste, reduce errors, increase quality, and enhance customer satisfaction.