How much damage can a poor materials manager have to the bottom line?

Flex, Jabil, Sanmina, Ultra Clean Technologies, and so many others supporting LAM, Mattson, Applied Materials, and so on, all face the same inventory challenges. Massive pushouts resulting from a slowed semiconductor sector have the potential to become cash strapped.?This is the time, more than ever we need Lean minded Material Managers.

Lean methodologies throughout the procurement and production process is the only way to fend off what could be massive write-offs.?Prior to Covid the standard Lean lead time was four days, some exceptional companies bringing in materials (JIT) with even shorter windows.?

The impact Covid had on supply chains push companies to keep more stock on hand to meet customer assembly demands, but as Covid lifted in 2021 and supply chains back to almost normal levels in 2022, companies running loose material purchasing policies as they did in the peak of Covid will be paying the price, quite literally.

Companies that continue to bring in months’ worth of manufacturing items are facing major cash shortages as they retain heightened inventory levels. ?Electronic component assemblers find their cash wrapped up in materials that are being pushed out several months, and in some cases pushed to 2025.

As if the depleted cash on hand due to heightened inventory levels wasn’t bad enough, worst yet, with all the technological innovations driving customer revisions to builds, the excess inventory these companies have been holding on to has a high probability of becoming write-offs.

The solution is much simpler than most seem to make it. If materials management is meeting regularly with production, they understand manufacturing build times.?If your manufacturing, planning, and the materials group and leaned out, and working there is no reason to have more excess reserves in your warehouse.?

As a Lean practitioner specializing in manufacturing, logistics, and warehousing for over twenty years, I say with absolute certainty, I have yet to see an operation as tight as they claim to be, or nearly as lean as their board would prefer them.?The good news, there is an entire Lean 6-Sigma community ready to provide expert guidance.

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