Inventory 101 for the SMT Industry: A Neotel Technology Perspective

Surface Mount Technology (SMT) has established itself as a critical player In the rapidly evolving landscape of electronics manufacturing. Despite its importance, the industry faces a myriad of challenges, among which inventory management stands prominent.

In this blog, we'lltakeg a deep dive into the core of inventory managementhe SMT industry. Our exploration will navigate through 20 essential inventory terms, illuminating their meaning, significance, and impact on operations. Along this journey, we will also integrate the innovative solutions provided by Neotel Technology - namely, the SMD Box, Neo Counter, Neo Light, and Neo Scan - showcasing how they revolutionize inventory management in this field.

Whether you're a seasoned SMT professional or new to the industry, this guide aims to enhance your understanding of inventory control and its pivotal role in efficient operations. So, let's embark on this enlightening journey together!

1. SMT Component Surface Mount Technology (SMT) Components are the electronic elements used in SMT assembly processes. They differ from their through-hole counterparts because they're mounted directly onto the surface of printed circuit boards (PCBs). Neotel's Neo Counter, an advanced x-ray component counter, aids in managing these components by accurately counting them without needing to unpack them, significantly improving inventory management accuracy and efficiency.

2. Automated Storage System An Automated Storage System is a technology that allows for the efficient storage, retrieval, and management of goods. In the context of SMT and the semiconductor industry, this usually refers to components or products. Neotel's SMD Box is an excellent example of this technology. It securely stores components, ensuring they're not only organized but also protected from environmental damage. The SMD Boimproving time spent on locating components, improving productivity.

3. X-ray Component Counter An X-ray Component Counter, like Neotel's Neo Counter, is a vital tool for the accurately countingdustry. It allows for the accurate counting of components in a sealed package, reducing manual effort, time and possible human error associated with physical counting. By knowing the exact component count, inventory management becomes more efficient and reliable.

4. BOM (Bill of Materials) BOM or Bill of Materials is a comprehensive list of components, materials, and assemblies needed to manufacture a final product. It serves as a crucial document for inventory management, allowing for effective planning and control of materials. Combined with the accurate counting capability of the Neo Counter and the organized storage of the SMD Box, BOM management can become an even more streamlined process.

5. Inventory Turnover Inventory turnover refers to the number of times inventory is sold or used in a specific period. It's an essential measure of inventory efficiency. The faster the turnover, the lesser the company's investment in holding inventory. With Neotel's integrated solutions like the SMD Box and Neo Counter, firms can track and improve their inventory turnover by reducing storage times and improving stock accuracy.

6. EOQ (Economic Order Quantity) Economic Order Quantity (EOQ) is the ideal order quantity a company should purchase to minimize its total inventory costs. It is a critical part of inventory management in the SMT and semiconductor industry. Combining EOQ with Neotel's Neo Scan system, which provides quick and accurate incoming material registration, can help companies optimize their order quantities and reduce costs.

7. Cycle Counting Cycle counting is an inventory auditing procedure where a small subset of inventory, in a specific location, is counted on a specified day. Neotel's Neo Light smart rack system, with its location sensor technology, significantly aids in cycle counting by making it easy to locate specific components quickly and accurately.

8. JIT (Just-In-Time) JIT or Just-In-Time is an inventory management method aiming to align raw material orders from suppliers directly with production schedules. It helps companies reduce inventory holding costs. JIT inventory management can be made more efficient with Neotel's products like the SMD Box and Neo Light, which speed up component retrieval and location tracking.

9. Safety Stock Safety stock is a term used to describe the extra units of an item kept in inventory to mitigate the risk of stockouts. The safety stock level depends on the predictability of demand and the lead time. Neo Counter's accurate counting can help in maintaining precise safety stock levels.

10. Stockout Stockout occurs when an item is not available in stock when required. It's a situation companies try to avoid, as it can disrupt production schedules and lead to missed sales. With Neotel's SMD Box and Neo Counter, inventory visibility is enhanced, reducing the chances of a stockout.

11. Work-in-Progress (WIP) Work-in-Progress (WIP) refers to the parts that are currently being processed in a manufacturing system. In SMT and semiconductor industries, tracking WIP is essential for production control and throughput optimization. Neotel's products like Neo Light and Neo Scan can assist in tracking and controlling WIP effectively.

12. Traceability In inventory management, traceability refers to the capability to track a component or product through all stages of production and distribution. In the SMT industry, traceability is critical for quality control and recall management. Neotel's Neo Scan system, by providing accurate incoming material registration, can greatly enhance component and product traceability.

13. FIFO (First-In, First-Out) FIFO or First-In, First-Out is a method for recording the value of inventory where the oldest stock (first-in) is recorded as sold first (first-out). FIFO is especially important in SMT and semiconductor industries to prevent the deterioration of components. The SMD Box, with its automated storage system, helps implement FIFO effectively.

14. MOQ (Minimum Order Quantity) MOQ or Minimum Order Quantity is the lowest set quantity that a supplier is willing to produce at one time. Understanding MOQ helps businesses to plan their inventory purchases more efficiently. When paired with Neo Counter's accurate component counting, businesses can optimize their orders to align with MOQ while avoiding overstocking.

15. Reorder Point The reorder point is the level of inventory at which a new order should be placed to replenish stock before it runs out. Using Neo Scan for incoming material registration helps businesses understand the replenishment timeline better, thus defining an efficient reorder point.

16. Obsolete Inventory Obsolete inventory refers to products or components that have become outdated or no longer in demand. It's crucial to identify and manage obsolete inventory to avoid unnecessary storage costs. Neo Light's smart racks can aid in segregating and identifying obsolete inventory.

17. Lead Time Lead time is the time between the initiation and execution of a process. It includes the time taken to procure components from a supplier or to produce a product. Neo Scan can help reduce lead time by fast and accurate incoming material registration.

18. ABC Analysis ABC analysis is an inventory categorization method that divides inventory into three categories: A being the most valuable items, B being the moderately valuable, and C being the least valuable. This helps prioritize inventory management efforts. With the help of Neotel's SMD Box, ABC analysis can be effectively carried out, ensuring most valuable items are efficiently managed.

19. Carrying Cost Carrying cost, also known as holding cost, is the cost associated with holding inventory over time. It includes storage costs, depreciation, obsolescence, and capital cost. Neotel's products such as SMD Box and Neo Light can help reduce carrying costs by optimizing space usage and improving inventory tracking.

20. SKU (Stock Keeping Unit) SKU or Stock Keeping Unit is a unique identifier for each distinct product and service that can be purchased. In the SMT and semiconductor industries, SKUs might represent individual components or finished products. Neotel's Neo Scan, by registering incoming materials accurately, aids in efficient SKU management.