As manufacturing operations expand, maintaining an accurate inventory count can often seem to be an impossible endeavor. With the vast quantities of materials and products sitting on warehouse shelves, it can be all too easy for units to disappear without a trace. The total cost of inventory management can accumulate in a hurry, requiring businesses to employ sophisticated software solutions to streamline the process as much as possible.
A recent study concluded that, on average, inventory-related investments account for 15 percent of total assets for U.S. companies. Some manufacturers might believe that inventory costs are exclusively related to the value of the items themselves, but there are numerous other expenditures to consider as well. In addition to lost or stolen materials and products, inventory management expenses include those pertaining to payroll and warehouse maintenance. Simply storing inventory in a manufacturer's facility requires a significant financial expenditure known as a carrying cost.
Many organizations take on more inventory than they need to meet service agreements, resulting in unnecessary storage and shipping fees. By deploying an inventory management solution, manufacturers can monitor physical counts more closely and determine what amount of materials is ideal to meet client demand. Maxim Integrated Products recently addressed their own overstocking issues by integrating an inventory control system.
"Once we deployed an inventory solution in all eight stock rooms, and all 14,000 parts were labeled with barcodes, we discovered we were housing parts that we didn't need to keep in inventory," stated Javier Saenz, representative for Maxim Integrated Products. "As a result we sent those parts back to the vendors or to one of our other U.S. manufacturing sites, reducing the overall cost of our own inventory and freeing up a lot of cash and space."
Deploying inventory control software is just one of many steps manufacturers can take to improve operations. According to Spend Matters contributor Jason Busch, companies should leverage supply chain logistics management solutions to address broader risks across the enterprise. With a sophisticated software suite in place, manufacturers can streamline their business, reducing costs and increasing output.