With the recent news that manufacturing activity is expected to increase in the coming months, establishing a robust inventory management system is as important as ever. Keeping track of inventory counts spread across numerous warehouses within the supply chain can be extremely difficult, and it is not unusual for manufacturers to amass significant amounts of excess inventory. SMC Data Systems' Dan Kaplan explained that stocking more inventory than needed to meet demand can adversely affect a business's bottom line beyond the cost of the materials themselves, as manufacturers will need to rent more warehouse storage space to house their unused wares. Other financial considerations may add additional costs to a company's inventory management operations.
"Inventory cost is increased because money is borrowed to finance it until it's sold, and in today's market banks are often reluctant to lend the money," Kaplan wrote. "Some of the inventory will never be sold and will end up being liquidated and sold to the conciliators at a loss."
Reducing costs with inventory management solutions
The sign of a healthy manufacturing operation is a balanced supply and demand ratio, in which inventory investments are kept to a minimum. Ultriva, a Fortune 500 electronics manufacturer, recently launched a pilot program to determine how integrating various supply chain management solutions with inventory control systems could reduce its inventory-related expenditures. Researchers projected that the program would yield $96,000 in savings on inventory investments that typically totaled $621,000. After completing the study, the company found that it had successfully reduced the average on-hand inventory 75 percent.
German automotive parts manufacturer GETRAG FORD recently launched a similar program to reduce the amount spent on excess inventory, according to Zebra Technologies. By integrating a system that allowed personnel to better monitor inventory flow, the company was able to more accurately keep tabs on their available wares and cut its carrying costs by $750,000. In addition, that increased level of oversight led to a one-third reduction in the amount of time on-site employees spent on manually counting inventory and searching for pallets and containers.
Manufacturers can experience similar results by integrating a comprehensive mobile inventory control system with their legacy supply chain management software. Employees from C-suite officers to warehouse managers and floor operators can track a company's wares as they move through the supply chain, ensuring that a high level of visibility is achieved at every stage of the enterprise. This way, manufacturers can keep accurate product counts and mitigate the costs associated with lost, missing or excess inventory.