SUPPLY CHAIN AND
INVENTORY BEST PRACTICES
Raw material inventory
How much raw material inventory do you maintain relative to revenues—what is the balance between what is in the “attic versus what is in the garage”?
• The customer expectation is to maintain the same order size even if it is in excess, but they expect the vendor to store the excess inventory at their expense.
• Inventory is considered a competitive advantage through reverse auction pricing;
• Vendors can be pre-qualified through an accurate quality and capacity audit.
• Check “Attic” for tooling and organization of tooling—get functional capacity down to the “Garage”.
Finding good global suppliers is a challenge. Few manufacturers in our group felt they could find suppliers that could service outside North America well. There is a significant pricing and distribution differential.
Supplier globalization costs have increased in China. It is challenging picking good suppliers and distributors globally. Have “What if” contingencies in place. Will a customer accept a commodity product if a custom solution is not possible because of a disaster? Make sure to have catastrophic plans and back up actions in place. Have a friendly agreement with your competitors. They have your back in a catastrophe and vise-versa.
• Review your insurance policies, particularly reflecting overseas exemptions. Review coverage frequently and know details.
This is great in theory, but difficult in execution. The additive process is excellent for some industries, but not mature enough to scale. Yet, the customer wants “just in time” products and services.
• Look to additive manufacturing for customized, small run solutions needing 24-hour turnaround.
Customers are consistently pushing back on mistakes on order size and want the manufacturer to bear the risk when they miss their forecasts.
• Slow-moving inventory needed to be moved within a year or it should be written off.
• One manufacturer wrote it off to the Product Managers’ margin so that it could be addressed within the quarter. Otherwise the costs would get too big. Maintaining off -products is too costly and difficult.
• Analysis of risk management of overstock and obsolete products is essential and manufacturers must determine who in the supply chain is holding it.
Speed of delivery
Improve speed of delivery by manufacturing smaller batches and keep suppliers domestic where possible as global presents supply chain challenges. “Consignment Inventory” works well to manage market intelligence.
Facilitator: Rick Smith, President Additive Manufacturing Council