Tag Archives: Inventory Management

Where’d the money go? – How to turn Manufacturing Assets into Profit

If you don’t know where your materials are and how many you have, you don’t know where your money is. The purchase and storing of assets (materials, tools, parts) for manufacturing is one of your largest expenses, so why don’t you have complete control of it?

We see many cases where manufacturers simply don’t know what they have. One shop in particular comes to mind. In walking through a manufacturing shop floor for carbon components in the aerospace industry, we passed the Material Review Board (MRB) area. It was enclosed by a cage to protect the parts from walking off. Inventory in this area was scrap but too valuable to just throw out.

There were shelves upon shelves, and stacks upon stacks, of carbon parts rejected by Quality. Oven times may have fallen short of required minimums or temperatures may not have registered high enough.  Without a fast process for review, these parts were being housed and shelved (literally). They were useless. The manufacturer had an enormous, labor-intensive future job to go through all these parts and create a disposition for each.

The Connection Between Process Control and Manufacturing Scrap

What the team was ignoring was the money that was tied up in these parts. It seems obvious from the outside, yes, but they were focused more on the disposition process and what they were going to do with all those quality rejects. Not to mention how sloppy it looked when upper management came through.  But what they were really missing was the key, hidden issue that this prospect had yet to uncover.

When I see that many pieces of contained scrap [and yes, it happens all the time] I begin looking for the scrap that hasn’t even made it to the cage. The amount of scrap in the screened area signals to me that there is a process problem. Solving process problems are what we are really good at. Control the manufacturing process and you control the scrap. Control scrap and you have a really tight handle on costs, too. That’s where you really start making up lost margin.

When a team is unable to control what is happening on the manufacturing shop floor, especially within the tolerances that their own engineering teams have thought possible, it signals a lack of control in parts and tools. Have you asked for an inventory count of your tools recently? Are you over-ordering or over-stocking in order to make up for “lost” tools [which are inevitably found on the shop floor]?

Ultimately, that same prospect closed manufacturing for a few days to complete a tool inventory. Yikes.

Know where your stuff is, know how much what you build costs you and control the processes that you use to build your parts. These three key concepts are completely linked and fundamental to successful manufacturing, and completely controllable with the right tools. Just ask us how.

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Do You Know Where Your Production Assets Are?

While production requires tools, materials, parts and equipment, many manufacturers don’t track or properly manage these assets. This oversight adds “hidden” production costs like scrap, inefficiency and waste – costs that can quickly overwhelm profit.

How much scrap and waste is generated by one of your operators using the wrong part or searching for a missing tool? How many of your late shipments are symptoms of orders sitting on the shop floor waiting for missing parts or materials? Problems like these are common when companies aren’t tracking and controlling assets in production.

Without granular data to optimize and control asset usage, mistakes are made and costs increase. The Quantum production control system manages parts, materials and tools during production, eliminating these mistakes and reducing costs.

Empower Production with Asset Control

A production control system actively links the management of tools, parts and materials to manufacturing activities.

Serialized assets, or assets given a unique identifier, are not only be used to track parts and materials for regulatory compliance, but also eliminate the scrap and waste caused when the wrong parts and tools are used. Engineering specifies a tool to be used in an operation, the operator then validates the correct tool with a simple bar scan before work begins. The validation adds invaluable conformance and control to the shop floor.

By collecting and analyzing production data on tool usage, you can track when an asset requires calibration, further reducing mistakes and scrap. If a tool is due for calibration, an alert is sent and the tool is put on hold until the proper calibration can be performed.

Data from the production control system can further improve asset efficiency. Over time, as you begin collecting production data and matching it to the serialized assets used, tools that aren’t operating efficiently are identified. Corrective action, such as more frequent calibration or part replacement, can be taken before the issue becomes a serious problem.

By managing tools, parts and materials in a production control system and validating on-hand quantities, you eliminate a root cause of late shipments.

Before an order is released, Quantum validates parts and materials are available. The system automatically lists where they are stored, reducing the time and effort necessary for kitting. If materials or parts are missing, the floor supervisor can put a hold on the order until the assets are available. Inventory can be moved to fill the order, ensuring the shop floor stays focused on critical and available work. You can identify an asset issue at the earliest stages, allowing corrective steps to be taken. Linking asset availability eliminates wasted time and helps ensure orders ship on-time, every time.

Lower the Cost of Production

Assets are a critical component of a successful and efficient production process. Production costs and shop floor errors increase when there isn’t a link between production and asset management, especially for make-to-order manufacturers that work under strict conformance and control requirements.

Once the link is in place and the production team is synchronizing work and asset usage, you’ll start identifying and correcting additional sources of errors and inefficiencies, further fueling production cost savings.

Contact CIMx today to learn more about part and material management in Quantum, and discover how production control software can lower costs and increase productivity for your business.