Inventory Management of Manufacturing Company

Production process has a growing influence on the basic input items. It is basically important to underline the requirement of the inventory stocks for the company particularly manufacturing company. Following discussion is remarkably noting the necessity of the inventory management for a company to retain the overall output significance in the business scope.

Relevant Aspect to focused management

Buffer stock- is held in individual workstations against the possibility that the upstream workstation may be a little delayed in providing the next item for processing. Whilst some processes carry very large buffer stocks, Toyota moved to one (or a few items) and has now moved to eliminate this stock type.

Safety stock- is held against process or machine failure in the hope/belief that the failure can be repaired before the stock runs out. This type of stock can be eliminated by programs like Total Productive Maintenance

Overproduction- is held because the forecast and the actual sales did not match. Making to order and JIT eliminates this stock type.

Lot delay stock- is held because a part of the process is designed to work on a batch basis whilst only processing items individually. Therefore each item of the lot must wait for the whole lot to be processed before moving to the next workstation. This can be eliminated by single piece working or a lot size of one.

Demand fluctuation stock- is held where production capacity is unable to flex with demand. Therefore a stock is built in times of lower utilization to be supplied to customers when demand exceeds production capacity. This can eliminated by increasing the flexibility and capacity of a production line or reduced by moving to item level load balancing.

Line balance stock- is held because different sub-processes in a line work at different rates. Therefore stock will accumulate after a fast sub-process or before a large lot size sub-process. Line balancing will eliminate this stock type.

Changeover stock- is held after a sub-process that has a long setup or change-over time. This stock is then used while that change-over is happening. This stock can be eliminated by tools like SMED.

These classifications apply along the whole Supply chain not just within a facility or plant. It is often the work practice to hold all these stocks mixed together before or after the sub-process to which they relate. Because they are mixed-up together there is no visual reminder to operators of the adjacent sub-processes or line management of the stock which is due to a particular cause and should be a particular individual's responsibility with inevitable consequences. Some plants have centralized stock holding across sub-processes which makes the situation even more acute.