According to management guru Peter Drucker, “You can't manage what you can't measure.”
But for many manufacturers, this advice feels like an impossible dream. If you’re trying to measure every data point manually, you’ll soon run out of steam. So you’ll probably prioritize what to measure—and accept the risks of increasing your carrying costs or not meeting customer demands.
This approach can have repercussions in areas such as inventory management. You typically hold safety stock to buffer against unexpected demand spikes or supply shortages. But optimizing safety stock should be about more than getting that equation right. It should also be about consistent data accuracy and relationships.
Rather than tying up cash in excess inventory, you can reduce your risk of stockouts by establishing tighter control over inventory and achieving greater accuracy in your recording. You can also work with suppliers to improve reliability and quality. These steps can help you reach your ideal balance of risk and reward.
Less Data Entry Means More Data Analysis
Here’s the challenge: operators and plant managers who rely on manual, paper-based processes will have to spend many hours just to capture accurate data. The good news is that manufacturers can now rely on increasingly mature manufacturing software tools to automate this task. This means your leaders can more easily gain the visibility they need to make well-informed decisions.
This was true for A&K Finishing, a plastic paint solution provider that works with automotive companies such as General Motors, Ford, BMW, and Toyota.
As A&K Finishing grew, it needed to capture inventory data more efficiently. This would allow the company to free up the time spent on physical inventory counts so that staff could focus on what makes a difference for customers: quality.
By digitizing inventory management, A&K Finishing was able to achieve far greater inventory accuracy. The company went from thousands of dollars of monthly inventory discrepancy to just a $900 discrepancy within 10 months of their digital transformation. And the $900 discrepancy was due to a faulty BOM calculation entered into the system, which the company immediately corrected.
A&K’s leaders soon discovered that less time entering data meant more time analyzing it. The company’s operations manager, Scott Hankamp, used to spend 85 percent of his time on data entry. Now that this task has been eliminated, he can spend 30 percent of his time reviewing data to drive continuous improvement.
Is Your Cash Staying Where It Belongs?
To gain end-to-end visibility in your manufacturing environment, you must record every receipt, move, production, and shipping step. When you’re choosing a system to help automate your processes, make sure it’s one that can track inventory through work-in-progress steps. This will make the “black box” of production much more transparent.