Inventory Accumulation: Masking Company Inefficiences

It is known throughout the manufacturing world that holding excessive amounts of inventory can hinder a company’s operations, penetrate capital, and stretch limited resources. Holding too much inventory can be costly to a company in a variety of ways including:

• Initial cash losses on purchase of inventory
• Reduced space for storage
• Equipment required for moving inventory
• Obsolescence based on how long materials are sitting in inventory
• Labour costs for personnel to manage inventory systems
• Procedures to ensure inventory accuracy
• Insurance premiums , especially high in warehousing

Despite these major cost concerns many companies find themselves holding more raw materials, work components, works-in-progress, and finished goods then they truly need. This is often the case as many people believe that holding an excess supply will help during times of increased demand. Although this may seem like a viable response to an increase in demand, it is merely a short-term solution that simply avoids solving larger fundamental problems and instead covers them up. By holding enough inventories, companies do not need to be concerned with larger problems because they might not even know they exist. When we hold excessive amounts of inventory, companies often do not have to concern themselves with such problems as long vendor lead times, not meeting production schedules, and quality problems. Therefore, inventory acts like a mask, hiding more primary operational problems and does not give a true representation of how efficient your company is operating.

The need for efficient inventory systems becomes prevalent during instances when we are forced to lower our inventory and many underlying problems are exposed. CNC automated cutting machinery offer a solution to many of these problems shops face. By utilizing CNC machinery in your shop, you are given the ability to use a variety of manufacturing procedures as well as ensure the quality of your product. CNC machinery such as plasma, router, waterjet, and knife cutting systems eliminate the chance of any human errors in the manufacturing process and provide users with a truly superior finished product. In addition it allows shops to eliminate the mask of excessive inventory by enabling a variety of manufacturing options including the increasingly popular just-in-time method. Just-in-time (JIT) is a strategy that strives to improve a shops return on investment by reducing the amount of “in-process” inventory and its associated carrying costs. By using a method like JIT you eliminate many of the problems associated with holding inventory by minimizing storage space needed, improving the flow of goods, and synchronizing production scheduling with demand. Depending on your company, holding excessive amounts of inventory may be an inefficient method of dealing with increases and decreases in demand. Firms like MultiCam Canada provide clients with world-class CNC cutting solutions to help shops transition to different more effective methods for managing inventory. Whether it is MultiCam’s Plasma, WaterJet, Router, Knife or Laser CNC cutting solutions each machine gives manufacturing shops flexibility with how they wish to deal with their inventory in addition to consistently providing high-quality, attractive, finished products.