A common challenge that many manufacturers struggle when it comes to direct materials (the products that go into your finished goods)
– increasing costs due to high inventory levels
– critical out-of-stock situations
Both these results in lost production time, costly plant issues (such as unplanned overtime, production line setups, and tear downs), and high logistics costs. Inventory costs rise when you’re carrying excess inventory in some areas and not enough inventory of the right materials in others. High transportation costs result when expedites are required to cover inventory shortages.
Another problem is long lead times with suppliers that impact responsiveness. Most importantly in today’s environment, you’ll want to ensure a resilient supply process in place, one that provides for continuity of supply and minimizes disruptions to operations and your customers.
The key barrier to optimizing inbound supply processes is the state of your own systems. Companies can have dozens, even a hundred or more separate, siloed enterprise systems or ERP/MRP instances. How can you expect to put in place standards for replenishing components and raw materials, along with consistent processes for your many suppliers, without addressing the fundamental issues of your MRP landscape?
New age strategy/mechanism to manage Material Inbound: