Businesses often focus on sourcing the cheapest raw materials and lowering operational expenses as much as possible—two aspects that require foresight into supply chain behavior.
Raw material inventory management is at the heart of effective operations, as efficient raw materials handling is essential for maintaining profitability. It also serves as a basis for evaluating just how efficient your inventory management system is.
Managing your raw materials inventory
Raw materials inventory consists of the total cost of goods held in inventory that have yet to be utilized in manufacturing or producing finished goods. Conversely, goods that are currently in stock and ready to use are called your pre-production inventory.
Supply chain managers face various challenges when managing raw materials inventory, such as underbuying and overstocking. Using an inventory management software for manufacturing can help them avoid these, as well as excessive expenses.
Here are some tips for efficient raw material inventory management:
Use quality materials
Using low quality raw materials may expose you to added risks, such as production delays, inconsistent product quality, and product defects. Aim to strike a balance between quality and affordability, with a greater focus on choosing quality, well-made materials.
Maintain reliable suppliers
Be mindful of issues and delays caused by suppliers and find more reliable ones if they haven’t performed better despite your feedback. It’s incredibly important to partner with suppliers that value their relationship with you by consistently delivering on time.
Avoid understocking and overstocking
Understocks may cause lengthy delays, while overstocks may cause an uptick in carrying costs. The key to avoiding understocking and overstocking is really keeping an eye on stock levels, preferably with the help of a reliable inventory management software for manufacturing. By automating reorder levels and using historical data, you can project exactly how much is needed in stock to keep from over- or understocking.
Don’t skip quality control
Quality control helps ensure that your products are of the best quality for your consumers. Raw material quality control is just as important, as it can directly influence how good the end product turns out.
Use an inventory management system for manufacturing
The practice of determining the types and amounts of raw inventory you need for production is also called material planning. Often, buffer stock, safety stock, and anticipation stock depots are needed for both indirect and direct raw materials. Direct raw materials are what turn into final products, like wood, steel, glass, and the like. Indirect raw materials are things like glue, nails, staplers, and similar supplies.
Having access to an Improving Your Reordering Strategies with Advanced Analytics helps to monitor business units. It can also integrate with other platforms based on your business requirements.
Automate data management
Complications can arise at any stage of the entire inventory process, making automation an incredibly valuable tool. This is especially true when handling large volumes of data in the context of big manufacturing companies, as manual data management techniques may cause more harm than good due to human errors and delays.
