How Inventory Stocking Programs Boost Manufacturer Efficiency and Responsiveness
Manufacturers can gain significant advantages when their foundry partner offers an inventory stocking program. Such programs provide a structured way to manage inventory, ensuring manufacturers are prepared for fluctuations in demand while optimizing production schedules and lead times.
Stainless Foundry & Engineering (SF&E) offers inventory stocking programs for finished and ready-for-machining parts to its manufacturing partners. Inventory stocking programs are ideal for high volume manufacturers that may experience spikes in demand throughout the year. Oddly enough, SF&E also stocks low volume product to ensure their customers can get to market faster. Inventory stocking is also ideal for manufacturers with parts that by their nature have a longer lead time. Having parts completed and ready ahead of time helps these manufacturers streamline their production process.
One SF&E manufacturing partner historically struggled with on-time delivery because their customer demands were unpredictable. Within six months of launching an inventory stocking program, SF&E was able to improve on-time delivery with this customer from 84% to 98%.
Getting Started
The first step in an inventory stocking program involves determining the minimum and maximum quantities of inventory to hold. This is often based on the manufacturer’s estimated annual usage (EAU) and the need to accommodate spikes in demand or seasonality. Once these parameters are established, a signed agreement between the manufacturer and the foundry partner ensures clarity and accountability. The agreement also outlines responsibilities, including provisions for changes, revisions and opting out of the program. Internal production control employees at SF&E analyze the manufacturing turns in order to have analytical discussions quarterly with each stocking program customer.
Once an agreement is in place, the foundry partner can start the first work order and soon the manufacturer will see the tangible benefits of an inventory stocking program, including:
Streamlined Replenishment Processes
SF&E utilizes their ERP software, Odyssey, to automatically create stocking data view reports and shop orders to monitor inventory and identify replenishment needs. This system keeps products moving through the foundry efficiently, minimizing delays and ensuring availability.
Manufacturers can choose from various stocking methods depending on their needs. For instance, a minimum stocking quantity can be maintained beyond open orders to cover unexpected releases, or inventory can be replenished based on specific purchase orders (POs). When a PO is pulled, it triggers a new order to replenish the stock without overstocking.
Enhanced Responsiveness to Demand
An inventory stocking program is particularly beneficial for manufacturers with high-volume requirements or short demand cycles that exceed production lead times. For example, if a manufacturer places an urgent order due within the same month, the foundry’s stocked inventory ensures the request can be fulfilled without delays. This is especially valuable for manufacturers with unpredictable demand patterns or those needing immediate castings.
For products with longer lead times, such as machined components requiring up to 16 weeks, a stocking program dramatically shortens delivery times. By managing machining-level inventory, manufacturers have products shipped within a week instead of waiting for the entire production cycle. This flexibility can be critical for some OEMs. SF&E’s goal is help our customers get to market faster!
Cost and Quality Controls
Inventory stocking programs help manufacturers optimize production and reduce risks associated with quality issues. By producing inventory in standard runs, foundries can balance workloads across the production floor, ensuring operational efficiency of resources like furnaces and work centers.
SF&E inventory stocking programs are not limited to specific parts. We stock both raw and machined components, providing versatility to meet diverse manufacturer needs. For example, a manufacturer might machine one casting into different versions for different purposes. Having the raw castings stocked, ready to be pulled for various machining specifications, provides systematic order fulfillment for the manufacturer and decreases what would be a 16-week lead time to less than 4.
Long-Term Price Stability
A big plus for manufacturers enrolled in inventory stocking programs is cost control. As part of the stocking agreement, manufacturers can see less variability in metal pricing This provides financial stability and helps mitigate the impact of price increases. As long as manufacturers order quantities within the agreement, they benefit from consistent pricing, even during market fluctuations. Other cost control measures come from a reduced need for their own on-site storage, a drastic reduction in rush order expenses, and optimized cashflow overall.
A foundry-led inventory stocking program is a game-changer for manufacturers. It improves responsiveness to demand, reduces lead times, optimizes production efficiency and minimizes financial and operational risks. By partnering with a foundry offering these services, manufacturers can ensure they meet customer needs while maintaining a competitive edge in the marketplace.
If you are considering an inventory stocking program, contact us today to learn more.