Three Competitive Advantages to Inventory Stocking

Inventory stocking is a great opportunity for manufacturers to smooth the transition between customer order entry and shipping. Any chance to improve the customer experience will increase the chances the customer stays with you for the long-term.

Manufacturers often stock their own inventory on site. But by stocking at the casting level, they can free up valuable shelf space and gain three unique competitive advantages.

  1. Reduced Lead Times

With inventory at the ready, foundries can process and ship products the same week. Agreements are set up between the manufacturer and foundry partner to have a minimum and maximum level of inventory stocked. Then, the manufacturer sets the pull program based on their expected demand. One common program is for the manufacturer to submit a blanket purchase order at the beginning of the year, then issue releases throughout the year, slowly depleting the inventory. Another program is a standard kanban pull program, where 20 pieces, for example, are pulled at a time, then automatically replenished by the foundry once shipped.

One Stainless Foundry & Engineering (SF&E) manufacturing partner historically struggled with on-time delivery because their customer demands were all over the board. Within 6 months of launching an inventory stocking program, their on-time delivery rate went from 84% to 98%.

  1. Minimal Carrying Costs

The difference in carrying costs between a manufacturer that stocks their own inventory and a manufacturer that stocks at the casting level is about value over time. When manufacturers carry six months of castings at their facility, they have made an upfront investment that takes months to recoup in sales. When stocking at the casting level, every month manufacturers are paying for castings that are immediately sold and turned into cash. And in some cases, manufacturers can charge a premium for products that can be delivered faster than their end customer is expecting.

  1. Mitigating Bad Forecasting

Stocking programs managed by a foundry partner mitigate the pitfalls of bad forecasting, and, in some cases, eliminate the need for it altogether. When buying large orders of castings off of a forecast, there is always the possibility that manufacturers have to deal with overstock and overruns, another factor that leads to the carrying costs mentioned above. A foundry partner will control the inventory levels to balance with customer demand and historical needs. It no longer matters if the manufacturer’s sales forecasting is good or bad because the impact on casting purchase orders is minimal.

Is inventory stocking right for you?

SF&E offers inventory stocking programs for finished goods to its manufacturing partners. Most of our manufacturers who participate in this program place four orders per year or more. We work with our customers to analyze their expected need and recommend a minimum and maximum quantity of stock. In about 8-12 weeks SF&E can be flush with inventory.

Once an inventory stocking program is in operation, SF&E leads a quarterly review process to analyze inventory turns. We look for instances throughout the previous quarter where the customer was overconsuming and also where they were under-consuming. Stock and pull quantities are adjusted so manufacturers continue to reap the lead time, carrying cost, and forecasting benefits of the program.

Inventory stocking at the casting level is key to enhancing the end customer experience, provides visibility to future demand, and helps foundry partners like SF&E to balance loads and capacities to serve you best.

Contact us at sales@stainlessfoundry.com OR submit your request directly HERE.

Other News Articles

Non-Galling ILLIUM 8 Alloy Is the Right Recipe for Food Processing Equipment

Nickel-based ILLIUM 8 alloy has qualities that are ideal for food, dairy, and pharmaceutical processing equipment, as well as petrochemical equipment. We have been pouring ILLIUM alloys for decades, continuously working to improve our processes with every pour. Learn more about ILLIUM 8, and how its non-galling and corrosion-resistant qualities make it a critical component to the success of some of our most vital industries.


Clyde Union® Pumps Keep The Oil Flowing On Offshore Drilling Platform

One of the most rugged workplaces in the world is located nearly 200 miles off the Newfoundland coast on the Hibernia oil production platform. To ensure the oil keeps flowing, Stainless Foundry and Engineering recently worked with the pump manufacturer Clyde Union Canada Ltd., to upgrade the platform’s three centrifugal pumps.


Supporting the Global Defense Supply Chain

All major weapons systems contain a metal casting. Stainless Foundry & Engineering works with different alloys and techniques to produce castings that are better equipped to support the defense industry needs, anywhere from submarines to advanced weapons systems.


High Spec Castings – What You Need to Know about Testing

Parts produced for the nuclear, petrochemical, power generation, military, and defense industries require a high level of specification. Thorough testing is imperative to ensure these critical castings not only meet customer and industry standards, but they have the structural integrity to perform throughout their expected service life. Here’s how we do it.


Anatomy of a Pour: Investment Casting Photo Story

When Stainless Foundry & Engineering (SF&E) opened its doors in 1946, we specialized in sand casting, primarily producing impellers for pumps. SF&E added investment casting to its service offering in 1968 in response to the increasing demand for precision parts. We’ve documented our investment casting process in a series of photos as a way to pay homage to this practice, which dates back to 3,000 B.C.


Return to the News Page