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 OR submit your request directly HERE.

Other News Articles

Anatomy of a Pour: Sand Casting Photo Story

Sand casting is a versatile and cost-effective technology that has been used for thousands of years. Nearly any part configuration can be created in metal as a sand casting. Stainless Foundry & Engineering (SF&E) has specialized in sand casting since we opened our doors in 1946. We’ve documented our process in a series of photos below as a way to pay homage to this time-honored practice.

SF&E Partner InspecTech Corp. Brings Precision and Dependability to NDT

Non-Destructive Testing (NDT) is a vital part of the foundry process, especially for projects in nuclear and military industries. Stainless Foundry & Engineering (SF&E) partners with InspecTech Corp. onsite to deliver convenient, comprehensive, and efficient NDT, making SF&E a true hub for all casting, testing, and machining capabilities.

How to Get Ahead and Stay Ahead in Pumps & Valves

In the late 1960s, Stainless Foundry & Engineering (SF&E) was one of the top producers of impellers in North America. More than 50 years later, impellers remain our top produced part, along with other crucial pump and valve components. In honor of our Top 6 most produced parts, we’ve collected the Top 6 ways to get ahead and stay ahead in the foundry industry.

Trends in Food & Beverage Pumps

As food processors work to meet consumer demand for product innovation – including healthy alternatives, fresh ingredients, novelty experiences, and global flavors – their equipment must be innovative as well. At the center of it all are pumps.

Reverse Engineering: SF&E Creates 3D Model from Pattern

3D Modeling has proven results for OEMs, especially when sourcing complex parts. Prior to 3D modeling technology, a full pour was done to determine the integrity of a sand or investment casting. Every time a non-compliant defect was found, the rigging and gating needed to be modified and the process started all over again. This cost the customer and foundry valuable time and money.

Return to the News Page