Since the introduction of the lean system of continuous improvement manufacturing (CI), the desire has always been for inventory management that minimizes stock on hand, if not fully eliminating it. True to lean principals, by eliminating waste at every turn in the manufacturing process quality is improved while production time and costs are reduced. As one of the seven wastes in lean philosophy, inventory proves to be inefficient when a plant maintains more on-hand inventory than is minimally required to produce products in the immediate time frame. Rather than the batched, push-production system where large inventories are maintained for the potential of future sales or supply chain problems, lean methods employ a pull-production system where orders are pulled from customers and raw material as inventory is maintained only long enough to be swept into production just in time (JIT), so to speak.

Certainly, manufacturers today are seeking to be more productive and less wasteful with regards to inventory management. For example, there is a train of thought that by decreasing randomness in the manufacturing process, you also decrease inventory. From this thinking has emerged the notion of total enterprise resource planning (ERP). Here concepts such as system flow, quality of performance, labor productivity, purchasing and materials management, inventory, and shipping are all integrated in terms of procedure and communication. With the real-time data available through ERP software, plant departments are integrated and coordinated toward the goal of decreasing randomness in the production process.

With a robust ERP software package, lean inventory management is facilitated in all aspects of the operation and should include the important functions of: cycle counting, supply & demand, and turnaround/turnover. In essence, it is this sort of inventory management and efficiency tool that is at the heart of the building and utilization of successful CI systems today.

For example, in the cycle counting mode, inventory managers can run inventory audit lists tagged to any period of time to answer the question of why there are discrepancies in inventory numbers. As for turnaround/turnover, ERP inventory management software is suited as an assessment tool for gauging how JIT any manufacturing system really is through the number of turns the inventory takes; and of course, increased turns is the desired result of a lean system eliminating waste by the reduction of on-hand inventory.

Regarding supply and demand chains, inventory management through ERP software is able to review key time-critical data to balance the time phasing requirements of materials, parts, and tools. That is to say, with a robust ERP manufacturing solution, inventory managers are in the position to make informed decisions concerning demand chains and supply chains. This is especially true in the newly emerging vendor managed inventory systems (VMI) that are increasingly seen as the logical extension of lean manufacturing methods and JIT inventory management.

These aspects of inventory management are vital elements for inclusion into any robust ERP software package seeking the leaning of manufacturer operations. With the knowledge gained through the real-time data available in ERP, inventory management becomes a central point of analysis for finding additional efficiencies in the system flow. It is in this way that efficiencies in manufacturing eliminate waste in the process. By offering the user a complete inventory management package that interconnects with all other shop areas in the production process, integrated ERP software builds a CI environment that enhances both productivity and profits.

About the author :

Dusty Alexander is the President of Global Shop Soultions. Global Shop Solutions is the largest privately held ERP software company in the United States http://globalshopsolutions.com/

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