The indirect materials stand as critical yet unacknowledged components of manufacturing processes. Cutting tools and other items like inserts and MRO supplies pass through manufacturing facilities rapidly but remain largely hidden from view. The hidden nature of these tools results in challenges for manufacturers when trying to manage tool spending as well as avoid stock shortages and maintain correct inventory records.
The problem is not that companies don’t care about indirect materials. The problem is that they are using systems that are not designed to manage them. ERP systems are great at helping companies control high-level business processes like production planning, procurement, and financials, but they are not set up to track and control at the most detailed level, in real-time. This is a dangerous visibility gap.
The tool management solutions address these problems most effectively through close integration with the ERP system. Manufacturers gain essential oversight, automation, and accuracy through collaboration, which ensures that indirect materials do not get overlooked. In this blog post, we will discuss how tool management software can enhance the management of indirect materials.
Why tracking indirect materials is challenging?
Let’s discuss the complexity of controlling indirect materials prior to examining the solution. Below are a few core issues:
1. High volume and low cost = low visibility
Indirect materials can represent thousands of SKUs. Usually these are low-cost, fast-moving items used in small quantities (i.e. a box of inserts or a pair of gloves). Nobody wants to do a manual count every time an operator needs one. Small, untracked withdrawals over time can lead to large variances.
2. ERP Systems are not built for real-time material issues
ERPs are powerful, but they run on a transaction level, not a consumption level. ERPs need people to feed them with organized inputs – purchase, receipt, issue, count – not with the fast-paced, fine-grained tool consumption on the shop floor.
3. Manual processes create opportunities for human error
Many companies still use old ways – paper sign out sheets, spreadsheets, operator self-reporting, periodic cycle counts – to keep the track of indirect materials. This doesn’t just sap productivity, it also ensures errors. When things are hectic in production, paperwork becomes optional.
Inaccurate or poor inventory management typically results in hoarding of tools or supplies, emergency purchases, duplicate orders, excess levels of safety stock, lost or misplaced items, and premature tool disposal. Without a real-time visibility into the supply chain, these types of inefficiencies can result in overspending of 15–30%.
The functions of tool management software
Tool management software has been developed to address the issues mentioned above. It’s different from ERPs in that it works at the shop-floor level and allows real-time control of indirect materials. The following are some of its main functions:
- Real-time tracking
When someone takes what tool, when and for what job or work centre, tool management software logs the details. This applies whether they’re using vending machines, crib systems, barcode scanning, or RFID. - Automated inventory monitoring
The tool management system maintains real-time adjustments to thresholds and min/max levels as well as reorder points by using actual consumption data rather than estimated figures. - Lifecycle management
Through real-time information about tool life expectancy and specific job requirements, operators and supervisors can reduce scrap levels and improve tool standardization. Tool management software provides many standalone benefits which reach its full potential when connected with ERP systems.
Why integrating Tool Management with ERP is a game changer
When your tool management software and ERP are integrated into a single solution, indirect materials are completely transparent across the entire business. Consumption data is available in real time from the tool management system while the ERP provides item masters, supplier information, purchase history and financial data. With a single source of information between the two systems, businesses can sync inventory levels, automate replenishment and ensure timely purchase requests so that there are no stock outs or expensive emergency purchases.
The requirement for tools to be tied to specific jobs or production lines allows organizations to achieve full cost visibility while strengthening their control over budgets. Planners gain the ability to start jobs with assurance since the essential tools are ready, resulting in better on-time performance as well as fewer delays. Organizations in highly regulated sectors gain reliable accuracy and repeatable operations because their tool life and calibration processes remain fully traceable and certified.
The shift from reactive to proactive control
Tool management software can enable manufacturers to transition from reactive firefighting to proactive control when integrated with ERP systems. The results have generally been:
- 15–40% lower tool purchasing costs
- 90%+ improvement in inventory accuracy
- Fewer emergency purchases
- Higher machine uptime
- Improved forecasting and planning
- Less operator downtime due to missing tools
- Most importantly, teams have visibility and control – two key elements of operational excellence.
The indirect materials create substantial effects on productivity and cost management as well as equipment uptime. Manufacturers who use only ERPs experience a loss of materials that slip through their operational processes. Tool management software narrows visibility gaps by monitoring equipment usage on-site while ERP integration produces a smooth information flow throughout the organization.
CRIBWISE & ERP integrations
Managing indirect materials doesn’t have to be complicated. The CRIBWISE tool management software enables manufacturers to track all tools and consumables in real-time. The tool helps reduce waste and maintain dependable production processes. CRIBWISE provides automatic replenishment and increases inventory precision while delivering essential visibility to support data-driven team decisions through integration with your ERP system. Its integrated stock optimization function determines optimal stock levels for efficient production while streamlining purchasing and stock management tasks for colleagues.
Tired of making assumptions about your tool usage? CRIBWISE offers transformative ERP integrations for Zoller, TDM, Wintool and Monitor G5 which revolutionizes shop floor operations. Book a demo and find out how to integrate CRIBWISE with your ERP.
