The inventory battle: Production vs Purchasing

Achieve Higher Productivity With Lower Inventory

So, can it be done? Typically, this involves two departments – production and purchasing. And their needs tend be very different from each other, often opposing. While production is focused on getting parts out the door, purchasing is concerned with operational costs, and therein is the conflict. In all my years working in the manufacturing industry It has been my experience that production managers are mainly measured on productivity.

The top priority of any production manager is to make sure that machines are running at all times possible. Everything else is secondary.

Any equipment that is not in use, that otherwise should be, is going to be obvious to supervisors and upper management.

Overstocked Operators and Underutilized Inventory

Managers at the shop floor certainly aren’t going to let a missing stock item be the reason that their shift isn’t at capacity. In fact, they’d more likely over stock on things like consumable tooling and protection equipment to make sure of it. Operators tend to follow suit, the result being inventory levels that can be more than a little padded:

More Frequency + More Items (on hand) + More Time = More Cost.

Sometimes, true inventory levels are unknown, and that leads to even bigger problems.

Purchasing Priorities

Purchasing, on the other hand, approaches things from a dollars and cents point of view as you’d expect. With a big part of their responsibility being cost control, purchasing wants to support the company from an efficiency standpoint – ‘how can we continue to cut costs to improve the bottom line?’. At the same time, order management employees have responsibility for all the vendors supplying the company. How can that be organized and streamlined? You can see the opposing forces.

Who wins?

Everyone. That’s right, and the reason is proper implementation of IoT solutions. At CRIBWISE we have been working hard to ensure Production has the items needed for 100% manufacturing productivity; purchasing is automated and optimized with less order frequency and human intervention; and costs are minimized for maximum business efficiency.

By Joakim Johansson, Head of CRIBWISE