Marginal concerns Featured

6:36am EDT April 2, 2003
How do you test the very principles of just-in-time manufacturing?

How about closing the airports and the Canadian border for a few days and see what happens to inventory levels.

That's just what happened to many manufacturers in September when lean inventories came face-to-face with a major shipping crisis.

Lean manufacturing has garnered a lot of attention recently, but the fact is that like any process there are always a number of "what-ifs."

The idea is for manufacturers to stay efficient while maintaining very low inventory levels. Theoretically, it's sound. Parts are only made or stocked in response to demand, with no internal inventory to collect dust. But there must always be continued improvements throughout the supply chain for the process to work as designed.

William Eisele, vice president of Sonic Chain, a bar-code based supply chain management system, stresses that you can't forget to factor margins into your supply chain. "You have to look at your supply chain optimization and determine how much inventory you have on hand and do you have a safety margin," he says.

One of the keys to making sure inventory levels stay within safe margins is to look at your inventory's cost and importance in relation to your product.

"Many companies haven't spend the time to optimize," he says. "Companies still do back of the hand calculations versus looking at commodities group."

Eisele's answer is to simplify and automate. Even with all the attention given recently to just-in-time and lean manufacturing, the industry as a whole is far behind others when it comes to using technology to improve inventory levels. The fact is, a small percentage – only about 29 percent of the manufacturers in the U.S. – are automated.

"One of the main reasons for that is that it is a huge investment for these companies," he says.

Eisele's idea with Sonic Chain is to use simple barcode technology and inventory databases to link multiple suppliers to one reordering system. All the parts need for manufacturing are cataloged and assigned a bar code and re-ordering is done via web-based software on Sonic Chain's server.

The process mixes technology and human intervention, meshing the basics of lean manufacturing with automated efficiency. Explains Eisele, "Tying up capital or losing time on fast flow products is one of the driving forces behind 'point of use' but utilizing technology takes a lot of error out of the process."

How to reach: Sonic Chain, (216) 535-9800.

Sonic Chain