Every business wants to be known for meeting customer needs because reliable companies foster loyal and happy clients. So, how do you keep your customers sufficiently supplied and happy? It’s all about right-sizing for maximum FITness.
Managing Material Flow in Supply Chain Management
Consider your material flow as a bucket with two faucets—one at the top dropping water in (inventory in) and the other at the bottom releasing water (product out) to customers. Naturally, you’d love to have both faucets continuously running at the same rate but since that’s not really possible, you aim to get as close to even flow as possible. Ask yourself what size bucket you need to make sure the water never overflows or runs dry. Here are some helpful strategies for optimizing material flow for effective supply chain management.
Right Materials at the Right Amount
Rather than focusing on reducing your costs, look at having the right amount of the right raw materials to ensure as close to a consistent flow as possible. Assess your environment, review your history, and address your known needs to determine the proper level of excess to keep your bucket sufficiently full.
Consider this: a bear going into hibernation puts on some extra weight to keep warm and energized over the cold winter. What happens if the bear doesn’t pack on enough to sustain it through the winter months? On the other hand, what happens to a lion that packs on too much weight? Will it be as effective hunting or caring for the pride? Your manufacturing processes function in much the same way, and you need to ensure that you’ve got enough extra weight to sustain your customer needs without having so much weight that it hinders your efficiency.
Waste Not, Want Not
It is not possible to operate a perfect manufacturing system with zero waste, but it is possible to eliminate some waste and streamline your process to optimize the potential energy in your business. Think about your bucket with the two faucets again. Factors beyond your control, such as customs strikes or shipping delays, may disrupt inflow, but keeping the bucket sufficiently full will allow you to weather those delays while maintaining the flow to your customers, which helps you maintain your reputation as a reliable supplier.
If you have three clients who each take two ounces of water each month and a bucket that holds eight ounces of water, this leaves you with two ounces of water, allowing you to accommodate one additional client or double one order in any given month. Any additional demand, however, can leave your bucket dry and your business unable to fulfill orders.
Maintaining extra inventory may mean you have to sit on it a bit, but the inability to fulfill orders can cost you customers. Ensure your bucket is large enough to accommodate variations in both inflow and outflow (supply and demand) so you can keep meeting your customers’ needs.
If you’re looking for ways to streamline your process and ensure your buckets are the right size, Cornerstone can help you succeed. Reach out to Cornerstone Consulting Organization for a free consultation.