As an original equipment manufacturer (OEM), supply chain optimization is always high on your list of priorities. But what does that mean? OEM supply chain optimization is not a quick fix with only one focus, but instead an ongoing strategy. Proper optimization requires analyzing, managing, and ultimately minimizing your inventory and costs, investing in current technology, and developing predictive strategies to streamline production and assembly procedures. Here, the team at Netsource Technology share the top tips for improving your inventory management.
Minimize Your Current Inventory
Minimizing your inventory provides several benefits:
- Streamlines processes: When you minimize inventory, you must find ways to move products through the supply chain more quickly and efficiently. Lean manufacturing techniques allow you to streamline your processes to meet demand without stockpiling inventory.
- Saves money: Storing product costs money, both in unsold stock and the space to store it. Inventory management allows you to identify and scale back on slow-selling products to minimize inventory.
- Minimizes risk: Understanding how your current inventory compares to your optimal level allows you to plan for contingency against product shortfalls while reducing overstock. By working with your supplier, you may have them hold inventory at their facility until you need it to reduce the risk of supply chain delays.
- Reduces total SKU count: Inventory control in manufacturing industry allows you to fill orders expediently while eliminating inventory audits for low-selling products. Ultimately, you’ll spend more time, effort, and money on your high-value inventory.
Take Advantage of Current Technology
Current technology can transform your business through OEM supply chain optimization. Technology such as vendor management inventory and warehouse management systems allow you to gain the advantages of improved visibility, accountability, and efficiency. With vendor management inventory, or VMI, you automate the inventory process by enabling the customer to send periodic, system-generated product reports directly to you. It allows you to speed the fulfillment process while lowering costs and improving customer service.
Warehouse management systems, or WMS, enable you to gain greater efficiency through the automation of the materials handling process. WMS makes use of radio frequency and barcode technology that enable easy tracking of materials. The top-performing companies have a competitive advantage as early adopters of technology. While the early adopters are leveraging automation and mastering supply chain optimization, their competition is left trying to play catch up while losing market share to more modern manufacturers.
Keep Track of All Costs
Manufacturing companies that fail to accurately track all their costs are at a disadvantage. Minimizing expenditures can’t be fully effective until you take the entire end-to-end process into account. It is imperative to consider operational and fulfillment costs like direct labor, materials, scrap, rework, shipping, delivery, and taxes into your pricing model. With a precise accounting of every expense, OEMs can improve planning and pricing for greater competitive advantage and profitability.
Use Analytics to Make Better Predictions and Decisions
With current technology, you can leverage the power of analytics. Analytics help diagnose problems, analyze trends, and allow you to make fact-based, informed decisions. With detailed insight into what is working well and why, you can foster beneficial behaviors and reduce inefficiencies with targeted continuous improvement efforts. With analytics, you have the numbers you need to improve forecasting for even leaner manufacturing processes.
NetSource Technology Provides OEMs with Procurement and Supply Chain Solutions
Manufacturers can gain significant cost savings by streamlining the OEM supply chain. By accounting for costs, reducing inventory buffers, and decreasing cycle times, you set yourself up for improved profitability. Implementing current technology gives you the ability for automation and a roadmap to more informed decisions, accurate forecasting, and better procurement.
NetSource Technology is your ideal procurement and supply chain partner. We will help identify your opportunities to optimize the OEM supply chain and streamline procurement of components that are hard to find, end of life, or highly allocated. For more information, please visit our supply chain, inventory management, or procurement pages.