As your business evolves, you will inevitably encounter pressure to move goods faster as your customers demand same day delivery and order through a number of different channels. Before we even think about what to do and which system to invest in, it is absolutely essential to understand the problems that you will encounter during this transition.
With over 100 VISUAL site implementations we have learned that there are in total 7 stages encountered when a company transitions from Made-To-Order to Made-to-Stock business model. So, let’s have a look at each of these stages and see what really happens during this journey.
At this stage your inventory levels are next to zero. You are a complete Made-To-Order facility. Your PO-WO-CO are all linked. Purchased raw materials are processed against jobs and all finished goods are shipped to the customer.
Business is beginning to grow, you’re getting larger orders and so you’ve setup Auto-Issue from primary locations. Also, because you’re buying certain materials in bulk you’re uncoupling the PO-WO Link.
Business continues to grow with new customers having multiple delivery dates. This results in the breaking of the WO-CO link. You’re also using more of Visual like concurrent scheduling but you’re not yet using trace on raw materials despite mounting pressure.
You’re booking large orders of raw material to take advantage of discounts and lead times. Negative inventory is leading to more frequent counts and new processes to track all this additional inventory. You’re starting to see a gap between what VISUAL is reporting and actual inventory levels.
You now have a lot of material handling rules and processes that are taking a toll on your productivity. Processes are heavily reliant on people and tribal knowledge. Inventory movements, usage, and transfer usually takes 2-3 days to show up in Visual.
Suddenly there is a need to track work in progress goods as well. There are delays and bottlenecks in production around WIP tracking. More resources have been hired but you feel a tipping point has been reached in the warehouse.
By now you’re stocking inventory. There are sub-assembly parts in the aisles, raw materials in the yard, and you have an external third-party warehouse holding finished goods. You’re still not fully using trace and are subject to penalties for non-compliance. Tenured warehouse staff are leaving and/or retiring so you’re continuously hiring and onboarding new people. And just yesterday you found out about your new e-commerce portal.
The good news is that this can be fixed. The better news is that your warehouse and inventory processes will be able to keep up with production volumes.
Materials management doesn’t come natural to manufacturers thus there is an understandable reluctance to invest in this area. VISUAL ERP was built to schedule and manage production not inventories. On the other hand, RF Plus™ for VISUAL was designed from the ground up to manage VISUAL’S inventories. It has real-time and direct integration into VISUAL which eliminates having to synchronize multiple databases and follows all your part profile, warehouse location, and engineering master setups.
Benefits include the reduction of buffer stock by 15%; inventory count time reduction by 80%; and improved picker times by 20%.
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