When I was younger and thinking of leaving home my mum would always say to me “Look after the pennies and the pounds will take care of themselves”
Since I have been working with CIM and assisting Manufacturing companies I can see only too well how that can transpire when looking to maximise cash-flow.
Every penny really does count in business and the secret to successful stock management is forward planning. This can assist the buyer with decisions which will enable them to get the keenest prices from suppliers without having to overstock. Forward Planning is also key for timely production of goods and on time deliveries to customers.
MPS/MRP is the key…
MPS/MRP is the key to this as it allows the buyer to see the demand from customer orders, read minimum stock levels, Re-Order Qty’s and lead times and so optimise ordering to ensure deadlines are met, delivery costs and booking in time is kept to a minimum and stock is rotated quickly and effectively.
What is MPS (Master Production Schedule). This planning tool reads all customer sales orders, sales forecasts and make to stock requirements. This is typically used in Production meetings to discuss the workload for the coming weeks and months.
What is MRP (Material Requirements Planning). MRP will read the demand from the MPS screen and interrogate stock below minimum levels. This takes into account; re-order quantities, production lead times, existing production and stock on hand.
This is then followed by a calculation of all purchases required taking into account re-order quantities, lead times, stock on hand and existing works orders which will then, in turn, combine like for like requirements together to maximise buying power and reduce delivery costs.
Purchase and Works Orders can be raised directly from the Planning screen and so reduces input time. Thus, saving hours of work each week against manual calculations of stock required and manual input of orders. Many companies who do not have a planning tool often overstock, rather than undertake longer lead times. This affects cash-flow. Stock rotation is often not as comprehensive as it should be, leaving businesses with obsolete stock that has to be written off. ‘Remember those Pennies’
Planning really is the way forward for all manufacturing companies. If you would like to find out more about the Planning solutions we can offer then please contact us.