In the world of manufacturing, inventory and throughput are inextricably linked. Any interruption in the former can mean shortcomings in the latter, resulting in decreased efficiency, profits and customer satisfaction. This has led some of today’s most innovative companies to incorporate vendor managed inventory systems (VMI systems) into their daily operations.
We sat down with production and operations managers from K-Tec Earthmovers and Novid Inc. to discuss the implications of integrated VMI and the bottom line. In this article, they identify strategies and solutions that businesses can apply to increase efficiencies, reduce waste, save costs and optimize product quality while maintaining a sustainable inventory of supplies.
Sound production lines are built on strong foundations
As manufacturers grow, so does their need for increasingly refined internal procedures and systems. An inventory supply that fails to evolve or keep pace with a company’s growth can cause a domino effect throughout the entire production line.
And it’s not just throughput that may suffer. An unreliable supply chain often means the receiving company’s staff must allocate valuable time for delivery checks. Managers spend inordinate amounts of time reviewing stock usage and inventory to catch overages and anticipate needs. Pauses in production put your bottom line and satisfaction rating at risk. And when safety equipment isn’t supplied on time, it risks a complete assembly line shutdown or, even worse, your people's sense of wellbeing.
Vendor management tools such as Innovair Industrial’s vending machines automatically ensure manufacturers always have the quality parts and supplies they need, before they’re needed. When an item is running low, these machines notify us so you don’t have to. They even report on usage by each team member, so you can identify areas of waste and opportunity.
Making a difference
Neil Blatz, Manager of Operations at K-Tec Earthmovers, has seen the challenges that arise when a vendor proves untimely or unreliable. As a leading manufacturer of earthmoving equipment, it’s critical the company has everything they need in-place—and of the highest quality—to ensure product standards, timelines and customer expectations are met.
“Before VMI, a lot of our time was spent managing inventory,” Blatz says. “Suppliers often missed things in our order, so we’d have to spend eight hours at a time going through each delivery, making lists of what’s missing. If we ran out of something, it could disrupt our assembly line and compromise our promise to our customers. We had no peace of mind.”
Innovair Group worked closely with K-Tec Earthmovers to turn this around, selecting the supplies and VMI system options that would best complement their products, processes and volume. By clearly understanding their systems and needs, we could find solutions that integrated seamlessly with their workflow and product standards.
Blatz says the benefits of switching to a vendor managed inventory system are apparent in his daily life and the company’s productivity, efficiency and bottom line.
“It eliminated the need for us to do inventory checks and the daily reports they send eliminated guesswork by showing us what people are using. It enables us to control efficiency and waste,” he says. “We set quantity triggers, so Innovair knows if we need a restocking, and we’re no longer waiting on parts. It’s streamlined our assembly line, eliminated overstocking and reduced costs, because we only use what we need and only pay for what we use.“
Riley Penner, Production Manager at Novid Inc.—a North American leader in the manufacture of stainless steel agri-products—says integrating VMI software and systems has helped their company improve internal processes, save costs and consistently enhance product quality.
“As we’ve grown, we’ve worked with a lot of different suppliers,” Riley says. “But we never had anyone who’s there to make sure everything we need is on-hand, and we didn’t want to hire extra people just to keep track of our inventory. Running out of supplies has a significant impact on our production efficiencies. Even a couple-hour pause is unacceptable.”
After collaborating with Innovair to integrate vendor management tools into their processes, Penner says he was surprised at the immediacy of returns.
“I was initially hesitant to start with the VMI vending machines because it’s new technology and seemed expensive, but after implementing it I was surprised that there was no cost, only savings. It’s made a huge difference to our efficiency and waste reduction. As we’ve grown, we’ve been able to double our throughput without doubling our consumables.”
Lessons for manufacturers
Penner says the benefits VMI gives manufacturers can help them stay competitive and profitable.
“When VMI is well managed, it improves your systems and processes,” Penner says. “It’s one less thing we have to think about, so we can focus on hitting our targets and ensuring our product is as top quality as possible.”
In choosing a vendor management system provider, Blatz and Penner advise businesses to look for a partner who is eager to understand how your business works, is proactive and responsive in addressing challenges, and keeps your bottom line top of mind.
“Innovair Group collaborated with us to get to know our company, then helped us select better equipment options that work seamlessly with our operation and minimized disruption” Blatz says. “They educated and trained us on better product use and applications, and continuously help us find more efficient tooling and better pricing.”
Penner agrees. “Look for a partner who will make sure the supplies you’re using are best suited for the application. They should keep quality top of mind, never use subpar materials, and be honest and fair in their pricing,” he says. “Innovair Group works with us to decrease our overall costs, and they’re responsive and transparent with information. It gives you peace of mind, which is huge, knowing you can trust them.”
Ultimately, the benefits of vendor managed inventory go beyond easy access to the supplies you need. The right VMI partner can help you innovate your systems to maximize efficiency and enhance profitability while improving the quality of your final product.
Look for a vendor managed inventory system with VMI software that enables your supplier to anticipate your needs and respond before challenges arise. Consider the value added by a system that provides reports on supply consumption by staff members, so you can identify areas of waste and opportunity.
Most importantly, find a supplier who behaves like a true partner, taking the time to get to know you and developing innovative solutions that enhance your operation, rather than prescribing a one-size-fits-all approach. Your company’s leadership, production team, customers and bottom line will thank you for it.