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Four Tips for Keeping Metal Stamping Costs Down and Inventory Flowing During an Uptick in Sales

Posted by Tim Lynch | 6/18/14 8:45 AM

Many manufacturers are experiencing steady increases in sales.  In fact, according to the Manufacturers Alliance for Productivity and Innovation (MAPI), manufacturing production is forecasted to increase 3.1 percent in 2014 and 4.1 percent in 2015.

Although growth is great, it can sometimes create challenges without adequate preparation and communication.  Here are four tips to help keep costs down and reduce out of stock worries during sales peaks.

1.  Share Forecasts with the Entire Supply Chain

Keep inventory flowing through the production process by sharing forecasts not only internally, but with your metal stamper, component manufacturers, and raw material suppliers.  Communicating sales expectations to your metal stamping provider allows for long-term and short-term adjustments to scheduling.  Which brings us to the second tip…

2.  Allow for Raw Material Lead Times

Non-standard materials may take months to receive, and there is nothing the next step of the supply chain can do without material.  Consider releasing raw material orders in advance, or authorizing your metal stamper to keep a reserve inventory on the floor. If there’s no margin for error, an unforeseen hiccup (like winter weather or a spike in seasonal sales) can stop your production line.  In a previous blog “Prevent Inventory Shortages – Consider Material Lead Times” we provided a great chart that outlines approximate industry lead times for specific metals.

3.  Reduce Shipping Frequency of Metal Stampings

If you find yourself releasing orders early to fill demand, it might be time to increase order release quantities. Increasing your order size versus placing a second order generally saves you money in both unit and freight costs.  Is it time to do a cost benefit analysis of shipment size vs. freight costs?

4.  Avoid Expedited Shipments

Rushing freight can substantially increase your costs, and if timing isn’t perfect it can stop production.  Evaluate your unit cost based on quantity, the cost to expedite delivery, and potential production down time.  If you have pre-negotiated your freight and/or use a fixed price for freight to determine selling prices, you're absorbing the cost of expedited freight shipments.  This may result in reduced profits and/or potential stops in production and lost sales.

Reducing inventory is a priority at every step of the production process.  Don’t forget the critical step of evaluating and adjusting your component supply chain flow; otherwise, running inventory too low may cost you more than you think.  Regular communication and advanced planning with your metal stamping provider, especially during an uptick in sales, is the key to keeping your metal stamping costs consistent, the production line flowing, and achieving better efficiencies.

A must-read for OEMs that use metal stampings in their products
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