Stecker Machine Blog

5 Ways to Maximize Machine Shop Inventory

01/22/2020 | Matt Oswald


What fuels the nightmares of machine shop production managers?

Machine downtime.

Efficiency is always the goal, so when machine shop equipment experiences prolonged periods of downtime, it can test the sanity of even the most professional and experienced shop manager.

A possible solution? Reliable production management. Upfront planning, with efficiency in mind, can help keep things running smoothly and achieve peak uptime while maximizing machine shop inventory.

This checklist can be your guide to leveraging your production management, which includes implementing lean manufacturing processes, creating just-in-time inventory management, and saving your shop money.

Questions to build a solid roadmap

Before we dive into our checklist that focuses on optimizing inventory, let’s agree on a production management definition as it applies to a modern machine shop. Then, with that top-of-mind, we can ask questions that will form a reliable production management roadmap.

Think of production management as improving the coordination of raw materials, human resources, and equipment. Your shop’s workflow and department collaboration are unique, so you’ll need to ask the right questions to create a proper roadmap. Here are some questions to get you started:

  • What’s the goal that needs to be achieved?
  • What tasks are required to meet that goal?
  • Is there a way to repeat certain processes to improve efficiency?
  • What tasks do not directly contribute to meeting that goal?
  • What processes are followed simply because “that’s the way it’s always been done?”
  • What tools could help get tasks done more efficiently?
  • Taking any company growth projections into account, what project management needs may be required in the next 2-5 years?

The answers will help you focus on refining your processes to elevate your productivity. It takes some time and effort to roadmap the right production goals for your shop’s needs. Yet, when production management practices are implemented and tasks begin to flow together, it can be a whirlwind of cost-effective day-to-day operations, efficient communication, and profit boosting.

Production Management Inventory Checklist #1: Schedule Appropriately

A little planning goes a long way, especially when it comes to shop inventory. Each job should include the overall length of time required to complete it as well as the necessary working hours needed. Scrutinize every hour, because any opportunity to minimize wasted time not only speeds the process flow, it reduces labor costs. Proper scheduling also helps keep your deliveries accurate and on time. And, by preventing inaccuracies in both your project timelines and reporting, there’s a reduction in the working hours spent dealing with those errors.

Best of all, a streamlined process minimizes the need for backup stocks and work-in-process inventories.

One word of caution here (yet it applies to every point on the checklist): change is good when a process is improved, but make sure any and every task is easy and quick to use. Streamlining can make the difference between your team loving a change and resisting it.

Production Management Inventory Checklist #2: Optimize Your Workforce

Speaking of scheduling projects, having the correct amount of employees scheduled for each shift is critical. Inventory optimization relies on your available workforce; too much labor means too much inventory, not enough means projects aren’t completed. 

It can be challenging for machine shop production managers to meet expectations if they don’t have a clear idea of their team’s capacity to take on work. When new projects requests are backed by solid workload information, the team can confidently manage new work and reliably hit deadlines.

An optimized staff is also aware that they’re each being held accountable for their work. No one wants to be the weakest link in the chain, and knowing that the team’s success depends on each person delivering expectations is motivating.

A key to engaged and flexible team is communication. A workforce needs to be properly informed of changes well before they’re implemented, whether that’s a new process, workflow, software, or tool. Explain the productivity benefits to the team and encourage feedback. You’ll see easier adoption of changes and less resistance and struggles.

Production Management Inventory Checklist #3: Embrace Lean Manufacturing

Taking a lean production management approach benefits a shop’s inventory by keeping the overall focus on efficiency. While some may see “lean manufacturing” and imagine an involved and complex process, it’s really numerous minor changes that fit together in a streamlined process.

The main investment is dedicating employee time to brainstorm any ideas that cut waste. If a task costs money to execute without adding value to the process, it’s eliminated. Implementing a few of those can boost inventory efficiency.

Think of this checklist point as mirroring design for manufacturing (DFM), which merges product design and its production method. The end goal is always to reduce effort and costs by simplifying and optimizing the process.

Production Management Inventory Checklist #4: Evaluate and Adjust

What you want to happen and what’s actually possible are likely two different things. That’s okay. You just need to objectively assess how your processes are affecting your machine shop’s inventory and take steps to improve them. Expect to check your on-hand stock regularly and adjust accordingly.

Well-executed just-in-time inventory management can reduce the stress (and costs) of running out of product or failing to deliver on a big order, disappointing your customers and damaging your relationship. On the other hand, holding too much inventory can limit your working capital and jeopardize your bottom line.

Finding the best of both worlds, oftentimes a tricky balancing act, is the goal of just-in-time inventory management. Ordering stock at the perfect time — just close enough to when the product is needed — prevents stock from tying up cash flow. Targeting your work ahead for a period as short as two weeks keeps stock low while providing a buffer to keep customers happy when dealing with the reality of production issues.

Production Management Inventory Checklist #5: Look to Technology

When you hear “machine shop” and “technology” in the same sentence, your mind may first jump to automated robots and other equipment, which are smart ways to enhance processes. Smart shops, however, for the main benefit of shop inventory, use production management software.

The right software offers solutions that resolve human inefficiencies, including regularly notifying the team of changes or responsibilities, which can make a huge difference in efficiency. Production management software is also the perfect way to introduce automated processes on the shop floor or within inventory control. Your employees who don’t take to change as easily as others know that software is supporting a new process’s smooth transition.

What different digital, production management software systems can help maximize machine shop inventory and save a shop money?

  • Enterprise Resource Planning (ERP) — Machine shops love having one source, a singular system, for controlling operations, logistics, and inventory. An ERP provides accurate inventory data — from tracking turnover to surplus management to inventory organization — so the shop manager can make smarter decisions.
  • Internet of Things (IoT) — Shop managers get visibility into their inventory like never before when using an IoT system. Real-time updates on inventory items’ locations, statuses, and movements allow machine shops to monitor inventory from anywhere by using a smartphone or a laptop. Plus, machine learning can help predict the amount of raw materials needed for a particular production run.
  • Manufacturing Execution System (MES) — When shop floor information is made available to the entire machine shop, those responsible for different tasks can respond quicker to changing situations and conditions. In addition, labor/downtime, tooling, scrap, and other costs are captured immediately from the shop floor as they happen.

Remember “just-in-time inventory management” earlier? Some shops carry “just-in-case inventory” to cover unexpected needs. Yet, because an MES constantly updates inventory records, your purchasing, manufacturing, and scheduling staff knows how much material is actually on hand, so additional inventory isn’t necessary.

Handle Current Jobs and be Ready for Future Ones

Every machine shop is different: different equipment, different workforce, different processes, different customers. Yet, one thing can be beneficial for any shop: the process of reviewing the 5-step checklist and highlight inefficiencies in current systems can be helpful.

And, even if introducing a new production management software system isn’t in the cards now, preparing for one is a step in the right direction.

Once you do have a new and reliable project management tool in place, you can begin to grow with confidence. Your team will get in a groove of using the shop inventory software, communicating effectively, and hitting deadlines without stress.

At that point, you can expand on your foundation and introduce new processes for long-term inventory success.

If this production management checklist has now got you thinking about ways to maximize your machine shop’s inventory, consider reading “A Machine Shop’s Most Powerful Tool? People!” This quick-read blog post explores how “people-focused power” complements the more technology-heavy inventory solutions in the checklist.New call-to-action

Matt Oswald

About the Author

Matt leads SMC's Marketing and Human Resources Team. He has worked for Stecker Machine for over 6 years on projects spanning CNC manufacturing, robotics, inbound marketing, and leadership. He has 14 years of electrical engineering R&D experience, and he enjoys applying an engineering approach to any project.