Inventory management in manufacturing: prevent unnecessary downtime

A machine doesn't need to have a major fault to come to a standstill. Sometimes the right component or consumable is simply missing. The material itself may only cost a few euros, while every hour of production downtime can cost many times more.

For manufacturing companies, inventory management is therefore about more than knowing what is in the warehouse. It's about availability: ensuring that the right materials are available when production or maintenance needs them.

Not all inventory is eventually sold

When you think about inventory management in manufacturing, you may first think of raw materials and finished products. But there is often another large group of materials needed to keep production running.

Think of fasteners, technical components, consumables, and materials for maintenance and repairs.

This inventory sometimes receives less attention because these materials are not part of the finished product or have a relatively low value. Yet the absence of such an item can have major consequences.

A machine that cannot run because a small component is missing suddenly makes that component particularly costly.

How much does one hour of downtime cost?

At a manufacturing company we spoke with, the cost of a machine being down could rise to around €1,500 per hour.

That quickly changes the calculation.

It's no longer just about the value of the missing item. You also need to consider lost production capacity, employees who cannot continue working, and potential consequences for planning and delivery.

That doesn't mean you should keep large quantities of every possible component in stock. That only shifts the problem. You would then have a lot of money tied up in materials that you may not use for years.

The challenge is to determine which materials need to be available and how much of each you need.

Make inventory visible where it is used

Inventory in a manufacturing environment is also rarely located in one central place.

Materials may be stored in a warehouse, but also at a production line, machine, workstation, or technical department. As a result, an item may still be available in the system, while it is not actually available where someone needs it.

Digital inventory management therefore becomes more valuable when you not only register items, but also know where the inventory is located.

With BarTrack, you can set up different inventory locations and keep track of which items are available at each location. This allows you to organize inventory in a way that aligns with the physical production environment.

A 2-bin system: easy replenishment on the work floor

A practical method used, for example, in panel building, is the 2-bin system.

Instead of keeping one large stock of an item, two bins are prepared. First, bin one is used. Once it is empty, you switch to bin two.

The empty bin then serves as the signal that the item needs to be replenished.

The advantage is that employees do not have to constantly keep track of how many screws, connectors, or other materials are still available while working. The second bin provides the stock they can continue working with while the first bin is being replenished.

By combining this practical approach with digital registration and ordering, you can further simplify the replenishment process.

Don't constantly count what is running low

Even without a 2-bin system, you want to avoid having someone regularly check all the shelves to determine what needs to be ordered.

For this, you can work with minimum and maximum inventory levels.

In BarTrack, you can record for each inventory item and location when the inventory level becomes too low. As soon as an item falls below the set minimum, it appears on the order list. With a predefined order quantity, you then know how much needs to be replenished.

This makes inventory management more predictable.

You don't wait until someone discovers that the last item has been used. Instead, you create a moment earlier when replenishment can be initiated.

Not every component is equally critical

For effective inventory management in manufacturing, it is therefore advisable not to treat all items the same way.

You will probably want to maintain a different inventory level for a frequently used consumable than for an expensive spare part. And a component that can be delivered within a few hours requires a different approach than something with a lead time of several weeks.

Therefore, consider factors such as usage, lead time, and especially the consequences if an item is unavailable.

A relatively inexpensive component that can bring an entire production line to a standstill may be more business-critical than a much more expensive item for which you can easily use an alternative.

Inventory optimization is therefore not just about the value of what is on the shelf. It is also about the value of availability.

The supplier can also play a role

With many recurring consumables, it can also be interesting to have a supplier handle part of the replenishment process.

A supplier connected to BarTrack can use BarTrack to help keep a customer's inventory at the right level. This means your own organization has to spend less time checking and placing orders.

How far you take this is something you determine together.

The supplier can support the inventory process, while you retain insight into what is happening. This is called Vendor Managed Inventory, or VMI.

For manufacturing environments with large quantities of recurring consumables, this can be an interesting next step.

Prevent inventory from only becoming important when it is missing

Technical inventory and consumables often only receive a lot of attention when something turns out to be unavailable.

And by then, it is already too late.

By making inventory locations visible, identifying critical items, and thinking ahead about minimum inventory levels and replenishment, you can make the inventory process fit the production process much better.

The goal is not to keep as much inventory as possible.

The goal is to have the right materials available when you need them.

In short

Inventory management in manufacturing is not just about raw materials and finished products. Technical components and relatively inexpensive consumables can also be essential to the continuity of your production.

By making inventory visible per location, identifying critical items, and working with minimum inventory levels or, for example, a 2-bin system, you can replenish earlier and reduce the risk of unexpected shortages.

With BarTrack, you can manage these inventories digitally and support the ordering process. This helps prevent a small missing component from ultimately becoming a much bigger problem.