Maximizing Efficiency: Optimizing Intra-Facility Supply Chain Logistics

Using new technology and smart inventory management to boost efficiency in an often-overlooked portion of the supply chain.
By Joe Stephens

Supply chain executives tend to pay a great deal of attention to the external components of a supply chain. Issues such as lead times, shipping schedules and even custom packaging receive the lion’s share of financial resources and strategic focus.

The problem with that approach is that it fails to address a significant part of the supply chain: after a part or set of parts gets delivered to the plant. Where does it go? Where and how does it get consumed? The supply chain is only complete when a part reaches its point of use. Therefore, ignoring or failing to prioritize what happens within the plant can be a potentially costly mistake. A remarkably high degree of waste and inefficiency (as much as 11 percent) within an organization can be traced to simple intra-facility travel time and production logistics.

Fortunately, today’s supply chain management professionals have access to a range of new tools and technologies specifically designed to overcome that blind spot. These tools boost supply chain optimization via the combined power of smart inventory management systems and supply chain mapping technology. From smart vending machines that issue MRO items to employees while maintaining control, to weight-based scales that calculate inventory levels and automatically reorder items when needed, the best new management systems optimize logistics with little to no oversight. These tools and systems – and the data they generate – can increase efficiencies and streamline workflow.

There are several tools, tactics and technologies that are increasing supply chain optimization across a range of different industries and facilities.

Innovation and Automation

At a time when managing low-value, high volume production parts is a particular pain point, there is a growing need for inventory management solutions that move parts closer to where they’re used, provide better usage data visibility, and ensure the right-size, right-time delivery of parts. Happily, the industry continues to develop and deploy increasingly sophisticated technologies focused on parts distribution within plants. Those include industrial vending machines, industrial lockers, weight-based bins with integrated sensing technology that monitors inventory levels by SKU, and more. Customized inventory management solutions, such as Crib Boss™, include functionality like automated alerts and notifications that eliminate the need for manual bin checks and costly “safety” stock. Compact size and flexible configurations enable inventory to be located as close as possible to the assembly cell or manufacturing line, creating point-of-use efficiency. An all-too-common mistake many professionals make is defaulting to a central storage or dispensing point. Sophisticated users are moving away from this central storage model and towards point-of-use storage that can be fully customized by department.

Driven by Data

What’s almost more important than these technologies themselves is the enormously valuable quantities of data that they produce. This is actionable data that leads to operational improvements, unlocking newly detailed information about how a supply chain is moving and flowing within an internal system.

Data gathered by individual department or machine makes it possible for companies to parse out how parts were used by individual employees and departments, creating a facility- and enterprise-wide supply chain map. Reporting and analytics shows usage by different areas or departments, or each line or cell, right down to the bin, revealing what parts are actually being used–and where. Comparative analyses can reveal consumption disparities or inconsistencies between departments or facilities. Visualization tools show consumption patterns with new clarity, conveying a detailed understanding of how inventory is being used. Mapping out like parts can consolidate and reduce the number of parts being managed, subsequently lowering costs.

Most organizations lack stratification of their data. They know how much they use of a single part or component, but they don’t know where they used it. New supply chain mapping technology and data analysis provides a single source of information that’s available to everyone. From purchasing to production, anybody can see where each part is being consumed.

New Efficiencies

By achieving a newly sophisticated and comprehensive understanding of consumption by part and location across a factory – and tying it to the specifics of a floor plan –manufacturers can generate new insights. This leads to greater productivity, right-sized inventory and consumption visibility. Evidence has shown that high-performing systems can reduce average parts consumption by 21 percent, and decrease waste by an additional 10 percent.

The good news is, supply chain automation is increasingly accessible. The average cost to deploy systems like those described above has reduced several times over in the last decade or so. If the supply chain mantra is right part, right place, right time, then truly impacting efficiency requires continued evaluation of the supply chain–all the way to its point of use. With the increasingly powerful and accessible systems and solutions now available, supply chain professionals can do just that.

Joe Stephens is the CEO of Motor City Industrial, a wholesale industrial supplier of fasteners, bearings and consumable products to automation, defense, manufacturing, OEMs and maintenance & repair operations customers across the Midwest and Southeast. For more information, visit www.motorcityindustrial.com or contact Joe directly at joe.stephens@motorcityindustrial.com.