Managing today’s supply chains is very complex. There are many opinions on which areas of expertise are most critical to production success and each have great arguments for taking the top spot, materials management being one of them. Just like oxygen is key to life, material flow is a driving determinant of production success. Without proper materials management, improper material flow (or no material flow) and poor inventory management usually occur, resulting in unsatisfied customers, shut-down situations, unhappy employees, etc.
Material and inventory issues can make or break launches, from consumer products to autonomous vehicles. All it takes is one missing part to ruin the entire thing. A proper materials management system is critical to the success of a launch and the overall organization, so ensuring it’s properly in place and functioning is paramount, which is why we recommend organizations focus on the five following areas to generate materials management success: strong leadership and communication, proper systems and bill of material (BOM) routing, inventory management, production reporting, and material flow and organization.
5 Ingredients for Materials Management Success
1. Strong Leadership / Communication
As with any department in an organization, success is driven by leadership from the top and carried out in the day to day. A team must be able to trust their leader and be driven to carry out tasks on his or her behalf. Leaders must be willing to work alongside their team, and not just dictate from behind a desk.
Leadership is crucial to materials management because of the moving pieces and coaching opportunities; materials are the genesis of all other areas in a plant or manufacturing facility. While it goes without saying that every department should have strong leaders, materials management is arguably the most important due to all the different implications of the process and flow. Organizations with strong materials leadership will be less likely to encounter material problems.
2. Proper System & Bill of Materials Routing
Although the concept seems simple, ensuring the proper system and routing of the BOM is vital to program and materials success, whether it be a full-blown ERP or a proprietary system. This could also be fully automated BOM or Plan for Every Part software. Any one of these is where the BOM or BOMs need to be entered to ensure the proper routing. A trusted system amongst all team members is the main goal. If there’s a hindrance to a system’s trust amongst anyone on the team, they’ll not fully utilize it, creating a weak link in the chain.
Once a system is in place and properly trusted by your team, routing of the BOM becomes the next main step. To capitalize on your materials and have real-time inventory, the BOM(s) must be routed properly to where everything backflushes correctly. Assemblies or parent parts need to be entered with the correct child parts and linked, accordingly. If there’s an improper correlation to assembly, child part, process, or material, then the routing isn’t properly set up and there will be continuous issues from material on up.
3. Inventory Management
There’s no doubt that inventory management is important in any manufacturing site or program; however, the importance of proper processes, systems, control, and reporting is often overlooked. The keys to a proper inventory control system include a proper system catalyst, organization of product (raw, stamping, sub-assemblies and finished goods), a cycle counting program and, most importantly, consistent production reporting and proper system part routing.
A robust system that allows you to accurately understand the various inventory categories will ensure you always have enough material on hand and even more importantly, never shut the customer down. This system can be a simple Kanban system or a more complex system with trigger or re-order points. A good tool for this type of real-time inventory tracking is Plan for Every Part (PFEP). Also, it’s important to note that production reporting will make or break the inventory numbers, which is discussed further in the paragraph below.
4. Production Reporting
Ensure all members of the team have the proper training on how to production report at every part stop throughout the process until it goes out the door as a finished good. Also, equally as important, if not more, is the proper routing of parts in the BOM(s). If any item in the part routing is incorrect, then it won’t properly be stated in inventory due to improper backflushing. For example, if the finished product is a welded steel assembly, then it could go through multiple stages before it’s finished. It’ll likely start off as raw material of some sort and then become a stamped part, then gets nuts or fasteners welded to it along with other potential stampings or sub-assemblies prior to being a finished good.
If the routings aren’t set up correctly or your team has improper training, then the inventory numbers could be skewed all the way back to the steel coil that produced the stamped parts. Confirm that your BOMs are set up correctly from the beginning and that everyone using them is properly educated on production reporting to avoid continuous physical inventory counts and to make the overall launch of a product much more successful.
5. Material Flow & Organization
Put a blueprint or system in place that highlights material flow from raw to formed, to WIP, to finished. Understanding how each material and component are connected is the basis of a proper material flow. At the onset of a facility or program launch, make sure material flow is engineered to govern the way things move fluidly, what makes them move and what happens from one process to the next. If properly structured, a material flow system can help people organize their work and react better to unexpected changes or help them solve problems. This aspect is crucial as the flow should make everyone involved more efficient and ultimately make their lives easier. Better material flow and organization leads to a better overall facility environment.
Materials management is no doubt important in the layout of any facility and program onset. The importance of materials management can sometimes be overlooked or improperly executed. To avoid short-term and future chaos, ensure the facility and materials team have the following in place: a great leader or group of leaders who communicate clearly and appropriately, a proper system and BOM routing, an inventory management system in place that accounts for the proper re-ordering and trigger points, a production reporting system where everyone is trained properly supporting healthy inventory management, and a material flow and organization strategy that allows for all materials and components to be connected, creating better organization and overall work environment. Perform the above and materials management will lead to positive outcomes.