Increase profits and improve cash flow with improved metal inventory management

Posted by Tom McDevitt on Apr 19, 2016 7:00:00 AM

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We’ve recently implemented kanban systems here at The Rose.  Thermal oxidizer spare Parts and Mark Metals are benefiting from this new method of inventory management.  Kanban means “signal” in the Japanese language and as used in supply-chain management, kanban is a card or some other signal used to indicate demand for inventory replenishment.  A system built on kanban principles is a “pull” method of keeping inventories optimally stocked with parts and components when they are needed and in the right quantity.  As inventory is consumed through sales or production demand, an order for depleted inventory is immediately signaled by this kanban system.  The parts are replenished in a preset quantity and delivery cycle. 

We used to make many thermal oxidizer parts in advanced of any actual demand.  We speculated the demand as a means of keeping people busy or we “pushed” the work into the shops in advance of real demand because we knew we’d be busy when the time came to make the parts.  It’s important to remember that pushing work without demand means parts will sit in inventory for long periods of time.  Meanwhile, the company can’t invoice for the work until the part is sold and that means The Rose Corporation is financing our customer’s high value inventories.  That’s not good!

Kanban is the next LEAN tool that will help The Rose get better at meeting our customer’s needs in a manner that is profitable for the company.   As with any program, there are rules to make the system work.  Check out the kanban boards in the machine shop and fab office and take some time to learn these rules.  We audit this new kanban system every day.  If something is out of place we’ll correct it.  If our stock quantities, order quantities, delivery times, material suppliers, etc. aren’t working properly, we’ll make changes – immediately.  The faster we can replenish inventory, the fewer items we need to maintain in that inventory.  That’s a good thing because it means The Rose Corporation has less money tied up in the process.   

The Rose Corporation is a Pennsylvania-based, WBENC-certified small business specializing in the manufacture of custom industrial fabrication, large-scale precision weldments, power generation equipment (including repairs), and more. The Rose Corporation’s most unique strength is our experience with delivery of specialized design expertise, along with an ability to help customers optimize manufacturability, reduce costs, and improve overall product quality.