Navigating the Supply Chain with Inventory Management
As told by Coye Harrett, Owner
When my business partner and I took ownership of Prairie Rivet in October 2020 we could order raw materials and receive them in about 10 days. Then January 2021 hit and overnight 10 days to receive materials turned into 10 weeks. We had to employ a more disciplined approach to inventory management and think quickly on our feet to adapt.
All manufacturers have experienced some form of supply chain frustration over the last year and a half—and “frustration” is putting it mildly. Countless discussions with our customers, many of whom have been in the fastener industry for decades, echo these frustrations. The supply chain disruptions serve as a reminder of the importance of inventory management.
In its most basic form, inventory management means having the right stock on hand in the right amounts to keep production lines running and orders fulfilled. Implementing an inventory management operational strategy over the past year has positioned us to better forecast orders, ensuring that we have the materials on hand when our customers are ready to order.
Of course, none of this happened overnight. We’ve worked hard to get materials on order earlier, communicated more frequently with our vendors, and explored alternative options for sourcing materials. We diversified our inbound supply chain by establishing relationships with new vendors, so we can rotate who we buy from if necessary. These relationships take time to build and nurture, and it can take several months from the first connection to receiving actual materials. Maintaining industry-leading delivery times is one of our key competitive advantages and is not something we’re willing to give up. By having inventory on hand, we can offer faster lead times.
One promising trend we’re noticing is the increased demand in domestic manufacturing to better secure the supply chain here in the US. Manufacturers are tired of 300-day lead times from overseas and distributors are tired of gaps in inventory. OEMs are looking for domestic vendors, knowing they might have to pay a bit more for materials previously sourced offshore. The peace of mind of lines running and employees working is worth it.
Let’s be honest, no manufacturer wants to cut shifts, reduce staff or shut down operations because they don’t have rivets. Utilizing data and creativity can better aid manufacturers to deal with our current supply chain issues. We found if you start with the data you have, in whatever shape it’s in, it allows you not only to track inventory but take that into forecasting future requirements. We’ll be tackling forecasting, and how we’ve helped customers and clients better manage cash flow and inventory through forecasting, in an early 2022 post.
To all of our fellow manufacturers and anyone else who has felt the effects of the supply chain over the past couple of years, stay strong. And have a happy, healthy and safe New Year.