Purchasing Inventory in Manufacturing: Straight To the Job or To Inventory?
In today’s increasingly competitive manufacturing environment, where tightened margins mean tightened grips on waste, running lean inventories is the name of the production game. Materials management is now the art of balancing production scheduling with inventory acquisition—tasks often performed by personnel with varying degrees of responsibility.
In large industrial organizations, the specialization of materials management has resulted in distinctions often drawn between the work of a buyer or purchasing agent and that of a purchasing manager.
While purchasing agents commonly focus on routine purchasing tasks, purchasing managers usually handle the more complex or critical purchases and may supervise a group of purchasing agents handling other goods and services. Whether a person is referred to as purchasing manager, buyer or purchasing agent depends more on the specific industry and employer practices more so than on specific job duties. In all cases, however, the increasing differentiation between the functions testifies to the increasing importance that materials management has in manufacturing today.
In the best case scenario, inventory will continuously flow through the plant with little to no stopping. Inventory moves from the reception of materials on the dock, to shop floor production, to the shipping out the door of the finished goods. For these just-in-time (JIT) mandates of lean production operation, important distinctions in materials management involve purchasing decisions based upon the job type. For make-to-order jobs where production may require a one-time part, material/parts can be purchased straight to the job.
By contrast, for big jobs or those multiple diverse job orders that require common parts, material/parts can be bought to inventory. In both modes of purchasing inventory, it is important to buy and stock only what you need to time deliveries of material to coincide as closely as possible with production needs. This will reduce the cost of carrying excess inventory with the resulting depreciation the longer its held in stock.
To the extent that such material requirements planning can be facilitated, reduced or zero-balanced, inventory flow is that purchasing concept that most contributes to JIT lean manufacturing operations. In the modern facility, enterprise resource planning (ERP) software offers an integrated system working to coordinate all of the variables involved in inventory management (inventory tracking, cycle counting, purchase requisitions, demand planning, etc.) to facilitate automated inventory purchasing, and produce lean production results.
For the modern manufacturer, this common sense approach to inventory and production coordination and control means tighter grips on cost margins through the elimination of inventory waste in the system.