Inventory management is central to success.
By Janet Preus
For any size shop, keeping track and maintaining control of supplies is a balancing act that requires careful attention. We asked two companies with similar product lines to respond to a few basic questions about this business fundamental.
KSK Color Lab Inc. is headquartered in Cleveland, Ohio, but has multiple facilities. It specializes in graphic imaging on fabric, including design, color management, sewing, and custom finishing. Ken Gazdag Jr. is vice president of purchasing.
Let’s Get Graphic, Mounds View, Minn., is a signage company of 22 employees specializing in the design, production, and installation of print graphics. Missy Miller is president and co-owner.
What are the most important factors in managing inventory?
Gazdag: Monthly, we calculate total amounts for rolls used, waste factors, purchasing costs of the material and balances in inventory. That data is compared to the shipments received at each location, pending orders with suppliers and any forecasted jobs we have in the wings. Additionally, materials are categorized in our warehouses according to the equipment they are suited for and each is clearly labeled and shelved. This makes it very easy for each operator to get what they need when they need it.
Miller: Frequency of use is first, then accessibility, and third is cost.
What is the biggest danger in inventory management?
Gazdag: A big challenge is finding a balance. The goal is to maintain enough inventory to handle the projects while avoiding overstock, as well as special runs and numerous shipments from suppliers. By tracking usages, trends of projects, and busy times you can do a good job of determining what needs to be ordered and when. Also, your sales staff can provide input as to what kinds of projects are in the wings, to alert suppliers in advance of the project hitting your doorstep.
Miller: Having too much on hand is a bigger danger. Some products expire more quickly than others so you need to be aware of how frequently products are used. In today’s tough market, you shouldn’t be purchasing inventory that goes to waste. Manage your inventory; don’t let it manage you.
How does a company establish a system that will allow it to control inventory for optimum efficiency?
Gazdag: Companies need to look internally at their operational structure to determine needs and wants as they pertain to inventory management. Attending trade shows or networking with other companies similar to yours is a good way to learn as well. Ask yourself this: how many locations are you dealing with? What operational reports already exist in your organization? Does the inventory reporting need to address any items from any other reports?
Miller: You should always have a list of materials on hand, and go into detail regarding the on-hand quantity of each material or product used in production. Any items not on the list are considered special order and arrangements are made to get them in time for production and the job due date.
How has the increase in the price of petroleum affected inventory management?
Gazdag: We have really paid attention to consolidating the orders we place in order to reduce the number of shipments we receive. Suppliers and carriers have raised their costs, the same as other companies in every industry across the country. Like every industry, we have experienced price increases in transportation as well as cost of goods. Increasing inventory supplies on some standard materials will help to meet demand and keep freight costs to a minimum. You also need a strong partnership with suppliers.
Miller: We haven’t noticed difficulty in getting the products due to the cost of petroleum. The product’s price and the increase in the cost of transportation have been the biggest challenges. We have really stuck to our philosophy of keeping on hand core products and working with vendors who are reliable and offer great service.
Do customers prefer ordering online or do they want to talk to a “real person”?
Gazdag: I believe it’s best to have a combination. For ordering material, I like to speak directly to my sales reps, creating relationships with them that no computer can touch. It’s the combination of people and technology that is most effective.
Miller: We have customers that prefer all of these methods. Some only order via e-mail and either send artwork electronically or via UPS. Others like to call and talk to someone or meet in person. We try to adapt to each customer’s preference.
What’s the best inventory management system in the world?
Gazdag: One that meets the growing demands of a company. A solution has to be flexible to meet the changing needs of the marketplace. It has to be open to customer demand and it has to address the goals of the corporation. It has to be a system that allows your company to make a profit and be the source your customers can rely on to get the job done.
Miller: In a company our size, it is communication — between our production manager and the sales and customer service department. It is important that both parties are aware of your core products and anything outside of that is communicated while the order is being placed into production. This way, special order products can be obtained in a timely manner and anyone who receives them at your facility can direct them to the correct area of production for completion of the project. In addition, large jobs that would use a good amount of core products are also communicated so additional inventory can be ordered.