January 2013 | Commentary | 3PL Line

Five Signs Your Production Logistics Needs Help

Tags: Manufacturing

Tom Stricker is President and CEO, HK Logistics,262-860-6805

Most manufacturers experience and address common inbound logistics challenges, but one area of improvement that many overlook is the discipline of production logistics — ensuring each machine and workstation is fed with the right product in the right quantity and quality at the right time.

As the crucial link that connects inbound materials to on-time delivery of outbound products, production logistics can increase an operation's efficiencies and save millions of dollars annually. By creating the right blend of technology, equipment, and disciplined processes, you will ensure materials get where they are needed to keep production flowing.

The million-dollar question is: when is it time to pay closer attention to production logistics? Here are five signs your production logistics may need improvement:

  1. Myopic view of inventory. If line workers are struggling to find materials, your production logistics are definitely a problem. Another sign of trouble is repeatedly having too much or not enough inventory of an item. A third indicator is confusion about which supplier is delivering which item and when; this is often caused by too many hand-offs between suppliers before an item goes to production.
  2. High inventory costs. Consistent high inventory costs often result from keeping more inventory on hand than is needed, which increases working capital and reduces inventory turns. High inventory costs may also result from unnecessary freight costs, especially if multiple suppliers feed the plant. The root problem for all these high costs might be traced to poor visibility or poorly conceived and executed production logistics processes.
  3. Right time, wrong part. It's good when parts arrive at the production line when needed—but not if they are the wrong ones. This error can occur for several reasons. The supplier might ship the wrong part to the plant, but workers add it to inventory anyway. Someone may key the wrong data into a spreadsheet as part of a manual process for inventory tracking. Or a supplier's IT system may not be in sync with the plant's IT systems that connect materials sourcing and production.
  4. Damaged goods. Production logistics problems might cause damaged parts and supplies—or worse, a damaged end product. Damaged items are often the result of too many hand-offs among suppliers, or too many workers handling parts and materials. It's simple math: the more touchpoints, the greater the potential for damage.
  5. Line delays and stoppages. If the production line is delayed or stopped once, it's once too many. A pattern of delays illustrates the need to revisit production logistics, because the source of the problem might lie in poor inventory visibility, inventory errors, damaged parts or supplies, or any combination of these issues.

Do Something

The biggest mistake some companies make is doing nothing. Don't ignore the signs of major problems that could be tied directly to production logistics.

And if the signs aren't clear—yet problems persist—consider having a production logistics expert evaluate the inbound materials flow from the time they arrive on site until they reach production. You might be surprised by the solutions available, and the results they can deliver.