The Power of Track & Trace for Optimizing the Inbound Supply Chain

Summary
Late deliveries in a lean manufacturing environment can lead to millions of dollars in plant downtime. The way many companies deal with this is by padding their lead-times which results in more invento-ry than needed, inventory obsolescence, and poor cash flow management. This article will explain this problem in more depth, and describe core sup-porting technologies to solve this problem.

The Problem
As manufacturers have embraced Lean concepts, many have built KanBan (just-in-time, just-in-sequence) warehouses close to their factories. The inbound warehouse receives inventory from core suppliers, sequences those strategic materials to support the next few hours production schedule, and uses trucks making milk runs to deliver those materials just-in-time to support the next wave of production (two hour delivery windows are not uncommon).

If for any reason, the strategic materials – raw materials, components, and subassemblies used in manufacturing - cannot be delivered, downtime can cost manufacturers millions of dollars. In the automotive industry, fines can be much as $4,000 per minute for trading partners whose delivery failures cause production downtime.

As a result, the inbound warehouses often seek to have several weeks of inventory on hand. Companies that run very lean in manufacturing, if not careful, end up pushing much of the inventory that used to be in the factory upstream. Just because the inventory is off the company’s books, does not mean the company is not paying for it. They are. Their suppliers and part-ners will have higher costs and will pass those along.