Maximizing ROI with Effective Work in Process Inventory Management

It is well known that the industry is at the threshold of transformation, which will have a significant effect on the production of goods, the provision of additional services, the labour market, the working environment, and customer behaviour.

The majority of production companies are interested in continuous cost reduction. The cost reflects the company’s competitiveness and sustainability. Manufacturing efficiency is linked to many business costs.  work in process inventory is one of these costs. 

The demands of society have always been met by research. Companies have evaluated these needs to meet them as scientific inventions. Since the Industrial Revolution, four major scientific have given companies a significant competitive advantage. The use of water and steam force was the first advancement that changed the production process. This contributed to the beginning of genuine mechanization and has also served as the foundation for further.

Electrification and process thinking were the main subjects. Henry Ford was the first to implement this processing change. A movable assembly line, which made products move from one job to another, was the first process developed; This was in opposition to the prevailing trend. This enabled a reduction in production costs and an increase in production in order to meet mass demand. 

Importance of effective Work In Process Inventory management for maximizing ROI

The JIT model helps organizations replenish work in process inventory in SKU when it is needed. When it comes to very expensive inventory items—that is, those with relatively higher purchase prices, holding costs or ordering costs, but low demand—this will be the best approach. The model tries to avoid overstocking and the costs associated with it. Consequently, organizations only receive six inventories when the need for additional stock rises. Vendors must ensure prompt delivery for the JIT approach to succeed. 

This is to prevent costly and irreparable business interruptions caused by work in process inventory delivery delays. Just-in-time, a developing field of scheduling, aims to increase return on investment by lowering work in process inventory and carrying costs. JIT is recognized as a production scheduling strategy in single and parallel machine environments, but it is now being taken into consideration in flow shop machine environments.

Different types of inventory in a manufacturing environment

Inventory can be classified into three types which include;

Raw material inventory

This includes all items purchased by an organization for processing. For instance, a confectionary organization has flour, yeast, eggs, and other raw materials in its stock.

Work In Process Inventory

This is an interim stage of raw material inventory that the plant needs to complete before moving on to another stage of processing. These are materials that have been somewhat processed but are still not finished. 

Finished Goods Inventory

This is the stock of products that have been completed. Regardless of whether the stock is in the warehouse or awaiting shipment, the level of finished goods stock is a matter of coordination between the organization’s sales and production departments. However, warehouse management includes a variety of warehouse tasks, including inventory management.

Lean Manufacturing for Managing Work In Process Inventory

Lean manufacturing is an innovative paradigm that aims to eliminate waste in any form, anywhere, and at any time. It constantly strives to maintain a balanced flow of materials and information and always strives for perfection. Today, industries are using lean manufacturing ideas to reduce waste and increase efficiency.

Lean philosophy has been recognized as one of the most important methods for increasing productivity, which increases an organization’s competitiveness. Lean production is usually categorized under the category of process improvement programs; This category also includes other approaches like total productive maintenance and business process re-engineering theory of constraints. 

Lean production is a multi-dimensional approach that incorporates a variety of management practices into an integrated system, such as just-in-time, quality systems, work teams, cellular manufacturing, supplier management, etc.

Lean manufacturing principles	What does it mean?	Enablers
Standardization	Standardized work procedures to do routine and repetitive tasks to improve efficiency and quality.	Standard work procedures, Design blueprints
Simple and specified pathways	The flow of work to the right machine or person in the right form at the right time at the lowest cost with the highest quality possible which reduces production lead time.	Kanban system, JIT
Teaching and Learning	Through the continuous effort of managers and supervisors acting as enablers or mentors in solving problems.	Scientific methods of problem-solving
Socialization	An atmosphere of trust, respect and common purpose in which work is performed to improve efficiency and productivity.	Consistency, consensus and communication
Continuous improvement	Experimentation by the people at every level toward improving their own work systems.	Kaizen, TQM, Six Sigma, JIT etc.
Supplier-customer relationship	Supplier-customer relationship specifies the form and quantity of the goods and services to be provided, the way requests are made by each customer, and the expected time in which the request will be met.	Long-term cooperative relationships
Coordination through rich communication	Communication is required to develop the idea into an innovation.	go-see, involvement of suppliers early during PD
Functional expertise and stability	Every company depends on highly skilled engineers, designers, and technicians to bring a product to the market; it is about developing a standard set of skills	Job rotation policy
The pursuit of perfection / striving for the ideal goal	It is common sense of what the ideal system would be, and that shared goal motivation to make improvements beyond what would be necessary merely to meet the current needs of their customers.	Sharing a common goal
Cultivating organizational knowledge	It shows the faith of the organization that the skills and knowledge generated will pay off later.	knowledge sharing practices

Tools and Technologies for Effective Work In Process Inventory Management

Manufacturing execution systems (MES)

Satisfying a variety of customer requirements and reaping benefits from mass and craft production, mass Mass customization production (MCP) satisfy a variety of customer requirements and reaping benefits from mass and craft production

Emergency orders and frequent engineering changes are some of the disturbances that typically occur in MCP companies because customer orders and operation times are very unpredictable. Because a lot of parts and components used in mass-customized products are one of a kind, it is difficult to estimate the setup and processing times involved. Normal production plans and schedules will be affected by such uncertain disturbances. Furthermore, snowball effects such as delays in customer orders, logistics errors, and high levels of work in process inventory are caused by these disruptions. 

RFID devices are systematically deployed on the shop floor to track and trace manufacturing items and collect production data in real time. RT-MES finds and manages disturbances. Decisions regarding planning and scheduling are made and executed more efficiently and accurately. There are online tools that allow you to visualize and monitor the dynamics of shop floor work in process inventory (WIP) in real time.

Internet of Things (IoT) and real-time monitoring: Cloud-Based Smart Car Parking

To best support the urban core, parking issues are becoming more and more pressing. Current trends in meeting the globally connected continuum could turn these persistent parking issues into new opportunities. New technologies that allow cities to reduce traffic and carbon emissions have changed the parking industry. 

The parking industry has become more and more dependent on the Internet of Things (IoT), which has enhanced processes and enabled intelligent parking solutions that increase and manage parking inventories. Here, the Internet of Things (IoT) uses embedded wireless sensor networks to connect physical parking space infrastructures to information and communication technologies. Through these connections, cloud-based smart management services are provided. 

Additionally, this shift in interconnectivity is driving social and economic transformations. For example, when physical infrastructure data is released, new applications and new business models are driving increased productivity. Parking space owners, be they individuals or businesses, can now market their assets with a Parking Service Provider (PSP) by turning unused parking spaces into money.

Conclusion

The majority of production companies are interested in continuous cost reduction. The cost reflects the company’s competitiveness and sustainability. Manufacturing efficiency is linked to many business costs.  work in process inventory is one of these costs. When it comes to very expensive inventory items—that is, those with relatively higher purchase prices, holding costs or ordering costs, but low demand—this will be the best approach.

JIT is recognized as a production scheduling strategy in single and parallel machine environments, but it is now being taken into consideration in flow shop machine environments. Lean manufacturing is an innovative paradigm that aims to eliminate waste in any form, anywhere, and at any time. It constantly strives to maintain a balanced flow of materials and information and always strives for perfection. RT-MES finds and manages disturbances. Decisions regarding planning and scheduling are made and executed more efficiently and accurately. There are online tools that allow you to visualize and monitor the dynamics of shop floor work in process inventory (WIP) in real time.

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