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How Small Manufacturers struggle with Inventory and Materials Planning

Feb 19,2024

Many small to medium-size manufacturers struggle to compete with larger businesses because they don’t have the economies of scale that benefit larger enterprises. Especially within the manufacturing sector, small businesses struggle to compete with larger counterparts because of problems with resources planning, inventory management and access to materials.

However, smaller manufacturers can identify and overcome inventory and materials planning with careful planning and management. Here are a few common inventory challenges and how to overcome them.

Lack of real data

Large businesses have access to a vast amount of data. They will likely have multiple different software collecting data, analysing it and interpreting it to help with forecasting models. With an entire suite of technology continually collecting data, it’s no wonder large businesses can accurately predict how much stock they will need and when. Small businesses may rely on spreadsheets, incorrectly recorded data or data gaps, and human analysis.

The answer: Just because your small business doesn’t have an entire software suite worth millions doesn’t mean you have to use pen and paper or rely on spreadsheets. Invest in a single, reliable software that can automate tasks and help keep track of everything. At StockTrim, we specialise in providing a solution for your inventory and materials planning that both small and medium businesses can rely on.

Poor identification numbering system

Plenty of small manufacturing businesses lose track of inventory, misplace parts, or cannot recall specific elements because their identification system is not up to scratch. Adequate numbering, batch identification and tracking numbers are crucial to inventory planning and materials management. Then you can easily find and track every part at every stage, inventory planning becomes smoother.

The answer: Ensure that every team member is aware of how and when individual pieces, components and parts are identified and ensure you have software in place to scan and track pieces by number. Often, this system can be linked to your central inventory management system. In particular, cloud-based inventory management systems should be able to help with tracking and assignments.

No buffer stock

Even the best inventory planning can run into problems; fluctuations in demand and emergencies can cause havoc on a well-planned materials schedule. Although small businesses struggle to have enough storage space to hold vast amounts of additional stock for emergency situations, many small businesses fail to include a buffer in their inventory planning.

The answer: Use a rotating buffer system in which inventory from your buffer is used and replaced frequently. This means you have extra when you need it, and it’s always new and ready to go. You should include a buffer into your planning the way you would include a client. Using your inventory planning system, you can input a buffer into your material stock.

Not considering the supply chain

Supply chain issues are never-ending, and while a big business may be able to switch suppliers, apply pressure where needed or rely on multiple suppliers, smaller companies don’t have this luxury. One issue with one supply or a delivery complication can have a big impact on your day-to-day operations. You may not be able to suddenly increase or decrease the supply of materials and will need to consider transportation time in your inventory planning.

The answer: You need to consider the supply chain as an extension of your own business and take a keen interest in any issue they might have to deliver items to you. Be prepared to work with your supplier to work out a solution. In a worst-case scenario, you should have a plan for supplier diversification.

Final thoughts

Small and medium-sized manufacturers often feel out-maneuvered by large companies that have seemingly unlimited planning resources and storage. However, a little careful thought and investing in the right systems can mean that smaller companies can immediately implement an effective inventory and materials plan.

While small manufacturing businesses face multiple challenges regarding inventory and materials planning, investing in the right stock forecasting system is a crucial step to making everything smoother. Get in touch today to find out more about StockTrim and how it can help your business.

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