Software Helps Shop Cut Inventory Costs

The management of inventory is a problem that can plague almost any industry, including machine shops and machining-intensive manufacturing operations. Dura-Mill, Inc. (Ballston Spa, New York) is just such a case. The company makes solid carbide end mills, and because its customers rely so heavily on these tools, Dura-Mill works hard to ensure their quality.

For example, the raw stock is measured when it comes in to make sure that it is within Dura-Mill's specifications. The diamond cutting wheels used to transform a carbide blank into a finished end mill are measured for dimension and profile to make sure they will cut the exact shape that is required. And millions have been spent on robotic cutting systems to make certain that each end mill of a particular product number is identical to others with the same number.

But with the attention to manufacturing detail comes another problem: Inventory is expensive. It takes space, dollars and people to manage it.

The raw carbide blanks for end mills cost about $8.00. The time and labor spent to create a finished end mill add significantly to the dollars invested in a single completed piece. Thus, a stockroom full of completed end mills represents a big investment. It is in everyone's best interest to make sure that it turns over as rapidly as possible. The best situation would be one in which Dura-Mill could maintain an inventory of each end mill that would be sufficient to meet customer needs without triggering rush production orders and without causing stock to sit on the shelf for months on end.

In the past, inventory control was frequently done by the "look and guess" method. Someone would notice that the bin holding a particular end mill seemed to be getting low, which would trigger a request to make more. The problem is that for popular end mills, a half a bin might represent only a week's supply, but for one of the slower sellers, it might represent several months' inventory. Setting the right level of inventory for each product number was the ideal, but it was hard to achieve.

The solution to the problem came from a familiar product. Dura-Mill, and its Newco Products Division (which sells industrial supplies), had been using the EXEControl system from Ebeling Associates (Clifton Park, New York) for years to manage substantial portions of their businesses. At every step of the way, from a customer phoning or faxing in an order to its being shipped out the door, EXEControl helps Dura-Mill manage the process. EXEControl creates the picking list for packing the order; generates an invoice; and tracks general ledger, accounts payable, accounts receivable, purchasing and the status of special orders.

The software is used in other ways as well. When a machinist begins a production run, a terminal at the CNC machine displays the instructions for making the part. Then a "smart" time clock prompts the machinist to tell the system what step he or she is performing, on what machine, and how many good and bad parts are produced as a result of the operation.

In addition, because it is possible for one machinist to perform several operations on multiple CNC machines at the same time, the software can automatically distribute that person's time among the various jobs. In this way, Dura-Mill can track the exact cost of each part, based on the raw materials and labor necessary to machine it. If a part must be scrapped, there is even a pop-up menu for entering the reason. This level of detail in data capture provides full-lot traceability from supplier to customer and information for maintaining quality control.

Ebeling Associates suggested that EXEControl could also help Dura-Mill more productively handle inventory control, using a scientific formula based on previous ordering history to establish minimums and maximums for each product number.

"We're already starting to see the benefits of much better control of our inventory," says Scott Walrath, administrative vice president. "In the past, we would often do manufacturing runs of 1,000 pieces of a given end mill. Now, we typically do 200-300 pieces. That means that our manufacturing equipment is not tied up as long, freeing us to respond faster to special orders from customers. In a competitive business like ours, that's a big advantage."

EXEControl not only keeps track of finished goods in inventory, it also keeps track of the raw materials that are necessary to produce the finished goods, based on inventory levels. "It's no good knowing you need to make 200 more of a given end mill if you don't have the carbide blanks you need and the tools to cut them," Mr. Walrath says. "The software also helps prevent us from over-ordering raw materials for products that sell more slowly and gives us an accurate picture of how much raw stock is in-house on consignment."