What Advantages do Digital Inventories Offer over Traditional Warehousing in Manufacturing?

23 February 2023

[Image Credit: Jacques Dillies via. Unsplash]

 

In the 21st century, mass production has taken the world by storm, with more and more technologies striving towards large scale operations as a measure of final success. 

Today, it is easier to order products than ever before – in less clicks than can be counted on one hand, customers can purchase items and expect their arrival mere days later. Combined with a steadily growing consumerist culture, it is increasingly important for manufacturers to keep up with their customers’ pace, prepared at all times for items to be shipped out. 

The most popular approach to ensuring this, for many years, has been to adopt a Just In Case (JIC) manufacturing approach, stocking up on large quantities of pre-produced items beforehand. This involves anticipating which items are likely to fly off the shelves and reflecting this in stock quantities, requiring keen attention to fluctuating market trends and patterns in customer behaviour, as well as a constant flow of production to fill stock gaps. 

Yet, despite the prevalence of this methodology, there is certainly such a thing as being too prepared, even detrimentally so. Manufacturers taking on a JIC approach can find themselves at the mercy of contingent demand shifts, too sporadic to prepare for in time; stocking up on product that ends up being unpopular can lead to both wasted manufacturing material and wasted warehouse space, a costly hit for businesses to keep taking. Furthermore, warehouse upkeep and the cost of purchasing such an expanse of space can make additional dents in the company bill. 

With the dawn of digital manufacturing, a solution is beginning to emerge, following a polar opposite approach to JIC logic. Just-In-Time manufacturing involves producing parts as and when they are needed, allowing manufacturers to cater their production to current demand and avoid becoming backlogged with surplus stock. 

JIT manufacturing is particularly successful in the context of spare part production. Part breakage is inherently unpredictable, making it especially difficult to avoid stocking up or redundant parts in case of a one-off scenario where they might come in useful. JIT manufacturing takes a more flexible approach, producing necessary parts at the moment of their need to avoid precisely this issue.

Adopting a JIT system, however, requires thoroughly preparing for last-minute production without limiting the options available to customers. This is where digital inventories come into play. 

Taking AMFG’s leading digital inventory solution as an example, this article will delve into what this functionality involves and what physical inventory complications its adoption can resolve. 

 

What is a Digital Inventory? 

Put simply, a digital inventory is a catalogue of files for pre-configured parts, ready to be manufactured. Rather than storing items on shelves in a literal warehouse, ready to ship out at a moment’s notice, the digital inventory ‘stores’ items in a software system; all the information needed for specific parts is prepared and readily available to manufacture, without having to take on a physical form. 

From a customer perspective, the digital inventory roots its value most firmly in collaboration with an ordering portal like AMFG’s. Here, customers can browse a catalogue of parts, select their desired items, and receive a quote for their chosen parts immediately, before placing their order, all in the same digital space.

Rather than having to independently source and upload the necessary build file each and every time they order, the path to purchase is significantly shortened, making things easier for the customer and increasing the likelihood of their return to the supplier.

Furthermore, businesses with distributed production centres can achieve harmony through the unification of a single computer-based storage source, rather than each of them tending to an individual local warehouse. 

 

Flexibility Without Overpreparation

 

In some ways, an element of the JIC approach is still present here. Manufacturers might want to select some of their most popular products to store in a digital inventory, for example, allowing customers to easily find their favoured parts and order them immediately.

Furthermore, this catalogue can be easily shuffled to match changing customer demand, by adding recently popular items or phasing out parts that are no longer frequently requested. In other words, businesses can upload build files ‘just in case’ a customer is likely to want it. 

On the other hand, digital inventories are channelled with greater strength towards a JIT technique. A customer’s order through the digital inventory acts as a trigger for the part to be immediately manufactured; with the file already readily available, the process of scheduling, producing and post-processing the part is also streamlined, optimising lead-times and sealing high customer satisfaction with a swiftly delivered order.

As an end-to-end solution, AMFG’s MES epitomises the success of digital inventories when smoothly integrated into the entire workflow. 

 

What are the Key Benefits of a Digital Inventory?

The advantages of moving inventory management into a digital space are varied. Here are a few of the central reasons driving manufacturers to invest:

 

• Cuts Costs Across the Board

 

Paying for and maintaining a physical warehouse, hiring maintenance staff, managing stock, discarding of surplus parts and ordering in material to replace wastage: the list of cost heavy components necessary for keeping a physical inventory winds on and on.

With a digital warehouse solution, these economic factors are rendered irrelevant. 

Rather than gathering dust, previous stock room space can be employed for more directly revenue-boosting purposes, such as opening up new departments or centralising R&D initiatives. Furthermore, replacing the repetitive tasks involved in warehouse maintenance, staff can be directed towards more engaging and productive work.

Most importantly, however, digital inventories ensure that only necessary quantities of material are used, adapting production output to the precise order quantities placed. Especially where expensive materials like platinum or compounds like carbon fibre are being applied, this can make an enormous difference on overall company spending, ensuring that high-quality products see high-revenue returns. 

• Improved Customer Relationships

 

 With so much competition on the market, ensuring that customers choose your services time and again is becoming increasingly difficult; spoiled for choice, loyalty is priceless in today’s manufacturing industry. By making it difficult for customers to return for repeat purchases, businesses are only harming their chances at earning the continued favour of consumers. 

A digital inventory keeps production data in a single system, easily accessible to both consumers and producers alike. The entire production process is subsequently simplified; clients can find and order their desired part at incomparable speeds, whilst businesses can immediately begin production upon receiving the order notification.

On both sides of the B2B or B2C exchanges, value is reaped; the probability of acquiring customer ‘stickiness’ is amplified, guaranteeing a smooth and swift ordering experience. 

• Simplify Part Retrieval 

 

Besides attracting more customers and reducing business spending, the step-by-step requirements following an order placement are dramatically simplified where a digital inventory is employed. 

Manually searching the layered and often disorganised expanse of a physical warehouse for a single part absorbs valuable time that could be directed elsewhere. This becomes even more of an issue as businesses scale, with more and more items needing to be stockpiled, warehouses growing larger and more traversal within the space becoming necessary. 

Digital warehouses allow users to search for, identify and send parts for manufacture in a matter of minutes. Without having to leave their seat, the process of fulfilling a customer’s request can be triggered immediately. Workers can easily return to other work, encouraging greater productivity and adding value to the business as a whole.

• Reduced Environmental Impact 

 

The manufacturing sphere is one of the most environmentally damaging, with the greenhouse gas emissions from plastic waste alone slated to reach over 56 gigatons alone by 2050. Though the economic impact of wasting material may be the main focus on the level of a singular business, the environmental impact when hundreds of thousands of factories do the same is immense. 

Indeed, with subtractive technologies, material wastage is an inherent part of the manufacturing process. Ensuring that only unavoidable instances of waste take place can play a critical role in reducing the industry’s overall carbon footprint.

Refraining from bringing parts into the physical world until the last moment necessary, digital inventories can overturn this trend for the good of the industry as a whole, as well as on an individual scale. Only manufacturing when necessary, and avoiding the creation of a stock backlog will be vital for this inclination towards waste to be reversed. 

 

Carpe Diem: Seize Changing Demand Day by Day

 

Though the physical act of warehousing may itself seem made up of relatively passive tasks – packing items away, order for stock to be renewed, transferring items – the influence it holds over business success should not be underestimated. 

The decision to store parts digitally increases flexibility, boosts connectivity and makes processes all the more efficient. With the drive to onshore operations emerging with renewed strength, and particularly in light of the US’ growing eagerness to manufacture and source domestically, the pressure to invest in local warehousing space is mounting.

In turn, cordoning off more land for warehousing becomes an inevitability, with many turning to greenfield terrain to occupy despite the increasing damage of urban sprawl on our natural environment. 

Not only is digital warehousing more cost effective, more attractive to consumers and much simpler, but its implementation could significantly support efforts to onshore without requiring investment in additional infrastructure. 

Whether you’re a small business without the means to invest in a warehouse, or a large business sinking under the weight of an overflowing stockpile, AMFG’s digital inventory is an invaluable tool, helping businesses to pick up operational pace and reach a new echelon of success. 

 

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Enjoyed this? Check out our previous article, ‘The Complete Starting Guide to Additive Manufacturing Technologies’.