Guide to Managing Your CNC Inventory

03 May 2023
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Image Credit: ageing_better via Unsplash



When it comes to your CNC machining shop, meeting customer demand successfully is the number 1 priority.

Ensuring that your shop has all the right castings, components and materials it needs to meet customer demand, then, is a crucial step in the process.

While being mindful of inventory is crucial, stocking up excessively is unnecessary, and lean manufacturing principles encourage little wastage and discourage superfluous inventory. Getting the balance right can be a risk for smaller shops without a system of predicting likely customer demand.

In these days of Industry 4.0, businesses of every size are embracing the Autonomous Revolution and using powerful tools to optimize their inventories, keeping in-house costs low while meeting ever quicker lead times. To stay competitive, it is crucial for CNC machine shops to invest in smart tool management and inventory systems. The benefits are obvious: with a greater handle on tool usage, condition and availability, as well as a slimmer buffer on held stock, it becomes easier to keep costs low, increase efficiency, and reduce waste. Further benefits, such as reduced downtime, greater accuracy, and fewer human errors also come with these so-called “smart” solutions.

Read on as we dive into the problems facing many CNC machine shops, and discover how working smarter, particularly with the help of specialized workflow software packages, can help your shop get a handle on its inventory for an improved bottom line.

Common Inventory Problems Faced by CNC Machine Shops

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Image Credit: Mediocre Studio via Unsplash

CNC machine shops can face challenges in determining the optimal amount of stock to hold. Manual stock tracking can be unreliable and time-consuming, leading to potential wastage of material and cash due to unnecessary orders. Moreover, improper stock management can result in reordering too early or holding onto too much stock. These issues can lead to delays in project delivery timelines, which can have negative impacts on business operations. Therefore, smart solutions are necessary to mitigate these problems and ensure efficient and effective stock management.

Speaking of smart solutions for CNC machine shops, software can play a crucial role in optimizing operations, but be aware that software can be a problem that disguises itself as a solution. Sure, it is always a wise decision for a machine shop of any size to invest in workflow software, particularly those that automate stages of the production process. The intention among businesses is clear to see: Deloitte’s 2023 Manufacturing Industry Outlook found that 62% of surveyed manufacturers cited ‘automation’ as a key area of planned investment over the coming year, the most commonly selected option of the fourteen investment areas listed. Resource planning packages represent a good way for businesses to update and modernize, since these steps have too long been managed using legacy methods such as Excel spreadsheets, flip chart paper, or even whiteboards.

But the issue arises when multiple competing software packages are used, which often have no clear way of speaking to each other. The chain of software solutions can get quite long and cumbersome, with a typical larger enterprise having to juggle 4+ software packages that relate to inventory stockkeeping alone. Order information may be handled by an electronic data interchange (EDI) system, from which it enters the wider enterprise resource planning (ERP) package. This communicates with a production requirement planning (PRP) application, in order to inform data about casting and component requirements. Last in the chain is a materials requirements planning (MRP) system, which generates purchase orders for new stock. And this is without considering all of the other processes that inform everything from loading the workzone with materials, to starting the program, to applying post-processing, to quality control, to assembly and shipping, all of which informs the inventory and which may require hours of cumulative manual work.

And this is without considering the knock-on effects on product quality that can arise from mismanaged inventory. For one thing, consistency of castings can vary among batches: though there are likely to be fewer miscellaneous errors arising from a larger order of castings, a shop may also see high scrap rates and more cash hemorrhaged with a particularly bad batch. The ramifications of poor inventory management can also extend beyond the shop floor and impact the entire supply chain, leading to delays in delivery times, increased costs, and decreased customer satisfaction. If a company is unable to fulfill an order due to inventory shortages or production delays, they may lose that customer’s business to a competitor.

The ‘Smarter’ Smart Solution

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Image Credit: Lee Campbell via Unsplash

As CNC machining processes become increasingly complex and demanding, manufacturers are turning to smarter solutions that leverage automation, data analytics, and advanced software technologies. Rather than relying on manual processes or multiple software packages to manage their operations, many manufacturers are adopting more elegant and integrated solutions that offer a comprehensive suite of tools for inventory management, tool management, production scheduling, real-time monitoring, and data analysis. By implementing these types of solutions, manufacturers can gain a more complete view of their production processes, improve efficiency and quality, and drive greater profitability.

A comprehensive MES, such as AMFG, can provide a range of features for inventory and tool management. In terms of inventory management, AMFG’s MES offers real-time tracking and monitoring of inventory levels, automated reordering and replenishment, and integration with ERP systems. This can help machine shop owners optimize their inventory levels, reduce waste, and improve overall supply chain efficiency.

For tool management, AMFG’s MES offers advanced capabilities such as real-time tool tracking, automated tool dispensing and retrieval, and tool performance monitoring. This can reduce setup and changeover time, optimize tool usage, and prevent errors or accidents caused by faulty or inappropriate tools. AMFG’s MES can also facilitate data collection and analysis by providing comprehensive tool-related data, such as inventory levels, tool usage, tool condition, and tool performance.

The Results

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Image Credit: Carlos Muza via Unsplash

By implementing a comprehensive MES such as AMFG, machine shop owners can potentially improve efficiency, reduce costs, and enhance quality. Real-time inventory tracking and automated reordering can help to optimize inventory levels, reduce waste, and improve overall supply chain efficiency. Automated tool dispensing and retrieval can reduce setup and changeover time, improve tool performance, and prevent errors or accidents. These can result in increased productivity and quality, which in turn can potentially lead to greater customer satisfaction and retention.

In addition to these benefits, AMFG’s MES can also potentially improve safety and compliance by providing real-time monitoring and tracking of inventory and tool-related data. With comprehensive data at their fingertips, machine shop owners can make data-driven decisions that can help them optimize their operations and maximize their return on investment.

Looking Ahead: Maximizing CNC Machining Shop Efficiency and Productivity

As CNC machining processes continue to evolve and become increasingly complex, the need for efficient and effective inventory management will only grow. By embracing smart tools and strategies for inventory management, businesses can stay competitive and meet the demands of an ever-changing marketplace. With the right solutions in place, CNC machining shops can optimize their operations, reduce waste, and improve the quality of their products.

As we look to the future, it’s clear that the adoption of advanced software technologies will play a critical role in the success of CNC machining businesses.

By investing in the right tools and resources, machine shop owners can position themselves for long-term growth and profitability.


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