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Inventory Management Techniques and Concepts

Inventory Management Techniques and Concepts

April 14, 2023

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Inventory Management Techniques and Concepts

Blog ➔ Supply Chain ➔ Inventory Management Techniques

Inventory Management Techniques and Concepts

Inventory management is an essential part of every business that sells a physical product. If a business runs out of inventory, they lose their ability to make money. But, the other side is having too much inventory that could potentially never be purchased, and increase storage costs. A product design can change and the business could be left with a bunch of outdated, worthless inventory.

Properly managing inventory helps balance the scale of having enough inventory to send to customers, and not having too much stock. In 2021, we’ve seen how a disruption in the supply chain can cause significant problems, and increased prices for consumers.

In this post, we’ll explain the different techniques and concepts that manufacturers and businesses use to manage their inventory.

What is inventory management?

Inventory management is a system that tracks inventory—raw materials, unfinished goods, and finished goods—from start to finish. An inventory management software can track everything from material purchases and inventory costs to the sale of finished products to ensure a business has everything they need to function.

The goal of inventory management is to increase the efficiency of a business. A company becomes more profitable and reduces waste when they know exactly what to order, when to order it, and how much to order. Of course, there isn’t a flawless system, but businesses can take steps to improve supply chain processes and reduce wasted resources.

Why is inventory management important?

Proper inventory management is essential for the longevity of every product-based business. Running out or running too low on inventory can cause a business to lose money and put extra strain on customer relationships. If a business’s inventory doesn’t match the current customer demands, you can expect lots of issues. 

Inventory control and management doesn’t solely apply to companies that sell physical products. Even service-based businesses need to have the right resources on-hand to provide their services. 

Proper inventory management is necessary if you want to scale a business and reach sustainable long term growth. 

Types of inventory

The types of inventory depends on the business. At Spex, we manage raw materials, work-in-progress, components, and finished goods.

Raw materials are unfinished goods that are used to create a product.

Work-in-progress is a semi-finished product that’s in-between raw material and a finished good.

Components or parts are similar to works-in-progress. They’ve been worked on at one manufacturer, but are sent somewhere else to be assembled or worked on more before reaching the end consumer.

Finished goods are products that are ready for the end consumer to purchase and utilize.

How does inventory management work?

Inventory management ranges from very simple routines, to very complex systems. This depends on the nature of the business and their customers. If a business has 2 products and they sell 50 Product A’s and 100 Product B’s every month, they know how much of each they need to order to fulfill orders and avoid storing too much inventory.

A larger business like a Walmart has thousands of products that are all bought at different quantities every day. And some of the products like produce and meats are only good for a few weeks, so they need a robust inventory management system.

Small businesses might count inventory by hand, but that’s also time-consuming and can lead to human errors. Inventory management for larger businesses typically uses a database system that tracks sales, orders, stock on hand, and future sales projections. You can see in real-time how much of everything you have on hand within a few minutes. The system will alert the right team members when inventory drops below a certain threshold, or automatically order more raw materials or products.

3 common inventory management techniques

In the manufacturing industry, make-to-order and make-to-stock are two inventory processes most commonly used in manufacturing facilities.

Just in time inventory involves holding as little inventory as possible. This process reduces the costs of storing inventory and materials. This increases lead time and manufacturing costs, but it also allows for customization and avoids dead stock.

Make to order is an inventory technique where the customer places a bulk order. They might order enough products for a month. Once the order is placed, the manufacturer makes the product and ships it. This gives the business some extra stock compared to JIT, but the orders are based on actual customer needs.

Make to stock is an inventory management process that keeps extra stock on-hand. This allows manufacturers to have enough stock to fulfill orders faster and more efficiently. The manufacturer might have 6 months worth of safety stock that’s ready to ship to the customer. This significantly reduces lead times and helps avoid supply chain issues. Make to stock is based on estimates of customer needs, or demand forecasting, so it can increase some storage costs.

Learn more about Make to Order vs Make to Stock

Common inventory management challenges

Depending on the size and nature of the business, managing inventory can be quite challenging. As we’ve seen in the past few years, business circumstances all around the world can change dramatically within a few days or weeks. Inventory management needs to have systems and structure, while remaining fluid enough to implement changes. 

Here are a few common problems and solutions:

Inaccurate numbers

Having inaccurate inventory counts can cause a lot of issues. If a car manufacturer thinks they have 4,000 steering columns on-hand and they actually only have 400, they can quickly run into production issues. You might think this is obvious and easily avoidable, but when a warehouse has thousands of different parts and isn’t organized well, inaccurate inventory becomes a common problem. 

Changing customer needs

It’s almost impossible to predict customer needs 100% of the time. Even if a customer has consistently placed the same order for years, it can change overnight. Modern inventory management systems will help you track customer trends and provide greater insight into their needs. 

Poor processes

Inventory management shouldn’t be left to guesswork. It takes time and effort to build proper processes, but it’s well worth the investment. Poor inventory management processes could be outdated or not understood by the team. It’s important for the processes to grow and evolve with the business. Using the same processes as 20 years ago isn’t going to fuel business growth. 

How to improve your inventory management

Improving your inventory management has two primary benefits:

  1. Reducing unnecessary storage costs.
  2. Increasing customer satisfaction.

When you don’t have too much inventory, you won’t be paying for the extra storage, and when you always have enough stock to fulfill orders quickly, customer satisfaction increases.

Here are three ways you can improve your inventory management:

Understand your needs

Every business has unique inventory needs. Taking time to understand what inventory is the most important, your customer’s needs, and looking at historical trends helps you manage inventory effectively.

Build relationships with suppliers

Having a good relationship with your suppliers is essential. These relationships help get the inventory you need, when you need it. Long-term supplier relationships help you set realistic expectations and unlock the best possible prices. Spex helps customers reduce the number of vendors and suppliers in their supply chain, saving time and money. 

Use real-time data

Having the most up-to-date numbers helps businesses make data-based inventory decisions. If inventory is updated on Monday, then a customer places a big order on Tuesday, you need to have updated numbers as quickly as possible. A system that shows you real-time inventory data can make a real difference in your business.

Inventory Management Metrics and KPIs

Measuring the effectiveness of inventory management is essential for organizations looking to optimize their supply chain operations and reduce costs. Various metrics and key performance indicators should be used to assess the performance of inventory management processes and identify areas for improvement. 

Some common inventory management metrics and KPIs include:

  1. Inventory Turnover Ratio: This metric measures how frequently a business sells and replaces its inventory during a specific period. A higher inventory turnover ratio indicates efficient inventory management and strong sales performance.
  2. Days Sales of Inventory (DSI): DSI calculates the average number of days it takes for a company to sell its entire inventory. Lower DSI values indicate that the business is effectively managing its inventory and quickly converting stock into sales.
  3. Stockout Rate: The stockout rate measures the frequency of stockout situations, where a business runs out of a specific item. A lower stockout rate suggests better inventory management and fewer lost sales due to unavailability.
  4. Carrying Costs: Carrying costs represent the expenses associated with holding and maintaining inventory, such as storage, insurance, and obsolescence costs. Reducing inventory carrying costs without compromising customer service levels can lead to improved profitability and more efficient inventory management.

By tracking and analyzing these metrics and KPIs, organizations can gain valuable insights into their inventory management performance and implement data-driven strategies to improve their inventory management processes.

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3D Printing for Rapid Prototyping

3D Printing for Rapid Prototyping

April 9, 2023

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3D Printing for Rapid Prototyping

3D Printing for Rapid Prototyping

Product designers and engineers have been using prototypes forever. A prototype helps give the product designers perfect a new design before mass production. A digital prototype is a good place to start, but it’s much different to hold the parts and see the entire assembly.

Prototypes are often used is the automotive, medical, aerospace industries, and in consumer goods. The purpose of rapid prototyping is to go from a digital design to a physical part or assembly as quickly and efficiently as possible.

In the past 10 years, 3D printing has helped create prototypes easier, faster, and with much greater accuracy. Spex has recently started using our in-house 3D printer to create prototype parts for our customers. In this post, we’ll share more about the benefits of 3D printing prototype parts.

What is rapid prototyping?

Rapid prototyping is one of the important steps in the manufacturing process. This is the step when the part goes from a computer design to physical part.

Rapid prototyping is a sped up fabrication of the part while maintaining accuracy.

Where the prototype design is a close match the proposed finished product, it’s called a high fidelity prototype. A low fidelity prototype has marked difference between the prototype and the final product.

While manufacturing precision parts, maintaining accuracy is highly important. The final products often need to be held within tight tolerances, within factions of a millimeter. If the prototype part isn’t accurate, it’s not as helpful to the product designers.

The concept of rapid prototyping has evolved significantly over the past few decades, driven by advancements in technology and a growing demand for accelerated product development. In this section, we will briefly explore the evolution of prototyping and how 3D printing compares to other prototyping methods.

In the early stages of rapid prototyping, the primary methods were primarily subtractive manufacturing techniques like CNC machining. CNC machines require extensive programming for new parts, making the process time-consuming, expensive, and somewhat limited in terms of design complexity.

As early 3D printers were developed in the late 1980s, it began revolutionizing rapid prototyping. The creation of complex and intricate designs that weren’t feasible with traditional machining methods became much easier. 3D printing allows for easier setup, more complex geometries, and minimal waste.

Applications of rapid prototyping

Rapid prototyping with 3D printers supports designers and engineers throughout product development, from concept to initial testing, development, and final part production.

Proof-of-concept (POC)

Proof-of-concept is a low-risk way to validate an idea. The POC helps designers run through physical tests for a new part and product. A physical prototype can also help other team members and potential investors validate or improve the concept.

Functional prototypes

A functional prototype allows engineers and product developers verify an idea. High fidelity prototyping accurately represents the final product. This makes it easier to verify the design, fit, function of the parts and components.

Materials for 3D printed prototypes

3D printing technology has made significant advancements in recent years, enabling the use of a wide range of materials for rapid prototyping. These materials not only determine the appearance of the prototype but also influence its mechanical properties, durability, and functionality. Some of the most common materials used in 3D printing for rapid prototyping include:

Plastics: Thermoplastics like ABS (Acrylonitrile Butadiene Styrene) and PLA (Polylactic Acid) are the most commonly used materials in FDM 3D printing due to their low cost, ease of use, and versatility. These materials offer good strength and can be used for both visual and functional prototypes.

Resins: Photopolymer resins are used in SLA 3D printing, offering high-resolution prints with smooth surface finishes. They are available in a variety of formulations, including rigid, flexible, and even biocompatible resins for medical applications.

Metals: Metal powders such as stainless steel, aluminum, and titanium are used in SLS and Direct Metal Laser Sintering (DMLS) processes. Metal 3D printers are significantly more expensive, which adds to the manufacturing costs. These materials provide high strength and durability, making them suitable for functional prototypes and end-use parts in industries like aerospace and automotive.

Composites: Composite materials, which combine the properties of two or more materials, are also used in 3D printing for rapid prototyping. For example, carbon fiber-reinforced composites offer lightweight, high-strength prototypes suitable for the automotive and aerospace sectors.

How are rapid prototypes made?

There are various manufacturing processes used to create prototypes. One of the most common processes is 3D printing. This is an additive manufacturing process, unlike a subtractive process such as CNC machining.

3D printers can take a CAD file and quickly create a detailed plastic part. Most 3D printers use nylon, ABS, or resin. This enables a high fidelity prototype to be made at a low cost. These parts can then be tested in a real world environment.

In some cases, other manufacturing processes are used to create prototypes. Processes like traditional machining or casting parts can be used for prototypes. These tend to be slower and more expensive compared to 3D printing, but they can offer more detailed and more accurate prototypes.

The manufacturing process depends on what the prototype part will be used for and the design specifications.

The primary goal of rapid prototyping technology is to create a functional prototype that can be used to ensure it will function as designed. Functional prototypes can be used for product testing and measure the effectiveness of assemblies and a new product.

Benefits of 3D printing

Benefits of 3D printers

Compared to CNC machines, 3D printing is still a newer technology. In recent years, the popularity and usefulness of 3D printers has significantly increased. You can buy a 3D printer for a few hundred dollars and print out whatever you want at home.

3D printing is also being used more in manufacturing industries. 3D printing is still limited in certain aspects. For example, 3D printers aren’t good for mass producing parts, or printing metal parts. They’re also not able to match the tight tolerances that CNC machining can reach.

The benefits are significant, and they should be used as much as possible. 3D printers are much faster and easier to setup, which is very helpful during the prototyping cycle. More conventional machines can take 20+ man hours to setup, and make it more difficult to make small part changes.

Currently, 3D printing is the best way to create a cost effective physical prototype. This can help speed up manufacturing workflows and get the final product to market faster. The raw materials for 3D printing is significantly cheaper than CNC machining or milling. This further helps save money during the prototyping process.

Future trends and advancements in rapid prototyping

As rapid prototyping technology continues to evolve, several emerging trends and advancements are poised to further revolutionize the field. 

Here are some key developments to watch for:

  1. Bioprinting: This innovative technology involves the 3D printing of living cells, tissues, and organs for medical applications. Bioprinting has the potential to transform regenerative medicine, drug testing, and organ transplantation.
  2. Multi-material printing: The development of multi-material 3D printers will allow for the simultaneous use of multiple materials in a single print, enabling more complex and functional prototypes. This will enable the creation of prototypes with varying material properties, such as flexible hinges within rigid structures or parts with integrated electronics.
  3. AI-driven design optimization: Artificial intelligence and machine learning are increasingly being used to optimize designs for 3D printing. These technologies can analyze and automatically adjust a design to improve its strength, reduce material usage, or enhance aesthetic appeal, saving time and resources during the prototyping process.
  4. Continuous 3D printing: The development of continuous 3D printing technology aims to significantly reduce the time needed for printing prototypes by eliminating the traditional layer-by-layer approach. This will enable faster production of prototypes, reducing lead times and accelerating product development cycles.
  5. Greener materials and processes: As sustainability becomes a growing concern, the adoption of eco-friendly materials and processes in rapid prototyping will become increasingly important. This includes using recycled or biodegradable materials, as well as implementing energy-efficient 3D printing technologies.

3D printing is a great technology that has many benefits during the start of the manufacturing process. The ability to produce quality plastic components helps test and verify the capabilities of new parts.

After a successful rapid prototyping final design, Spex uses different machining methods to manufacture high quantities of parts. Reach out to our team to learn more about our precision manufacturing expertise. We can help bring your next project from idea to full-scale production, and provide the best supply chain management solutions.

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What is CNC Milling?

What is CNC Milling?

March 16, 2023

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What is CNC Milling?

What is CNC Milling

CNC milling is a machining process that uses computerized controls and rotating cutting tools to produce a custom-designed part or product. This process is used for machining a wide range of materials, such as metal, plastic, glass, and wood, and CNC machines can manufacture a variety of precision parts.

CNC, or computer numerical control, machines are programmed with a 3D CAD model, allowing machine shops to produce large amounts of identical parts. This machining process is used for a variety of parts in industries around the world. 

Early CNC machines were used in the 1940s and 1950s. This technology was replaced by analog computing technologies. From the 1960s into the 1970s, digital technologies emerged and made the production process more automated and efficient. 

This article focuses on the CNC milling process, the capabilities of CNC milling machines, and the industries it’s commonly used in.

Brief overview of CNC milling

With modern manufacturing techniques like CNC milling, the applications are nearly limitless. The milling process begins with product design using CAD (computer automated design) software.

A product designer creates a 3D model of the part and its specific dimensions. The 3D model is then converted into computer numeric controlled data that the CNC machines can understand. The data dictates how the CNC mills and lathes will move and cut away material to form the final product.

To prepare a CNC mill for production, the operator attaches the raw bar material onto the machine’s holding piece. Then the operator attaches the milling tools to the machine’s spindle to cut, drill, or shape the end product.

Once the milling machine is set up, it can be used to make high quantities of precision metal parts. These parts can be used in a variety of industries.

Some common industries and applications that utilize CNC milling include:

  • Aerospace: CNC milling is used to produce aircraft components, such as engine parts, structural elements, and landing gear, which require high precision and the use of advanced materials.
  • Automotive: The automotive industry relies on CNC milling to manufacture engine components, suspension parts, transmission components, and other critical parts that require tight tolerances and high levels of accuracy.
  • Electronics: CNC milling machines are used to create circuit boards, enclosures, and other electronic components that require precise dimensions and intricate geometries.
  • Mold-making: CNC milling is widely used in the creation of molds for plastic injection molding, die casting, and other manufacturing processes that require high-quality, precise, and durable mold components.
  • Medical devices: The medical industry uses CNC milling to produce surgical instruments, implants, and diagnostic equipment that must meet stringent quality and safety standards.
  • Energy: In the renewable energy sector, CNC milling is employed to produce components for wind turbines, solar panels, and other energy generation equipment that requires high precision and durability.

CNC machining capabilities

The milling process is best suited as a secondary machining process to provide finishing features to a custom-designed part, but finished parts can be milled from raw material. CNC milling machines allows us to machine parts of a wide range of materials, shapes, and sizes.

The capabilities depend on the type of milling machines used. CNC milling machines with greater degrees of freedom allow for increased versatility and complexity in the milled parts produced. The capabilities also depend on the machinist’s knowledge and experience.

CNC turning is a different type of machining similar to CNC milling. The main difference is that CNC milling uses a rotating tool to cut away material to form the part, while CNC turning uses a rotating part for cutting.

CNC turning is more commonly used to make cylinder-shaped parts. CNC milling can use multiple tools to cut various angles, holes, and features to machine custom precision parts.

Compare: CNC Milling vs CNC Turning

There are two types of milling machines: horizontal and vertical. The biggest difference between these two milling machines is the orientation of the spindle. With vertical milling machines, the spindle features a vertical orientation. On horizontal milling machines, the spindle has a horizontal orientation. In other words, horizontal milling machines have a cutting tool on a horizontally oriented spindle that’s removes material to form the part.

The milling machines also have slightly different cutting tools. Vertical milling machines usually have longer, thinner cutting tools, while horizontal milling machines have shorter and thicker cutting tools.

Advantages

Some of the main advantages of CNC milling include:

  • High precision: CNC milling machines can achieve tight tolerances and high levels of accuracy, ensuring that parts meet the required specifications and dimensions.
  • Consistency: The computer-controlled nature of CNC milling ensures that each part is produced consistently, even across large production runs. This is particularly important in industries where quality and reliability are essential.
  • Flexibility: CNC milling machines can be programmed to create a wide range of shapes and features, making them highly flexible and adaptable to various applications and design requirements.
  • Complex geometries: CNC milling technology is capable of producing intricate and complex geometries that are difficult or impossible to create using conventional machining methods. This enables the production of advanced parts and components for various industries.

Disadvantages

Some of the disadvantages of CNC milling include:

  • Skilled labor requirements: Operating and programming CNC milling machines require skilled and trained personnel. Finding qualified employees can be challenging, and training new staff can be both time-consuming and costly.
  • Limited material removal rate: Compared to some other machining processes, such as turning or grinding, CNC milling may have a limited material removal rate. This can lead to longer machining times for certain types of parts or materials, potentially increasing production costs.
  • Limitations with specific materials: While CNC milling machines can work with a wide range of materials, they may struggle with certain types, such as very hard materials or materials with high thermal conductivity. In these cases, alternative manufacturing methods may be more suitable.
  • Environmental impact: CNC milling machines produce waste material in the form of chips or swarf, which must be disposed of or recycled properly. Additionally, the machines typically require coolant to maintain cutting tool performance and prevent overheating, which can result in the need for proper coolant management and disposal.
  • Maintenance and downtime: CNC milling machines require regular maintenance to ensure proper functioning and to prevent excessive wear and tear. Unplanned downtime due to maintenance or repairs can disrupt production schedules and increase costs.

How precise is CNC milling?

There are many factors that influence the accuracy of CNC milling. Metal parts are typically used is a system, in conjuncture with other parts which means they need to fit together properly. If one part is too big or too small, it can mess up the entire system. Part tolerances are usually within tiny fractions of an inch, and constantly checked by a quality control team.

In some industries, such as the aerospace and medical field, maintaining tolerances is even more important.

Factors like the type of milling machine, the material being milled, the machinist’s experience, and the size of the parts can affect the level of precision.

Most CNC milling machines can typically produce parts within a 5μm tolerance. 1μm (micrometer) is 1/24500 inches. So, you can expect your parts to be very accurate.

In addition to the accuracy of the technology, modern machine shops have diligent quality control teams that complete an initial inspection. This is documented and provides the customer with an expected tolerance before production begins. Then, during production, standard quality checks are done to ensure the parts are within the desired tolerance.

A higher accuracy benefits both the machine shop and the end customer. Maintaining tight tolerances saves the machine shop time and resources because more parts are useable, and the customers receive a higher quality part.

Materials used in CNC milling

Almost any type of metal can be used for CNC milling. When selecting the right metal for your project, several factors must be considered, including the cost, strength, resistance to wear, and machinability.

At Spex, we machine a wide variety of metals and polycarbonates including: 

  • Stainless Steel
  • Aluminum
  • Brass
  • Carbon Steel
  • Copper
  • Nickel Alloys
  • Polycarbonates

You can reach out to our team if you need help deciding which material is best for your project.

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Countersink vs. Counterbore Holes in Machining

Countersink vs. Counterbore Holes in Machining

March 7, 2023

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Countersink vs. Counterbore Holes in Machining

Countersink vs. Counterbore Holes

Machined parts can have holes of all different shapes and sizes. Each type of hole has a name that describes the shape of it. Two popular types of machined holes are countersunk holes and counterbored holes.

Countersink vs. Counterbore Holes

The difference between countersink and counterbore holes is the shape of the top of the hole. Countersink holes have a cone-shape, while counterbore holes have a cylindrical shape.

Countersink vs Counterbore Hole
Countersink vs Counterbore Hole

Both types of holes are designed to hide the head of a fastener, making it flush with the part when it’s assembled. The different type of hole is designed to be used with different fasteners.

Fasteners that have an angled head require a countersunk hole to be flush. A fastener with a flat head needs a counterbored hole.

Countersunk holes

A countersunk hole is a cone-shaped hole that is drilled into a material. A cone-shaped cutting tool is used to machine the chamfer at the desired angle, and then the rest of the hole is drilled with a regular drill bit.

Countersink holes are often used in woodworking or when working with softer materials. The angle can be adjusted, but the 3 most common are 60°, 82°, and 90°. ISO standard screws often have a 90° angle. In the aerospace industry, countersunk fasteners usually have an angle of 100°

Countersink Hole Angles
Countersink Hole Angles

Advantages and disadvantages

Countersink holes are used to hide the screw head by making it flush with the metal. This protects the screws and increases their lifetime. This also improves the visual appearance, and can make the part or assembly more aerodynamic.

Drilling countersink holes does add to the machining cost compared to drilling a regular thru hole.

Counterbore holes

A counterbore hole is a type of machined hole created to seat a fastener flush with, or below, the surface of a part. Counterbore holes are typically shallower than a countersink hole and have straight sides rather than angled sides.

Washers and lock washers can also be used in counterbored holes to secure the fastener.

Advantages and disadvantages

A counterbore usually has more holding strength compared to a countersink hole because the force applied by the socket cap screw head is parallel to the axis. The force applied by the screw or bolt is distributed evenly over a larger surface area. This is not the case with a countersunk hole, which has tapered sides.

Countersink vs. Counterbore: Applications

Countersinks are typically used for wood and metal screws, while counterbore holes are used for larger fasteners such as lag bolts, and socket head fasteners.

Countersink and counterbore holes are often used in applications with moving parts, and for assemblies with limited space. Because they provide more space for lock washers, counterbores are used in heavy-duty applications including machinery, construction, and automotive applications.

Callout symbols

The callout symbol on a machining blueprint for a countersink hole is “⌵” and the callout symbol for a counterbore hole is “⌴”. The symbols are designed to match the top shape of each hole. 

Countersink and counterbore sizes are expressed in terms of their diameter, depth, and angle of countersink. The diameter is the width of the countersink or counterbore, while the depth is the distance from the surface of the material being drilled down to the top of the pilot hole.

Spex offers a large selection of custom precision machined parts for whatever your project needs. We are an ISO 9001:2015 certified company, and our team specializes in precision machining and supply chain efficiency.

Our machined components are available in an array of different materials and finishes and are manufactured to meet all the highest quantity needs.

Reach out to our team to get a quote for custom precision fasteners. 

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How Lead Time Affects the Supply Chain

How Lead Time Affects the Supply Chain

February 27, 2023

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How Lead Time Affects the Supply Chain

How Lead Time Affects the Supply Chain

When customers place an order with a supplier or manufacturer, there’s always a lead time. The lead time is how long it will take from the order being placed to being delivered.

There are tons of factors that influence lead times, they can be anywhere from a week to a year.

Businesses should regularly review lead times and look for opportunities to reduce them. Unexpected delays decrease output and productivity. Long lead times negatively impact customer service.

Lead times within the supply chain

There are 5 aspects of effective supply chain management:

  1. Planning
  2. Sourcing
  3. Manufacturing
  4. Delivery
  5. Returns

Lead Time for the Company = Procurement Time + Manufacturing Time + Shipping Time

Manufacturing lead times impact each of these. The longer the lead times are, and more unexpected delays that happen all have a negative effect.

During the planning stage, businesses try to predict their customer needs and plan how to meet them. Accurate planning depends on having accurate lead times.

Sourcing covers ordering, receiving, and managing the inventory of raw materials. Poor sourcing can add significantly to the lead times. If a manufacturer is stuck waiting for their sourcing materials, lead times increase.

Manufacturing lead time is the time needed to manufacture an item. This includes order prep time, wait times, setup time, production run time, move time, inspection time, and even stocking time.

Delivery is the last piece of lead time. Maintaining good logistics and shipping requires the shipping company to have accurate knowledge of supply times throughout the supply chain.

Make to order vs Make to stock lead times

Make to order (MTO) and Make to stock (MTS) are two inventory management strategies used by manufacturers and their customers. Manufacturing leads times are different for each of these.

With MTO, the customer places their order, and the manufacturer starts working on it. With MTS, the manufacturer produces inventory based on their customers’ future orders.

MTO lead time is the time between the order being placed and the product being shipped to the customer. MTS lead time is the time between the order and the inventory being stocked. 

One of the drawbacks of make to order is longer lead times. Since no inventory is kept on-hand, more time is required for order receipt, manufacturing, shipping, and related processes.

What affects lead times?

Lead times are primarily affected by sourcing, manufacturing, and shipping.

Sourcing

Sourcing or procurement is the process of getting the raw materials required to manufacture the product. A good relationship between manufacturers and their suppliers can help, but delays and longer lead times are outside of the manufacturer’s control.

We saw the negative effects of this in the automotive industry when the manufacturers were unable to get computer chips from their supplier. This sourcing delay caused major delays for car manufacturers, dealerships, and customers.

Manufacturing

The manufacturer is in control of their lead times, for the most part. Manufacturers will have longer lead times when they’re short staffed, don’t have adequate equipment, inefficient processes, or make mistakes during manufacturing.

Working with a manufacturer that has a good network of suppliers and manufacturing partners, as well as more industry experience, significantly improves lead time.

Shipping

Shipping times vary greatly depending on where the customer is ordering from, and how the manufacturer ships products to their customers. Better and more predictable shipping times is one of the main benefits of working with a domestic manufacturer. Outside factors like weather or natural disasters can cause delays.

Optimize lead times

While some things will always be out of your control, there are steps you can take to reduce lead times.

1. Use a local/domestic supplier

When your suppliers are nearby, you can expect faster lead times. Being closer significantly reduces shipping times. It’s also typically easier to communicate with your suppliers when you’re in the same time zone.

2. Consolidate suppliers

Coordinating and managing multiple suppliers can add to lead times. While you may not want to or be able to rely on a single supplier, reducing the number of suppliers you’re working with can improve supply chain efficiency and streamline processes.

3. Reassess your processes

Take a step back and review your supply chain processes. Tracking key performance indicators in your supply chain process is essential. Some KPIs to pay attention to include average lead times, supplier defect rate, and supplier availability.

Spex offers a large selection of custom precision machined parts for whatever your project needs. We are an ISO 9001:2015 certified company, and our team specializes in precision machining and supply chain efficiency.

Reach out to our team to get a quote for precision machined parts, and supply chain solutions. 

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Direct vs. Indirect Procurement

Direct vs. Indirect Procurement

February 16, 2023

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Direct vs. Indirect Procurement

Direct vs Indirect Procurement

Procurement is another way of saying purchasing in the business world. Procurement is a bit more complex than making a purchase, but they are almost interchangeable. 

Procurement includes identifying the required goods or services, choosing the right supplier or vendor, negotiating prices and contracts, and managing the delivery of the goods or services. 

Procurement is at the core of the supply chain, so it’s important to understand how it works, and the different types of procurement—mainly direct and indirect procurement.

Direct Procurement

Direct procurement is a purchase that’s essential for the core purposes of the business. Without direct procurement, the business doesn’t function.

For example, this is a residential painting company buying paint, paint sprayers, and drop cloths. Or Wendy’s purchasing hamburger patties and buns, frying oil, or replacing the broken ice machine. Direct procurement is directly tied to the business functions and their customers. 

A good direct procurement strategy is essential for business success. Working with the right vendors and suppliers, ordering the proper amount of inventory, and negotiating on prices all impact the customer. 

If the painting company mismanages their direct procurement and buys low-quality paint, the customers end up with a lower quality product. When the HVAC repair company fails to order enough replacement parts, their customers experience delays and dissatisfaction. On the other hand, if the business negotiates a discount on their purchase, the customers can also enjoy the discount.

The price, quality, and inventory of the goods and services are determined by the direct procurement, which impacts the customers either positively or negatively.

Indirect Procurement

Indirect procurement is the goods and services a business buys that don’t directly impact the business functions or customers. 

These purchases are still essential to the business, but they don’t have the same effects.

For example, indirect procurement is the maintenance and upkeep of the paint company’s truck. When they get an oil change or fill it up with gas, they’re making a purchase necessary for the business. However, unlike the paint and sprayer, the upkeep of the truck doesn’t directly impact the customer. Another example is the mops and brooms Wendy’s uses to clean their kitchen and dining area. 

The mops and brooms are necessary, but people aren’t buying cleaning supplies from them, and they’re not used to make the food or drinks.

Differences between Direct and Indirect Procurement

The main difference between direct and indirect procurement is how the goods or services are used. 

Direct procurement is the purchase of things used to make or manufacture something a customer will buy, while indirect procurement is the purchase of goods and services that aren’t directly related to the production process.

Direct procurement is better planned and has a greater impact on the business. Businesses can better plan how much raw materials they’ll need based on demand forecasts. This needs to be planned, because if a business runs out of essential goods, they can’t help their customers. 

Example: If the office break room runs out of coffee cups or plastic forks, they can continue serving their customers. There’s also spend more time building relationships with suppliers so the business can get the best materials at the lowest prices.

Indirect procurement is less planned. These purchases are based on the needs of the business and less impactful on the success of the business.

Strategies for better direct procurement

The goal of direct procurement is to get the necessary resources at the best possible price, quality, and delivery time. Here are a few ways businesses do that:

Building strong vendor relationships: Having a solid relationship with vendors helps businesses get better service, greater reliability, and more favorable pricing. 

Consolidating suppliers: Working with fewer suppliers also helps lower prices and streamline the supply chain. However, it’s worth noting that this can also cause a bigger problem if there’s an issue with a supplier.

Long-term contracts: Establishing long-term contracts with suppliers helps secure stable supply and negotiate favorable pricing and terms.

Strategies for better indirect procurement

As we mentioned, indirect procurement isn’t as important to the business, but it definitely matters and should be optimized as much as possible. Here are some methods for better indirect procurement:

Consolidation of suppliers: This involves consolidating purchases from a limited number of suppliers to reduce transaction costs and leverage volumes to secure better pricing.

Standardization of products: Standardizing the products and services that are purchased can lead to cost savings through increased efficiency and reduced complexity.

Contract management: Establishing effective contracts with suppliers can help ensure that the company receives the products and services that it needs at a fair price, with favorable terms and conditions.

Vendor evaluation: Evaluating suppliers on various parameters such as quality, delivery times, and pricing can help identify the best suppliers and eliminate underperforming ones.

Demand management: Managing demand for goods and services by monitoring usage and controlling spend can help reduce overall costs.

Using technology in procurement

Technology has become a significant driving force in modern procurement, transforming the way organizations manage their direct and indirect procurement processes. Here are a few of the ways technology is impacting procurement:

  1. Procurement Software: Procurement software solutions enable organizations to streamline their procurement processes, automate manual tasks, and improve visibility into their supply chain. These systems can help manage supplier information, track orders, monitor inventory, and generate reports for better decision-making.
  2. E-Procurement: E-procurement platforms allow organizations to conduct their procurement activities online, simplifying the sourcing, purchasing, and payment processes. E-procurement can lead to cost savings, reduced cycle times, and improved supplier collaboration.
  3. Data Analytics: Advanced data analytics tools can help organizations analyze vast amounts of procurement data to identify trends, patterns, and opportunities for improvement. By leveraging data analytics, procurement professionals can make more informed decisions, optimize their procurement strategies, and achieve cost savings.
  4. Artificial Intelligence and Machine Learning: AI and machine learning technologies can enhance procurement processes by automating routine tasks, improving demand forecasting, and identifying potential risks in the supply chain. These technologies can also help organizations analyze unstructured data, such as supplier reviews or social media posts, to gain insights into supplier performance and market trends.
  5. Internet of Things (IoT): IoT devices can provide real-time data on inventory levels, shipment tracking, and equipment performance, enabling organizations to optimize their procurement and inventory management processes.

By embracing and integrating these technologies, organizations can improve their procurement efficiency and effectiveness, leading to cost savings, better supplier relationships, and more strategic decision-making.

Spex offers a large selection of custom precision machined parts for whatever your project needs. We are an ISO 9001:2015 certified company, and our team specializes in precision machining and supply chain efficiency.

Reach out to our team to get a quote for precision machined parts, and supply chain solutions. 

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What is Material Requirement Planning (MRP)?

What is Material Requirement Planning (MRP)?

February 10, 2023

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What is Material Requirement Planning (MRP)?

What is Material Requirement Planning

MRP (Material Requirement Planning) is an inventory management concept used to optimize inventory and minimize risks. MRP was developed in the 1960s, and has continued evolving with new technology. The concepts are used today by every manufacturing business.

What is MRP?

Material Requirement Planning is an inventory management system used for ordering and tracking the items required to manufacture a product. MRP will tell a business:

  • What they need
  • How much they need
  • When they need it

The MRP system generates a list of the materials needed, and when the business should place the order to keep optimal inventory levels.

How MRP Works

MRP Process
MRP Process

Step 1: Determining the demand

The first step is to estimate the demand for the product. How many finished products will be ordered this month, quarter, year. This estimate helps the manufacturer maintain the proper amount of inventory. The goal is to have enough inventory to meet demand, while also avoiding the costs of carrying excess inventory.

Step 2: Calculating the material requirements

The next step is to understand what parts and materials are required to make the finished product. This typically comes from a Bill of Materials (BOM). 

For example, a bicycle manufacturer would use a BOM that lists all of the raw materials, parts, subassemblies, and assemblies required to make a complete bicycle. A bicycle has a multi-level BOM that breaks down the entire bike into individual parts and materials.

Level 1: Bicylde

Level 2: Wheels, Frame

Level 3: Tires, Spokes, Rims, Handlebars, Pedal Assembly, etc.

Level 4: Tire Valve, Valve Cap, etc.

Step 3: Generating a production plan

The third step is to plan the production. When are the parts and raw materials going to be ordered and used to make the final products? How much time and labor is required to complete the orders on-time?

The Role of BOM and MPS in MRP

Ready for some more supply chain acronyms?

We briefly mentioned how the Bill of Materials is used to determine which parts and materials are required to make the final product. 

An MPS is a Master Production Schedule. This is what the manufacturer uses to determine what they’re manufacturing, when, and how many.

The Bill of Materials and Master Production Schedule work together to create a realistic plan that delivers products to customers quickly and efficiently. 

The BOM describes the order that each material is needed, which parts are dependent on other parts, and how many of each part is required. The MPS helps create an efficient supply chain by optimizing inventory and profitability while reducing risk.

Benefits of using MRP

MRP is designed to improve the efficiency, flexibility, and profitability of manufacturing operations.

A few of the benefits include: 

  • Improving production efficiency: having the right materials on-hand reduces product wait times. When you have the parts and materials, you can avoid delays and have a more effective manufacturing operation.
  • Reducing inventory carrying costs: holding excess inventory increases costs. Proper MRP avoids overpaying for inventory storage and dead stock.
  • Improving customer service: MRP improves customer service by decreasing late shipments, stock-outs, and long lead times.

Challenges of Implementing MRP

Proper Material Requirement Planning depends largely on having accurate and up-to-date information. Customer demand, and part and material availability can change quickly. The MRP needs to be responsive and flexible enough to adapt to changing environments. 

There also needs to be good coordination and communication between different people and departments involved in the production process. Most manufacturing operations and supply chains have tons of moving parts. Good systems and effort is required to keep people on the same page.

MRP vs. ERP

MRP is focused on planning, ordering, and tracking the raw materials and components needed for the manufacturing process. ERP includes a much wider range of business functions, such as financial management, human resources, customer relationship management, and inventory management.

ERP is an integrated software suite that manages the majority of company information, while MRP is one application, or module, in that suite. Nearly every ERP system includes a basic MRP module.

Spex offers a large selection of custom precision machined parts for whatever your project needs. We are an ISO 9001:2015 certified company, and our team specializes in precision machining and supply chain efficiency.

Reach out to our team to get a quote for precision machined parts, and supply chain solutions. 

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U.S. Manufacturing Statistics – 2023

U.S. Manufacturing Statistics – 2023

February 2, 2023

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21 U.S. Manufacturing Statistics - 2023

Blog ➔ Supply Chain ➔ Manufacturing Stats

2023 U.S. Manufacturing Statistics

Manufacturing is one of the largest industries in the U.S.

For hundreds of years, the U.S. had led the way in manufacturing goods. Since 1946, Spex has played a relatively small—yet important—role in the U.S. manufacturing industry. Every month, we ship millions of precision parts across the country, and all around the world.

We’re looking forward to continuing to advance and move forward with other U.S. manufacturers. Manufacturing is a significant part of the U.S. economy, and a large number of people are employed in the manufacturing industry.

Here are 21 interesting statistics about the current state and size of U.S. manufacturers.

Economic and employment stats

1. Manufacturing accounts for 11% of the U.S. economy.

2. The manufacturing industry is the fifth largest employer in the U.S. at 12.1 million employees.

3. Fabricated metal manufacturing employs 1.38 million people. 

4. Machinery manufacturing employs 1.04 million people. 

5. Primary metal manufacturing employs 347,000 people.

6. There are 8.1 million people classified as Production Workers.

7. Non-production staff is anywhere between 25% and 50% of total headcount. 

8. The average annual payroll for manufacturing employees is $61,127.

9. Transportation equipment manufacturing and food manufacturing are the two largest sub-sectors.

10. Primary metal manufacturing ships $200 billion worth of goods annually.

11. Fabricated metal manufacturing ships $347 billion worth of goods annually.

12. The total cost of materials (raw materials, resales, fuel, electricity, and contract work) is $2.8 trillion.

13. Manufacturers export 59.2% of total U.S. exports.

14. U.S. Manufacturers export $861.6 billion worth of goods annually.

15. U.S. manufacturers ship $5.8 trillion worth of goods annually. 

Factory technology stats

16. 72% of all manufacturing is still performed by humans, and 71% of value is created by humans.

17. 3D printing is a $16.75B industry, and expected to grow to $75B by 2030.

18. The average factory is over 25 years old with machinery that is, on average, 9+ years old. (1)

19. 91% of industrial companies are investing in digital factories. (1)

State manufacturing stats

20. California is the only state to ship $500 billion worth of manufactured goods.

21. Six states (Texas, Illinois, Indiana, Michigan, Pennsylvania, and Ohio) ship between $200 and $499 billion worth of goods.

Other sources: 2020 Annual Survey of Manufacturers

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Everything You Should Know About Thread Galling

Everything You Should Know About Thread Galling

January 31, 2023

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Everything You Should Know About Thread Galling

Everything You Should Know About Thread Galling

Thread galling is wear that happens when two threaded parts rub against each other. Over time, the build-up of friction causes the threads to stick together. Vibration, changes in temperature, and pressure causes the threads to rub against each other. This build-up of friction can cause excessive wear and tear on the threads, leading to seized bolts, and stripped threads. Galling makes it impossible to disassemble the threaded parts without breaking them.

Thread galling is commonly found in bolted joints, and it’s often caused by insufficient lubrication or incorrect assembly.

What causes thread galling?

One of the main reasons thread galling happens is because of how the threaded parts are manufactured. On a bolt, the threading is cold rolled. This means, the bolt blank was rolled between thread dies to form the threads. The threads on a nut are formed with a cutting tool. 

If you looked at a matching nut and bolt under a microscope, you’d see that neither set of threads is perfect. This difference in manufacturing methods can cause some resistance when the nut and bolt are threaded together. 

Thread galling is also caused by heavy pressure on the threaded assembly. If a threaded part is holding weight, or being pressed up against something, the threads are being pushed into each other which can cause galling over time.

Vibrations or movement in an assembly also causes galling. Because the threads aren’t perfectly matched together, if the parts are moving there will be friction and heat causing galling.

Temperature changes also cause thread galling. The metals expand and contract and the threads rub against each other.

Examples of Thread Galling
Examples of thread galling

What metals are most likely to be affected by galling?

When most people experience thread galling, it’s happening with stainless steel fasteners. Any type of metal can be affected by thread galling. However, harder metal alloys are less susceptible.

Metals that are more prone to thread galling are stainless steel, aluminum, brass, and titanium. Galling can happen to other materials depending on the design of the threaded assembly, and the surrounding environment.

Which environments does it happen in?

Thread galling can happen right away when the threaded parts are being assembled. If you tighten a nut onto a bolt and experience friction, the threads will heat up and stick together. That galling can happen in any environment, but it can be avoided with proper assembly and anti-seize lubricant. 

Galling can also happen over time. It’s more likely to happen when threaded parts are exposed to high temperatures, high pressures, and high levels of vibration. When there’s more movement or pressure, the threads are rubbing against each other more. And in high temperature applications, the metals are weaker and more likely to deform.

Can you prevent galling?

You can’t guarantee that thread galling will never happen, but there are steps you can take to reduce the chances of it happening.

Proper lubrication

Thread galling can be prevented by using proper lubrication before assembly. Adding a small amount of anti-seize lubricant onto your bolt creates a barrier between the metal threads, reducing the chances of galling. You’ll also want to clean off all the threads to avoid any debris between the threads.

Proper assembly techniques

A lot of thread galling happens during assembly. If you’re screwing a nut onto a bolt and it gets stuck, you might try to keep threading it on. This will cause thread galling and can snap the bolt, or ruin the threading on both parts. 

Making sure the parts aren’t cross threaded, and assembling the parts slowly helps prevent galling.

Using two different metals

Using two different metal alloys (like a softer metal and harder metal) can also reduce thread galling. Two stainless steel parts can stick when they’re being assembled, but a stainless steel bolt and brass nut are less likely to have threading issues. Of course, there are many situations that require certain alloys to be used, like in the marine industry.

Thread galling can be repaired in some cases by adding new threading to the parts. However, it’s usually best to aim to avoid it or replace the damaged parts. 

Does thread galling happen more with smaller threads?

Finer threads are sometimes easier to cross thread, but thread galling can occur in both large and small threads. The size of the thread doesn’t necessarily make it more or less prone to galling.

Spex offers a large selection of custom precision machined parts for whatever your project needs. We are an ISO 9001:2015 certified company, and our team specializes in precision machining and supply chain efficiency.

Our machined components are available in an array of different materials and finishes and are manufactured to meet all the highest quantity needs.

Reach out to our team to get a quote for custom precision fasteners. 

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Different Types of Gears And Their Applications

Different Types of Gears And Their Applications

January 18, 2023

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Different Types of Gears And Their Applications

Different Types of Gears And Their Applications

Gears are one of the most commonly used mechanisms in systems that have moving parts. Mechanical gears, or cogs, are used to transfer torque or power from one part to another.

If you look inside of a clock, you’ll find gears controlling the movement and speed of the hands. Cars also use gears to transfer power from the engine to the wheels.

The general purpose of every gear is the same, but there are many different types of gears, each with pros and cons.

This article covers the various types of mechanical gears and what they’re used for.

Internal vs External Gears

To start, there are external gears, and internal gears. As you probably guessed, external gears have the gear teeth on the outside of the part, while internal gears have teeth on the inside.

Internal Gear vs External Gear
Internal vs External Gears

Internal gears can be more efficient than external gears, but they come with limitations. Internal gears can only work with an external gear, and only spur and helical gears can be internal gears. Internal gears have a size advantage, because the two centers of the meshed gears can be closer together. They’re commonly used in applications where space is limited.

Another difference between internal and external gears is the way they spin while working together. When two external gears are working, they spin in opposite directions. While an internal and external gear work together, they spin in the same direction.

Internal Gear vs External Gear (1)

Spur Gears

Spur gears are the simplest and most common type of gear. The teeth on spur gears line up parallel and transmit the power and torque to a parallel shaft. Spur gears are commonly used in vehicles, conveyor systems, speed reducers, and more.

The purpose of these gears is to change speed in a system. For example, a smaller spur gear is used with a larger gear to reduce speed. The smaller gear might spin 100 times, and spin the larger gear 1 time.

Spur gears are easy to manufacture, and they’re fairly efficient.

Spur Gears
Spur Gears

Rack and pinion

A rack and pinion is more of a system than gears. The pinion is the spur gear, and the rack is the toothed straight edge. This system uses a spur gear and a flat surface with matching gear teeth. Rather than transferring continual movement, a rack and pinion transfers rotational power into linear movement. 

Rack and pinion systems are often used in a linear actuator, stairlifts, and steering systems.

Rack and Pinion
Rack and Pinion

Helical Gears

Helical gears are very similar to spur gears. The difference is, the teeth on helical gears are cut at an angle, and the gears line up in opposite directions so the teeth mesh together. 

Just like spur gears, these gears transfer power to a parallel shaft.

The advantage of helical gears is that there are multiple gear teeth in contact, and when the gear teeth come into contact, it’s more gradual. This offers two benefits:

  1. Because multiple teeth are in contact, helical gears can carry larger loads.
  2. Because the teeth come into contact gradually, they are quieter and less friction.

There are also double helical gears that have two helical gears side by side to increase the contact area of the teeth.

Helical Gears
Helical Gears

Bevel Gears

Bevel gears are gears formed on a cone, rather than a cylinder. Instead of meshing parallel, bevel gears mesh together perpendicularly. This changes the direction of the movement, turning linear power into vertical power. 

These gears are commonly used in a vehicle’s differential and rear axle assembly. Bevel gears are also common in the manufacturing industry, including lathes and drilling machines. 

Most bevel gears are used at a 90°, but they can be used at various angles.

Bevel Gears
Bevel Gears

Worm Gears

A worm gear consists of two differently shaped gears. One gear is shaped like a screw, and the other gear is similar to a spur gear. The worm gear meshes on top of the other gear and rotates to move the other gear. Like bevel gears, worm gears also transfer the power perpendicularly rather than parallel. 

Worm gears have less friction and are typically quieter, but they are less efficient in terms of power transfer. Worm gears can produce significant reductions in speed in compact spaces, making them useful in many industrial applications.

Worm Gears
Worm Gears

How are gears manufactured?

There are many different ways to manufacture gears. The right manufacturing method depends largely on the size, material, and precision requirements of the gears.

Casting

Die casting is a common method used to manufacture gears, and gear blanks. Casting is a process where molten metal is poured into a metal die mold. Secondary machining processes can be used to add the gear teeth or improve the surface finish.

Casting is typically used for larger gears, and gears that don’t require high precision.

CNC Milling

CNC milling is a common precision machining process. The raw material—usually a round metal bar stock—is held in place and a rotating cutting tool removes material to form the part.

CNC milling can be used to form any type of gear, use any material, and maintain tight tolerances.

Broaching

Broaching is a precision machining process that uses a cutting tool called a broach to remove material and form a part. A custom broach is expensive, so broaching is used to manufacture high quantities of identical gears.

Broaching is most commonly used to cut internal gearing, and less common to cut angled gearing.

Common materials

Gears are continuously in contact with other metals, and most gears are in high-fatigue work environments. The common materials used for gears are high-strength steels.

4000-grade Molybdenum steel alloys offer excellent strength, wear resistance, and heat resistance. This steel alloy is very common in the automotive industry.

86xx steel alloys are low-carbon alloy steels that offer good toughness and core strength. These alloys have better machinability compared to 4000-grade steels.

9310 is low-carbon steel similar to the other alloys. It has high core hardness and high fatigue strength. This alloy is commonly used for aircraft gears, but less suitable for high temperature applications.

Steel alloys are almost always heat treated after machining to increase the strength and durability of the parts.

Some softer alloys like brass and bronze are used for gears that require less strength and hardness. Because these alloys are softer, there’s less physical wear on the gears. Brass and bronze are also more resistant to corrosion compared to steel. The tradeoff is that the softer metals can’t handle high loads that steel can.

Spex offers a large selection of custom precision machined parts for whatever your project needs. We are an ISO 9001:2015 certified company, and our team specializes in precision machining and supply chain efficiency.

Our machined components are available in an array of different materials and finishes and are manufactured to meet all the highest quantity needs.

Reach out to our team to get a quote for custom precision fasteners. 

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