Stocktaking requires a great deal of time and is an extremely labor-intensive task. To solve this problem, systems that digitize storage shelves and improve operational efficiency on manufacturing lines have appeared in recent years. This time, we will provide detailed explanations from the basics of inventory management to the problems of excess inventory and insufficient inventory. This article is the first installment in a series that classifies and explains the general theory of inventory management and order management into five parts.
・What is Inventory Management
・Problems with Excess Inventory
・Problems with Insufficient Inventory
・How to Streamline Component Inventory
・Let's Reconfirm the Importance of Inventory Management Now
What is Inventory Management
Inventory management is an extremely important management item in company operations and constantly requires appropriate management. Specifically, what does inventory management involve, and what is its purpose? First, let's touch on what inventory management is.
Problems with Excess Inventory
When there is too much component inventory during stocktaking, not only does it incur unexpected costs, but it also does not benefit the company. Additionally, troubles such as deteriorating cash flow also arise. Beyond this, various problems such as the following may occur.
Working Capital
Although component inventory is inventory assets, it cannot be immediately converted to cash. From this background, holding too much inventory leads to capital shortages and deteriorating cash flow.
Dead Stock
While product lifecycles are shortening, if component inventory is maintained in an excessive state, there is a risk that product value will decline. Accordingly, dead stock also increases.
Inventory Management Costs
When component inventory is excessive, costs incurred from holding component inventory, such as loan interest, storage fees, and management costs, also increase. Additionally, increases in labor costs for managing that inventory are also highly likely.
Increased Storage Space
One of the problems when there is too much inventory is that inventory space for safely storing components and materials increases more than necessary.
Decreased Flexibility
When old components such as obsolete parts and materials still exist as inventory and are stored in large quantities, there is a tendency for delays in switching to new products. Therefore, situations arise where product value declines and flexibility in product switching is lacking.
Problems with Insufficient Inventory
Having too little component inventory is also not beneficial to the company and is not a favorable situation. What kinds of problems can occur when component inventory is too low? Specifically, the following troubles may occur.
Loss of Opportunity Due to Stockouts
When component inventory is excessively insufficient, the risk of stockouts naturally increases. When stockouts occur, they lead to loss of opportunity. If stockout conditions are maintained continuously, it can also become a factor in losing customer trust.
Longer Delivery Times
When specific component inventory cannot be procured, such as when component inventory with long procurement lead times is insufficient, it leads to longer delivery times. Longer delivery times mean that the company's own delivery times become correspondingly longer, and sales losses may also increase.
Increased Costs Due to Emergency Procurement
When component inventory shortages occur, emergency orders may be placed instead of regular orders. Cases of emergency ordering are more expensive compared to regular ordering, so costs increase.
To resolve the problems with excess inventory and insufficient inventory as described above, it is essential to introduce racks that can streamline component inventory more smoothly.
How to Streamline Inventory Management
Component inventory causes problems whether it is excessive or insufficient. To promote streamlining of inventory management, it is important to reduce costs related to inventory management and to incorporate mechanisms that enable receiving and issuing regardless of reel type.
One service that can realize these is the Smart Reel Rack. This system digitizes electronic component reel storage shelves and is widely utilized by many companies across industries and business types, mainly as a mounting machine for inventory management.
Let's Reconfirm the Importance of Inventory Management Now
Reexamining the importance of inventory management leads to deeper knowledge of your own company. If you can notice your company's problems and improve them effectively and efficiently, it can directly lead to improved productivity in assembly processes.
The Smart Reel Rack can streamline operations because receiving and issuing are freely possible, and it is also possible to maximize reduction of component inventory space. During issuing, LED lighting can also achieve significant time reduction.
April 2025: Survey Results on the State of Inventory Management in SMT Processes,
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