Most sourcing professionals have one priority in a rapid, unforeseen downturn or crisis: minimize the cash flow impact of the supply chain that was built on an immediately slumping demand chain. The obvious options are to: cancel existing orders, push out the orders, or consider options for minimizing working capital tied up in inventory.
Canceling orders can be a costly decision to make because it could be very difficult to ramp back up and meet pent-up demand when everything returns to full speed. HMMI can help you avoid this costly move. How? Shorter lead times. After 20 years in manufacturing, we have found that producing high-quality products with short lead times is critical to customer satisfaction. But in times of crisis, it becomes even more important to have a supplier who can also help you reduce your inventory. HMMI understands bottom line impact of reduced inventory. We make it possible for customers to do this with dramatically shorter lead times on frequently produced parts.
After 20 years in manufacturing, we have found that producing high-quality products with short lead times is critical to customer satisfaction. But in times of crisis, it becomes even more important to have a supplier who can also help you reduce your inventory. HMMI understands bottom line impact of reduced inventory. We make it possible for customers to do this with dramatically shorter lead times on frequently produced parts.
LEAN Implementation and Facility Expansion
In 2018 and 2019, HMMI began a LEAN journey and the results have had a dramatic impact on our customers’ bottom lines. Our 100,000 square-foot facility includes an expansive indoor steel storage space which allows us to maintain a large selection of consigned raw materials on-hand. This helps us to rapidly meet the changing needs of today’s on-demand market. And our various LEAN inventory control options minimize inventory floor time, ensuring just in time delivery.
Our large facility keeps frequently used parts on-hand, dramatically shortening lead times. Before these improvements, our lead-time was eight to 10 weeks, but now we have reduced that to four to six weeks to complete most projects.
Time is Money
HMMI uses “supermarkets” to reduce lead time and ensure on-time delivery. When our customers share and regularly update their forecasts, HMMI produces complete parent weldments and/or child subcomponents in higher, agreed-upon quantities than are indicated on open, active purchase orders. This improves economy of scale by spreading setup costs across larger quantities and provides our customers with shorter lead times and less inventory on their own floors to meet market demand. It solves the age-old market responsiveness vs. low inventory challenge: Do I meet market demands quickly, or do I minimize dollars locked up on the shelf? We help our customers answer “yes,” to both of those questions.
For example, it can be costly to nest and bend one or two large parts because the set-up time can be extensive. By nesting six to eight at a time and then bending those parts while the press brake is already set up, it saves time and money on each project. Those cut and formed parts can then be placed on shelving units so they’re ready for manufacturing as soon as an order is received. Think of the time that saves. Additionally, it’s customary for us to store completed parts on our shelves in order to take advantage of slower periods or simply because we can anticipate our customers’ needs.
Customer Examples
Leader in Crane Manufacturing
HMMI has one customer who hesitates to place orders beyond what is needed that week, which forced us to scramble on rush orders before we began our LEAN journey. Therefore, we made 10 of their frequently ordered parts, placed them in the supermarket and waited… for a day. Our customer called the next day asking for another rush order of six of these parts. They were astounded and thrilled when we told them we could meet their needs in a small fraction of their expected lead time. Not only did that delight their end customer, it also improved their speed to revenue by several weeks.
Leader in Boom Truck Manufacturing
One of HMMI’s customers typically held several completely built units of one of their large and expensive products in inventory for six weeks… largely due to the lead time required for the larger weldments.
But by sharing their forecast and MRP each week, HMMI was able to “supermarket” the common parts and cut 4 weeks from the lead time. As a result, the customer was able to reduce their inventory of completed units in stock by 33% for only two weeks to meet the same market demand, while also reducing working capital formerly locked up in inventory by 33%. It further resulted in a 66% improvement to inventory turns and a significant new competitive advantage for the customer.
The Bottom Line
Developing strong partnerships with our customers is our pride and joy. We help customers improve cash flow, reduce the time working capital is tied up in WIP, reduce inventory levels and shorten lead time for a competitive edge in their markets. This level of interest in and understanding of our customers’ business positions our customers to win more and grow faster. These principles are not a platitude or a marketing angle for us, they are the absolute keys to our own survival in hard times and growth in good times.
If you are interested in solving short term cash flow challenges today, lowering the supply chain demand on working capital in the near term and bringing greater speed to revenue for the long term, please contact us.
We’d like to learn more about your business and see if we can help.
