Companies practicing lean manufacturing can benefit highly from vendor-managed inventories, or VMI. Unlike traditional inventory management, a VMI arrangement is between two companies. The arrangement is used to lower the cost of inventory for the customer companies. It is also a way for the manufacturers of the inventory to help supply the companies as needed. However, there are only three things that you need to know about VMI relationships and how they work.

How They Work

There are two parties involved: the manufacturer of the inventory, and the retailer, distributor or another manufacturer who actually owns the inventory. The original manufacturer holds the goods until they are needed by the customer (the manufacturer, distributor or retailer) requests more inventory. Special arrangements allow the original manufacturer to send shipments based on information gathered about the customer. The customer company agrees to accept the shipments, because their inventory should technically require stocking. VMI arrangements are used by companies large and small to greatly reduce lag time in supply chains. However, the system requires detailed synchronization of your point-of-sale information.

The original manufacturer of the inventory must know how much to produce and when. To accomplish this, they must use some of the same methods that its customers would use when storing their own inventory. The point of sale information from retailers tells the inventory manufacturer when goods are sold and the number of goods sold. Retailers using the VMI system must be willing to share this information in order to make the most out of the relationship. Manufacturers who use VMI share their production schedules, while distributor customers share their “ship-to-stock” information.

Moving Merchandise is Key

The successful use of marketing and sales campaigns are essential for moving the inventory through the systems. The VMI system does not work properly if the previous inventories are stuck in the storerooms. Companies should make a new marketing and advertising campaign a priority when beginning a VMI system. Companies entertaining vendor managed inventory should consider the importance of sharing information with the vendor and also becoming aggressive in moving the inventory. These points, along with an understanding of how the system works, can make the VMI experience a positive (and profitable) one.

Eagle Technologies Group is an industry leader in the design and installation of factory automation systems worldwide.

The year 2011 was marked by protests of corporate America, which occupied headlines for much of the
year. Global concerns over the growing debt crisis in Europe made manufacturers in the U.S. Fear for
their export sectors—and their profits. The government’s failure to act on many expiring credits and
incentives didn’t make things any better. Despite these obstacles and the recovering U.S. economy, the
manufacturing industry ended 2011 on a high that is expected to roll over into 2012.

Year End 2011

Despite the political and economic turmoil that all industries saw in 2011, the manufacturing industry
grew steadily throughout the year. December 2011 saw a growth of 3.3 percent in both employment
and production in manufacturing. The increase in employment is a great sign in a nation where millions
are still out of work and seeking relief. There were concerns that the export sectors in manufacturing
would suffer because of the debt crisis that seemed to take over the European economies. However,
such fears were apparently not as relevant in 2011, as the growth in production rates show.

2012 Predictions

The growth in production and employment is expected to continue through 2012. The Manufacturer’s
Alliance for Productivity and Innovation predicts a three percent increase production. This number
is higher than the 2.1 percent increase predicted for the U.S. gross domestic product (GDP). MAPI
further predicts growth in 18 of the 24 sectors that comprise the manufacturing industry. Housing is a
part of that prediction, surprisingly. The housing market has been the basis for much of the economic
turmoil that firms have experienced since the recession in 2008. Growth in this area has much larger
connotations for the economy at large. Energy, industrial equipment and transportation sectors are
expected to lead the 2012 manufacturing growth.

Moving Ahead

The growth in the manufacturing sector is expected to spill over into the next year. In fact, MAPI
confidently predicts a four percent rate for 2013, with 23 of the 24 sectors benefiting.

The general consensus is that manufacturing is marching forward and upward. If the past two years
are any indicator, the rest of the country will follow. Expect a closer look at the manufacturing
sector throughout the year, along with spirited analysis of the production numbers. Historically, the
manufacturing industry is the one that, once it rises, takes all other industries along for the ride. This is
something the country will welcome.

Eagle Technologies group is an industry leader in the design and implementation of factory automation systems worldwide.

Sustainability in manufacturing is dominating the manufacturing world, as companies work to reduce,
reuse and recycle in any way that they can. The reusable products sector that provides shipping
equipment is one solution that continues to take a foothold. Redesigning plants for better use of space
(and reduction of energy) is another. Many companies are even looking into ways to incorporate
renewable resources in providing energy for the plants. Unfortunately, one sector still remains sluggish
in the sustainable area. The medical manufacturing industry is working on ways to meet sustainability
standards without compromising the most important factor in their business—patient safety.

Concerns

The medical manufacturing industry isn’t intentionally bucking the sustainability trend. In fact, there
are several studies in the works to find more environmentally friendly practices in the manufacture of
medical devices and pharmaceuticals. The efforts all end at the nosocomial infection risk that increases
each time a medical device reused.

Nosocomial infections are those that originate in the hospital. The pathogens carried by patients
coming through the hallways can cause harm to those who recently received surgery or have
compromised immune systems. These pathogens are easily spread when a device or tool is reused
without proper sterilization. Hospitals have used a highly effective sterilization method in the autoclave
for more than a century. However, plastic and other nonmetal objects are destroyed in the autoclave.
It also uses a lot of energy and manpower to operate. The alternative to the autoclave and solution for
nosocomial infection was disposables.

Sustainability in manufacturing is dominating the manufacturing world, as companies work to reduce,
The disposables are cheap to make as many are made of plastics and paper. They are quick to use
as well. The first disposable medical item was the latex glove, developed in 1964. Today, doctors
have pre-filled syringes and other dispensers that deliver a one-time dose to the patient. Yes, the
number of nosocomial infections have reduced, but the amount of waste has increased exceedingly.
Approximately 90 percent of medical device waste is disposable products. Several thousand tons of
waste from disposables alone populate our landfills, as a result of the effort to reduce infection.

Solutions

First, the industry must admit that the disposable device is necessary for the modern medicine. The
Centers for Disease Control and Prevention estimates that 1.7 million people contract nosocomial
infections each year. More than a 100,000 of these patients died from those infections. There is no way
around the progressive need for infection reduction methods. However, the industry can reduce in other
ways to help eventually reach sustainable practices.

The company Farm Design Inc. came up with one way to keep disposables and also reduce waste.
Their new trocar (which is a device used to insert instruments into the abdomen during laproscopic
surgery) is a hybrid of disposal and reusable components. The entire device designed by the Farm is
made is metal with a disposal plastic tip. The metal is re-sterilizable, while the tip must be replaced
with each use. In turning what was once an 100 percent plastic device into a 90 percent metal one, the
company saves in freight costs, fuel and waste, as one metal trocar uses 1,500 uses. More work is being
done to make hybrids out of other medical devices.

The problem is infection and the solution seems to hybridization. It seems that in medical
manufacturing, as in automotive manufacturing, hybrids are primed to save the industry and the
environment.

Eagle Technologies Group is an industry leader in the design and implementation of factory automation systems worldwide.

A well-stocked spare parts inventory is like a lifeline during a mechanical breakdown. The parts are kept in a nearby storage room, ready for installation immediately. The production line can restart with very little delay in filling orders. Sometimes, however, the part you need is not in the inventory, for one reason or another. Companies who find themselves having to order spare parts place themselves and their production at the mercy of often complex parts supply chain. There are a few ways to prepare for such delays, and make the down time as short as possible.

Know Lead Time Numbers

Every part takes time to manufacture, ship and install. This time must be considered when determining
the amount of time between the moment the part is ordered and when the machines is up and running
again. The time period is different for many parts, so knowing the lead time for each part is essential.
During an emergency, the information can help your reschedule orders and alert customers. The time
delay numbers can also help create estimates that the customer care department can use in reassuring
customers who await their products.

Gather Alternatives

Your vendor may not be the only maker of the machine, and is thus not the only supplier for the spare
parts. Find the contact information for other makers of your spare parts and keep the information
handy. Doing so can help ease the pressure of a spare parts delay due to problems in the vendor’s own
plant.

Make a Transport Plan

Some issues are logistics in nature, caused by various failures in the transportation of parts from the
vendor to the customer. Maintain a plan for transporting the parts using the fastest route, the most
effective, and one that uses various modes of transport, in case one particular method is inhibited by
weather, mechanical issues or even political and economic troubles. Having such a plan ensures that
your company runs no matter what obstacles affect the vendor.

Keep Sources Updated

Manufacturers do discontinue products, including spare parts. Vendors go out of business or change
locations. The best way to avoid being surprised by one of these events is to stay abreast of your
contacts. Check periodically on the status of the vendors and transport companies. Also, pay attention
to all correspondence. Many vendors send notices of discontinued lines to their customers. Update your
vendors on any changes in address and other contact information as well.

Delays in receiving spare parts do occur. Fortunately there are ways that customers can minimize those
delays. It does take a little planning and additional time in maintaining correspondence. However, the
payoff during a breakdown can be immense.

Market analysts watch the monthly statistics waiting for a sign that the country is heading away from
another recession. In the meantime, individual states work to boost jobs and slash their budgets, some
using measures that were once thought to be unorthodox. Despite the scramble against what seems to
be a very stubborn economy, the state of Michigan has managed to grow its manufacturing sector in
such a way that the rest of the nation has noticed. Some are even seeing it as a sign that the recession
worries are behind us.

Hesitant Relief

Just a few short years ago, the state of Michigan was the place for the dying auto industry and
manufacturing plants that were fleeing the state fast. Unemployment had climbed to more than 15
percent and the state’s budget was in dire straits. After a few strategic government interventions,
including the federal bailout of the automobile industry, Michigan began diversifying. The result is a
3.9 percent drop in unemployment and the title of the second fastest recovering economy in the U.S.
However, the state is guarded in this news. Although their unemployment rate is dropping, it is still
much higher than the national average of 9.1 percent. There is still some work to be done.

What this Means for the Nation

Manufacturing has been showing slow gains for quite some time, but the sluggishness of the sector’s
growth did seem to reflect the nation. The U.S. Economy seemed to march slowly toward recovery, led
by the manufacturing sector, but held back by housing and the even slower growth in the construction
industry. The latest news about the recovery of one of the worst state economies in the union means
the slow growth has been productive. With the worst economies accelerating toward recovery, the rest
should soon follow.

The automobile sector adds another ray of hope. The big three automakers are feeling the boost of
recovery. Chrysler reported a 27 percent increase in revenues, while General Motors announced
a predicted two percent gain. The increases in production will affect other state where the parts
for the cars are made. Thus, ramping up the assembly lines in Michigan, means increased work in
Mississippi, Indiana, Illinois and other states. These increases will lead to more jobs as well and lower
unemployment rates.

Some Waiting Left to Do

The news that Michigan is recovering, and its meaning for the rest of the nation, doesn’t mean a speedy
recovery for all. There is still a long recovery ahead before the nation, and Michigan, even reach the
employment levels and manufacturing production experienced before the recession. In the meantime,
it seems that the manufacturing industry will continue pulling the state and national economies toward
recovery.

Eagle Technologies Corporation is an industry leader in the design and installation of factory automation systems worldwide.

In the early months of 2011, the drug manufacturing industry was abuzz with the large number of drug shortages that affected several companies throughout the industry. Although injectable drugs were the most affected, doctors found themselves restricting many high profile drugs due to the shortage. There were many causes, the most frequent culprit being manufacturing errors. In order to help curtail the effects of the shortage, the U.S. Food and Drug Administration teamed up with companies and organizations in the drug manufacturing industry to help alleviate some of the strain brought on by the shortage. They have come up with a few options that will hopefully go into effect in 2012.

Early Warning System

The U.S. Congress kicked around a few laws, including one that would require drug companies to give a six month advance notice of a shortage. Doing so is not difficult using the lead time calculation that companies use to track inventory. The American Medical Association also has ideas for such an alert system. With the warning, doctors can ration dosages and schedule procedures so that there is enough of the drug to finish. Chemotherapy drugs were the most plagued by shortage. The surprise shortage caused oncologists to think creatively, providing less potent drugs and delaying treatment. With the early warning system in place, oncologists could better treat their patients.

Laws to Require Continued Manufacturing

Another potential law is one that requires drug companies to keep a continued stock of life-saving drugs. Not every drug would fall into this category, but many would. Under this law, the manufacturers would have to keep the supply of many drugs going, despite the factors that are adhering to the industry now. The company would have to meet a set quota determined by several factors in order to be considered a continuous supply. This law would indirectly cause the drug manufacturing industry to get to the bottom of the shortage problem, or so Congress hopes.

In 2010, the drugs considered in shortage was at 178 which is up from 61 five years before. The 2011 numbers are expected to be even higher. In order to begin curtailing the problem, drug companies need to find ways to make production safe and products more tamper resistant.

Eagle Technologies Group is an industry leader in the design and installation of factory automation systems worldwide.

Manufacturers usually keep their spare parts inventories neat and organized. However one look at the
inventories can explain why the company is spending unnecessary time and money on their inventories.
Most inventories are not standardized. Standardization differs from organization in that the parts are
simply put in their place, but they are selected and placed specifically to streamline the process they
are used for. The parts are arranged by the process they are used for as well, making repairs faster
with easy to find parts at hand. There are other ways that companies can benefit specifically from
standardization of their spare parts inventories, including saving time and money while streamlining the
duplicates that may be in the inventory.

Cutting Down-times

Organizing the inventory room by a generic method such as alphabetical or numeric order seems
practical, but isn’t. When parts are needed for the repair, the maintenance workers must diagnose the
machine, return to the inventory room and hunt down the parts before returning to the machine for a
fix. In a standardized spare parts inventory, the parts are grouped by process or product. Some may
even be grouped by the most common repairs performed on the machines. The maintenance worker
hears that the machine has broken down. He can go first to the inventory and retrieve the spare parts
for that machine and the accompanying tools before moving on to the machine. A manufacturer can cut
two trips to the inventory room down to one.

Eliminate Duplicates

It is not uncommon for a plant to have several machines made by various manufacturers. The spare
parts will thus come from several manufacturers as well. When the inventory is arranged by process
or product, it may become evident that machines share the same parts. Companies can cut back on the
duplicates and share parts between machines just by standardizing the spare parts. Some companies
have also retooled their machines to accommodate the slightly similar parts.

Save Money

Eliminating the the duplicate parts is one way that standardization saves money. By standardizing,
maintenance managers can whittle the inventory down to the parts that are most necessary. Better
maintenance scheduling is possible, further saving the costs of breakdowns. Another component of
standardization is keeping parts and machines that can be easily repaired and maintenanced by similar
tools and spare parts. This eliminates special tools, parts and technical support that can all be costly to
the company.

Standardization is organization, but in a more pointed manner than the generic methods. It helps
the company to tailor their emergency repair needs to their individual processes and machinery.
Undertaking standardization also requires an intimate knowledge of the plant’s processes and needs.
The result, however, is a much more streamlined, cost effective and efficient spare parts inventory.

Eagle Technologies Group is an industry leader in the design and installation of factory automation systems worldwide.

Repurposing is another way to introduce green practices into a factory. It is like recycling, but object
being reused doesn’t become another thing. Repurposed machines, for example, are used to produce
more than one product—products outside of its normal usage criteria. The concept of repurposing is
already taking hold in the manufacturing industry in the form of materials repurposing. Plants reuse the
metal usually lost during casting, for example. There are also ways to incorporate repurposing in the
machinery and equipment area as well.

Buy Multipurpose Machines

Think about repurposing when you purchase a new machine. More and more industrial machinery
manufacturers are creating machines that can be used in more than one process. They can also produce
more than one type of product. The cost of such equipment and machinery is often higher than the
single use. However, companies will realize the savings from buying one machine as opposed to two
or more. The energy savings from repurposing are also notable as many of the machines are designed
to be more energy efficient.

Consider Upgrading

Repurposing has a second definition. It also means to upgrade the machine with small modifications
or a complete overhaul. The upgrades can be aimed at making tan old machine more energy and cost
efficient. It can also work to make a single use machine into a multi-use one. The amount of repair
doesn’t matter, as the original machine still exists under the upgrades. Consider upgrading the machine
before going out to purchase something new.

Evaluate Closely

Look around the plant carefully to see which machines or equipment can be repurposed. Good
candidates are old machines or those in need of more than minor repairs. Machines that can handle
multiple production lines and those with discontinued parts are also good candidates. If any of the
machines need to be replaced, remember to look for newer multipurpose models. When you are done,
the savings in cost and your contribution to the green movement will be noticed.

Automation is an important component of manufacturing. It allows factories to produce massive
quantities quickly. The production at a lower cost than the artisan produced prior to the Industrial
Revolution. The artisan is the craftsman, the skilled creator who once produced the goods for the
area. Production took time, came at a price and quantities were limited. However, the premise that
automation has killed the artisan is false. In fact, there are several place within the manufacturing
industry that you find the old artisan in full form.

New Product Development

Artisans were creators, skilled at not only making new products, but also in designing them. Who
better to handle the new design concepts? Artisans in new product develop use their creativity, along
with intimate knowledge of the product to design the new. They also work on product improvements,
including incorporating government mandates and green innovations. The result is a computerized
design of the new product or a prototype that can be used for testing.

Engineering

The artisans in the engineering department work more with design improvements than they do with
creation. Modifications to the prototype for things like ease of use and safety. Engineers work in testing
the prototype for design flaws as well. The engineer does improve on the design as needed before
manufacturing can begin.

On the Plant Floor

The welders, electricians, millwrights, sheet metal workers, and other specialists are like the smiths of
the pre-industrialized era. Like the blacksmiths,tinsmiths, zincsmiths and others, these modern artisans
work with metal. Their craft is taking a metal sheet, bar or slab and shaping, forming and molding it
into something the consumer can use. Theses artisans are highly specialized, so skill, talent and training
are required for success. In fact, these artisan professions often use the same training hierarchy used
before automation. They begin as apprentices assisting the smith while learning the trade. Journeyman
and master are more advanced levels, with master being the title bestowed upon the smith who
successfully completes the training, which takes several years.

The American artisan is alive, well and working in factories across the country. Their jobs weren’t
wiped out by automation. On the contrary, the artisan craft was expanded, making the produced goods
something that everyone can get their hands on. There is no need to travel to the artisan. Go to the local
retailer. His work has come to you.

Eagle Technologies Group is an industry leader in the design and implementation of factory automation systems worldwide.

Reuters has the story of a recent Standard & Poor’s report on the manufacturing industry:

U.S. manufacturers and transportation companies we rate have engaged in a number of mergers and acquisitions (M&A) this year, despite indications of an increasingly fragile economic recovery, according to a report published by Standard & Poor’s Ratings Services. The article is titled “U.S. Manufacturing And Transportation Companies Boost M&A, With Trends Varying Among Sectors.

While there are probably a number of factors affecting this finding, one explanation is that manufacturing’s successes and failures have been very different from company to company. Some firms are better equipped to adapt to changing market conditions than others, and those that aren’t are being consolidated into those that are. U.S. manufacturing is still a vital and important part of the economy, but it’s also volatile. It’s more important than ever for a company to be ahead of the curve.

Eagle Techologies Group is an industry leader in the design and installation of factory automation systems worldwide.