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The Definitive Guide to Manufacturing Inventory Management

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Meet Canary7
The Definitive Guide to Manufacturing Inventory Management

Reliable, Robust 3PL Solutions; Now at your service.

A modern manufacturing facility is nothing short of magic: hundreds of equipment, workers, and processes at work together, simultaneously, and seamlessly. 

However, unless you are in the manufacturing business yourself, you wouldn’t know just how hard it is to ensure that everything remains under control at the warehouses! Not only do you have to deal with complex, complicated machines like robotic arms, compressors, extruders, and cranes, but you also have to make sure that they work in a manner that turns raw materials into something useful. 

What’s the key to it all? What is it that makes it all come together at a manufacturing warehouse?

You guessed it: manufacturing inventory management. 

Manufacturing inventory management is the glue that supplies a manufacturing warehouse with much required cohesion. It is only through proper inventory management that a warehouse can master the process of transforming raw materials into sellable, customer-loved products. 

Yet, to integrate a proper management system within your manufacturing inventory requires a lot of understanding, knowledge, and consideration. It is important to get all the information you can get about manufacturing inventory management. 

That’s exactly why we have compiled everything that you need to know about manufacturing inventory management in this easy to read and understand guide: 


  • Manufacturing Industry Trends
  • What is Manufacturing Inventory Management? 
  • Best Practices for Manufacturing Inventory Management
  • Manufacturing Inventory Software

Manufacturing Industry Trends

Before we get to inventory management for manufacturing, it would perhaps be beneficial to cast a glance at the world of manufacturing and understand what it truly means to be a manufacturer in today’s day and age. The best possible way to do that is to look at manufacturing industry trends, which will show us how the manufacturing industry is going through what can perhaps be called the biggest and most significant transformation to date. 

Manufacturing Inventory Management - The Industrial Internet of Things (IIoT) (1)

The Industrial Internet of Things (IIoT) 

If you are in the manufacturing industry, you must have at least some experience of this phenomenon even if you don’t know if this is what it’s called. The Industrial Internet of Things, also known as IIoT, is a term used to describe the process of using interconnected devices to gather data in industrial settings, particularly in manufacturing. This data is then leveraged to optimise the manufacturing process and hence becomes a core asset for the company. 

So – think of devices like sensors. Sensors are an interconnected IIoT device because they help manufacturers collect data on factory machines, which can then be used to properly understand how the machines work and how well they are doing. They can also be ultimately employed to do things like reduce machine downtime, avoid operational inefficiencies, and wholly optimise the maintenance process of the machine. 

When we say IIoT is one of the most prominent trends in the manufacturing industry, what we mean is that more and more manufacturing businesses are understanding its importance and trying to incorporate it into their processes. For this reason, manufacturing businesses today are quite evolved and actually benefit from the best, top-notch technology at their warehouses. 

The Rise of 5G and Smart Machines

On the technology end, another trend that is continually rising in the manufacturing industry is the usage of 5G. For the most part, 5G is relied on to maximise the potential of IIoT devices, as easy connection to the internet allows better connection between this technology and provides the means for them to be used within manufacturing warehouses. 

Paired with 5G are also many other smart machines, such as the aforementioned sensors, which are used to further refine manufacturing processes. Manufacturers are increasingly creating private 5G connections that are used on their premises and give them super fast speeds so that their workflow remains seamless, and any defects in “normal” internet don’t creep into the warehousing aspects. 

The reason why the increased use of 5G is such a big development in the manufacturing industry as well as a promising new trend is that it is a wireless, relatively simpler way for manufacturers to connect their often complicated machines together. It brings an additional dimension of efficiency to the process of turning raw materials into useful products, and hence is an important and effective part of the manufacturing processes. 

Manufacturing Inventory Management - The Rise of 5G and Smart Machines
Manufacturing Inventory Management - Maintenance Based on Forecasting and Predictions

Maintenance Based on Forecasting and Predictions

As you might now, maintenance is very important in the manufacturing business. However, recently, maintenance within the manufacturing factory and warehouse has been going through a revolution of sorts. This is given the fact that it is now based on forecasting and predictions. In fact, predictive maintenance is the new norm and manufacturers are employing it in their processes daily. 

Predictive maintenance is maintenance done in accordance with data in order to avoid future problems. Essentially, it is the way to use AI to forecast failure patterns, fix them, and ensure that they don’t lead to detriment in the future. So, by focusing on aspects that are likely to fail, manufacturers can take action in advice and make sure that they don’t fail. 

It’s actually pretty simple, when you think of it. What’s even better is that this sort of predictive maintenance is not only applicable on latest equipment, it can also be used on old motors, transmissions, and whatnot. It can also be used to evolve inventory in manufacturing, but we will discuss that later. 

It’s always better to be safer than sorry, which is exactly what this trend exemplifies and hence, is likely to be adopted by more and more manufacturers in the future.

End-to-End Automation and “Dark Factories”

If you are thinking of operating a manufacturing factory or warehouse in the 21st century without equipping it with end-to-end automation, you are more or less setting yourself up for disaster. 

AI and automation are important aspects for manufacturing today. Machines complete tasks that humans simply can’t or can but a lot more slowly and inefficiently. Therefore, it is wise to configure your machines in a way that they can take workload that your human labour simply cannot. 

A factory that is completely automated is referred to as a “dark factory” – a site where all the processes are completely automated and there is no human intervention needed on the site. These are likely to become more common in the future, and the reason behind this is that automation is very beneficial for manufacturers! Not only do they result in greater efficiency, but they also give you considerably more accurate work processes and the space to save money.

What Do They Mean for You?

Overall, the trends we have discussed above point towards a shift in the way things work in the manufacturing industry. The manufacturing industry is evolving at the speed of lightning, and for you, this means that you must do that as well. You must also slowly, but surely, make your way towards achieving seamless automation at your factory or warehouse!

And the way you can break into this, and other trends we have talked about is through optimising your manufacturing inventory management processes. 

Manufacturing Inventory Management - End-to-End Automation and “Dark Factories”

What is Manufacturing Inventory Management?

Now that we know the kind of pressure you have on you as a manufacturing business to remain at par with your competitors in the industry, let’s try and understand the role of manufacturing inventory management in the mix. 

Firstly, let’s start with what it is. 

Manufacturing inventory management is the process of handling your stock. This includes tracking the inventory of goods across multiple stages of the production. Inventory management covers both the storage of raw materials as well as the completed products ready to be shipped as such, including all the supplies, materials, and items that are integral to your manufacturing processes. Of course, good inventory management  in manufacturing goes beyond this, and we will get into more about that in the next sections. 

But for now, let’s focus on understanding everything that we can about the manufacturing inventory. 

Types of Manufacturing Inventory

Unlike other forms of inventory management, manufacturing inventory management is slightly more complicated as it includes multiple stages of production. The items that go into the inventory differ with each stage. Let’s have a look: 

Manufacturing Inventory Management - Raw Materials

1. Raw Materials

When you are baking a cake, you need certain ingredients that will have to be mixed together to give you your delicacy, right? Well, a manufacturing process is quite akin to baking in that sense! The manufacturing of any product: whether it is something as big as a car or small as a wristwatch, it starts with raw materials. These are the most basic materials and supplies that go into making the end product. So think of materials such as metal, plastic, chemicals, stone, cloth – these are the raw materials that you start your manufacturing process with. 

The inventory for these items is obviously different, as the requirements that they need to be stored under will be quite different from those of the end product. Storage also needs to be separated physically since these materials should be available more readily in the area where the manufacturing process is just starting out. 

2. Work in Process Inventory 

The work-in-process inventory, as the name suggests, is for products that are not quite ready yet and are under construction for the time being. Needless to say, products aren’t made in one day. Mostly, they have to be stored and taken care of in the inventory during the manufacturing process. 

So, for example, you are a mustard manufacturer. The mustard is ready, but it still needs to be poured in the designated bottles. In that sense, it is past the raw material stage meaning that the ingredients have been mixed together to give us the mustard itself, but it is not fit for sale yet since its not in the bottles. 

Manufacturing Inventory Management - Work in Process Inventory
Manufacturing Inventory Management - Finished Goods Inventory

3. Finished Goods Inventory

Once the product in question has been finished off, it becomes a finished product. A finished product has made it all the way from the raw material stage, through the work-in-progress stage, and to the final product inventory. Here, it will be stored until it is ready to be shipped out to the customers! 

Most commonly, these three types of inventory are simultaneously engaged in manufacturing warehouses! They can be seen as the three main components that make up the manufacturing inventory process. However, packaging inventory and MRO inventory can also be included, but we haven’t discussed them above since they are not always a part of manufacturing warehousing. 

The Role of Manufacturing Inventory Management

In manufacturing, as in any other industry, the inventory is one of the most integral parts of the supply chain. It is inventory that determines the ability of your business to meet demand, and create a product experience that is well-liked by your customers. 

Your manufacturing inventory is a necessary aspect of the overall production. If you fail to manage it properly, it can cause havoc in your warehouse, which can further manifest in your business and customer relations, and cause you to lose sales. Afterall, your customers will stick with you just as long as you continue providing them with high-quality, timely delivered products. Even a single hiccup that causes them to receive the wrong product, or to not receive it on time, can trigger them into opting for business with your competitor instead. 

Failure to manage your inventory properly can also lead to financial losses – not just for your business, but also for other businesses involved and can ultimately lead to distrust in your manufacturing operations! 

For these reasons, and many more, inventory management for manufacturing is absolutely crucial for an optimised manufacturing journey. 

Benefits of Manufacturing Inventory Management

  • Save money 
  • Reduce stock outs
  • Simplify and streamline inventory management
  • Accurate forecast of future sales
  • Save time
  • Get better data
  • Increase traceability
  • Improve customer satisfaction
  • Boost production rates

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Best Practices for Manufacturing Inventory Management

When all is said and done, the most important part of our discussion is this: how can you, as a manufacturing business, improve inventory in manufacturing? 

Well, the first point you must understand is that it is not a one time thing. It’s not like you can wave a magic wand, utter an incantation, and everything in the inventory realm will suddenly come together to work in your favour. Instead, improving your manufacturing inventory management will be a constant, sustained effort that will require a lot of work from your end. 

However, there are a few things that you can do to accelerate the improvement of your inventory management processes. In this section, we look at these methods and discuss their efficacy in terms of refining the manufacturing inventory. 

1. Implement the 3 best inventory management techniques.

The first thing you can do to ensure that your inventory management processes are adequate enough is try and implement proven manufacturing inventory management techniques. The following 3 techniques are loved by manufacturers and are guaranteed to help you in one way or the other:

  • Pull technique

The pull strategy, interesting enough, relies on the customer. This is because implementing this technique means that you are supplying the product according to your customer’s demands; nothing more, nothing less. 

The pull strategy works in terms of keeping your spending low, and requiring comparatively less effort from your side. However, it may not be the right fit for you if you are a big business, since you are more likely to have a larger, more diverse customer base with varying demands that regularly fluctuate. But if you are a small business, the pull strategy is great paired with the right equipment. 

Manufacturing Inventory Management - Pull technique
Manufacturing Inventory Management - Push technique
  • Push technique

When manufacturers release products in accordance with what they think the level of customer demand is likely to be, they are implementing the push strategy or technique. If you are wondering how this is made possible, think back on the manufacturing trends we discussed.

Predictive operations and forecasting in general is what makes this strategy possible, and the widespread use of the push technique may very well be the reason why forecasting has taken such an unwaverable spotlight in the manufacturing industry.

Push strategy is easier for businesses, especially large-scale businesses, as they can produce their products in advance without having to rely on proper findings or data. It means a faster flow, and surprisingly even works a lot of times. However, unfortunately, it is quite risky.

For example, if you experience an unanticipated drop in the customer demand, you will have excess stock to take care of in your inventory. Storing stock can be very expensive and complicate manufacturing inventory management by a lot, so this is definitely a drawback.

  • Just in Time (JIT) technique

This is another very popular inventory management technique, and it is used in not only the manufacturing industry but also other industries such as eCommerce, retail, and FMCG. This strategy is essentially a mixture of the pull and push techniques, and is implemented when you get raw materials according to a forecasted customer demand, but only put them through the manufacturing process when there is an actual demand for the end product.

As you can appreciate, this is very convenient for businesses and allows them to minimise overhead costs for businesses of any size.

Manufacturing Inventory Management - Just in Time (JIT) technique
Manufacturing Inventory Management -Audit and inspect your inventory regularly

2. Audit and inspect your inventory regularly.

Reviewing your inventory and conducting regular inspections and audits are very important. This way, you can find potential problems ahead of time and tackle them properly before they lead to losses. The best way of doing this is by creating comprehensive reports on each aspect of the manufacturing processes. You can base these reports on multiple types of audit methods, such as physical inventory, spot checking, and cycle counting. The main idea is to be in touch with your inventory activity to the point that you can easily identify gaps and discrepancies before they become bigger problems.

3. Improve your relationship with suppliers.

This tip, as important as it is, rarely gets due attention when talking about good inventory management for manufacturing. At the end of the day, the manufacturing process is entirely dependent on the raw materials which you get from your suppliers. You need to have a good relationship with your suppliers so that they are more willing to work with you to solve all problems related to inventory management. Having a good relationship with your suppliers can also give you the means to ask them for discounts, and can help you save! 

One way you can do this is by being more communicative and transparent with your suppliers. This will help you connect with them and maintain a sense of trust, which can further prove to be beneficial for your supply chain. 

The best part? All of these can be easily involved in your warehouse and inventory processes by the help of a manufacturing inventory management software! 

Manufacturing Inventory Management - Improve your relationship with suppliers

Inventory Management Software for Manufacturing: The Best Solution

Manufacturers have a unique set of needs that must be met in order to ensure efficiency and advancement in all their operations. However, meeting these needs is not a straightforward job, especially as far as inventory management is concerned. It can only be done with the help of the right tools and technology.

In order to implement the best practices mentioned above, as well as reap the benefits of good manufacturing inventory management, an inventory management software for manufacturing is your best bet! And although there are many software solutions that can help you, what we offer at Canary7 is unrivalled!

Canary7 is a unique inventory management system that has been designed keeping in mind the needs of many industries, including the manufacturing industry. Our aim is to help you benefit from a software solution that does not only help you manage your inventory, but optimise the rest of your warehouse procedures as well. 

To that end, you will find Canary7 to be the perfect warehouse management, warehouse control, labour management, order management, and of course, inventory management tool for manufacturing. Our solutions bring efficiency to all of these processes, and ensure that you are fully in control of your warehouse and inventory activity from the beginning to the end. 

For manufacturers, Canary7 is the best option because it allows you to implement proven inventory management for manufacturing techniques such as the JIT technique and allows you to benefit from industry trends that are sure to contribute towards the success of your business. In that regard, Canary7 is the ultimate partner for end-to-end warehouse optimization and automation, and can help you achieve a completely automatic workflow. 

Canary7 is the vision of the future, and that’s exactly what your warehouse and inventory deserve. Book a free demo today and see our manufacturing inventory management software for yourself.