Too much stock, and still running short

It's common to see both at once: plenty of inventory sitting on the shelves, and frequent shortages on the items that matter. Money is tied up, but delivery still slips. Purchasing gets blamed either way. Buy early and you carry excess. Buy late and you cause delays.

These aren't two problems. They're one problem showing up in two directions. Under-ordering leads to production delays, urgent purchasing and missed delivery dates. Over-ordering ties up cash, takes up warehouse space and creates obsolete stock. Both are usually symptoms of poor planning visibility.

For Shannon Reshno, Central Innovation's Managing Director, one of the central problems MaXXflow addresses is the working capital manufacturers have tied up in inventory. Manufacturers can have hundreds of thousands of dollars sitting on shelves, often because they lack confidence in what materials will be needed and when.

That stock buys a degree of security. It also restricts the cash available for other investments, and it carries the risk that materials become obsolete as conditions change. On top of the cash itself, excess inventory brings storage, handling, insurance and obsolescence costs, and makes stock harder to manage.

And it doesn't stop the shortages. Excess stock often sits alongside shortages of other critical items, because it was bought to cover uncertainty rather than to match the work that's actually coming.

Nobody sets out to overstock. It builds up when teams don't trust the information in front of them:

• Purchasing orders extra so it isn't blamed for the next shortage.
• Production asks for more than the job needs.
• Managers approve purchases because they can't tell what's really required.

Over time, the business carries inventory that doesn't match actual demand.

Stock records add to the doubt. A part can be on the shelf but already allocated to another job, stored in another location or unusable for the work that needs it. When the number on the screen doesn't reflect what's physically available or already committed, people stop relying on it.

Safety stock has its place. Too much ties up cash and warehouse space. Too little increases the risk of production disruption. The trouble starts when buffers stand in for planning information the business doesn't have.

MaXXflow connects inventory and purchasing decisions to actual manufacturing demand. Instead of one stock total, you see what's available, what's already allocated, what's expected from suppliers, what upcoming BOMs and jobs need, and when they need it. Where stock is held across warehouses or stores, you can see not just whether it exists but where it is and whether it's free for the work that needs it.

That changes the buying question. Inventory tools tell you what stock you have. MaXXflow helps answer whether that stock is enough to support the work you need to deliver.

The everyday transactions keep the picture honest. Confirmed sales orders reserve inventory, and receipts against purchase orders are checked for duplicate or excess quantities before stock and order status update.

The aim is to reduce excess inventory while making sure you have the materials needed to meet customer commitments. You still make the buying decision. You make it with demand, timing and operational risk in front of you, which gives buffers less work to do. Read more in Inventory and warehouses and Purchasing and suppliers.

1. How confident are you that stock records match what's physically available?
2. Can you easily see what's available against what's already allocated to other jobs?
3. How often does production find that stock shown as available can't actually be used?
4. Is excess inventory tying up cash or warehouse space?

If you'd like a rough figure for what excess stock costs you each year, the planning cost check helps you estimate it.