24 Jul 2024

Optimising stock on the machine-shop floor with the help of AI


For the modern machine-shop floor, the effective management of stock levels remains a challenging task—particularly for shops where well-thumbed tooling catalogues, and pens and paper, still play a vital role. At shops that have transitioned from paper-based inventory-management processes to the use of smart online systems, however, this task has been made significantly easier. Development Manager at CRIBWISE, Patrik Grönman, explains further.

When it comes to managing their stock levels, machine shops have a tricky balance to strike. On the one hand, they need to ensure that vital tools, consumables and safety equipment are available for those critical jobs. On the other hand, money tied-up in unnecessary stock is money that a machine shop cannot spend on growing its business.

Increasing complexity

Some shops employ people to place orders for new stock, while in other shops it might be a shared responsibility. Regardless, these professionals will need to familiarise themselves with the shop’s inventory, keep track of the use – and any changes in the use – of these items and to evaluate any events that might impact production. They must do this while taking both objectives – maintaining low stock levels while ensuring that items never actually go out of stock – into account.

While this task might be relatively straightforward to carry out for a small shop producing a limited number of parts, the complexity of the decisions that must be made increases substantially as the shop, and the variety of items it manufactures, gets larger. As such, even the most experienced of staff can misjudge stock-levels from time to time, and such mistakes can prove costly if they cause jobs to be delayed.

Simple solutions, many benefits

Fortunately, simple and cost-effective solutions to this problem are now available. Machine shops are increasingly turning to cloud-based software for the management of their inventories of tools, equipment, assets and personal protective equipment (PPE). These intuitive and proven solutions are affordable for even the smallest and specialised of machine shops.

The benefits associated with the use of inventory-management software are numerous. It tracks tools from their point of delivery to their destination on the shop floor—slashing administration costs. It grants machine shops better control over their expenditure. Using it, machine shops can mark tooling as “in use” rather than “out of stock”, for instance, eliminating over ordering, and rules can be set that ensure that operators choose used and refurbished tools before they reach for new. Critically, it guarantees that the right tool for a given job will be in stock when it is needed—making production delays a thing of the past.

Exploiting artificial intelligence

Further, by exploiting the latest developments in artificial intelligence (AI), these software solutions are getting smarter. At CRIBWISE, for instance, we have created a new feature within our software called Stock Optimisation. As the name suggests, this AI-driven function optimises a shop’s stocks of consumable items—ensuring that production operations can go ahead as planned and dramatically reducing time needed for purchasing. CRIBWISE Stock Optimisation ensures an equal or better degree of optimisation than even the most experienced of users doing it manually.

Key criteria

Stock Optimisation uses advanced algorithms to track and analyse data on input values and four key criteria:

  • Training Period – an initial step needed to teach the system;
  • Service Level – which is expressed as a percentage of stock availability at any time;
  • Safety Stock – additional items kept on-hand to bridge any gaps created by inconsistencies in delivery; and:
  • Order Frequency – as in ‘how often’ and the timing in between orders.

How it works

Using Stock Optimiser, machine shops can classify stock items as ‘A’, ‘B’ or ‘C’ according to their consumption value. Items designated ‘A’ should be the primary focus, as they represent 70% of the consumed value in stock.

Shops can review the re-order frequency on these items in the purchase scripts. They can consider purchasing category-A items in higher frequencies than B and C Items, so that the Stock Optimiser can reduce the order points and ordered quantities.

Based on the lead times for historical purchases and consumption patterns, Stock Optimiser can also optimise the order point and maximum order levels for consumable items.

Stock levels, and their relation to consumption, can be monitored continuously in reports and the CRIBWISE dashboards. Indeed, the reports on slow-moving items can be used to “cut the tail” of non-used items in stock.

Getting started

Getting started with Stock Optimisation is easy. Current versions of CRIBWISE have Stock Optimisation built-in already; it just needs to be turned on. There are a few prerequisites for its use:

  • the stock items must be consumables.
  • the purchase function in CRIBWISE needs to be used, so it can determine the actual lead time from order to delivery for each item and the potential spread of lead times.
  • to train the system, a 30-day measurement period, with at least fifteen picks, is needed so it can calculate consumption and the consumption spread;
  • for the moment, it will only work for normal stocks—transfers to satellite stocks are not considered as consumption and re-stocks to satellites are not considered as purchases.

But that is it. With a minimal training period, and small number of items picked, the Stock Optimiser can begin to produce results.

The effective management of a machine-shop’s stock levels was once a complex task and mistakes – sometimes costly mistakes – were invariably made. The latest inventory management systems, however, when coupled with advanced, AI-based systems, simplify stock-management significantly. This means that machine shops can concentrate their efforts on what they do best—getting high-quality parts out of the door quickly and efficiently.

Company info: CRIBWISE