printing industry manufacturing benchmarks inventory turns

#Printing industry manufacturing benchmarks inventory turns full

Just as OEE measures the effective use of the investment in production capacity, stock turns measures the effective use of the investment in spare parts capacity.

I'll have more to say on the use of a stock turn percentage later. Hence the value of the above example is 0.5, not 50%. The top is dollars per year and the bottom is just dollars. This is because the units on the top and the bottom of the calculation are different. Now, the first thing you might have noticed is that the stock turn is a ratio, not a percentage. That is the company has ‘turned over' its inventory investment at the rate of one half per year. Stock turn = (value used in past 12 months) / (value held today)įor example, if a company holds $5M of inventory today and has issued $2.5M of that inventory in the past year, the stock turn ratio is 2.5/5.0 = 0.5. The stock turn is the ratio of the value of the inventory issued in the past year (dollars per year) divided by the value of the inventory held (in dollars) at the point in time that the measure is taken 2. Just like OEE and production capacity, the stock turn metric is a good, high-level, indicator of materials and spare parts management. If you don't pay attention to how much is stocked or how it is managed, you will have a low stock turn. If you buy items way before when they are really needed, you will have a low stock turn. If your parts usage planning is ineffective, you will have a low stock turn. If your procurement management results in poor availability and thus drives excessive stock levels to cover the problems, you will have a low stock turn.

Similar to OEE, if you buy too much inventory and some is left idle because it is not really required, you will have a low stock turn. This is a good high-level measure of the capacity management of the materials and spare parts inventory investment. An indicator of the effectiveness of that spare parts investment is stock turns. Spare parts require an investment of capital with the expectation that the investment will be used productively. So, would continuing to operate all three plants at low capacity be a smart move or could better use be made of the capital that is tied up in one or more of those plants?Īn investment in spare parts, to support your production capacity, is in many ways similar to the investment that is made in production capacity.

#Printing industry manufacturing benchmarks inventory turns full

In the above imaginary scenario the OEE of each of the plants would be less than 0.24, if they operated at full capacity, with no breakdowns or quality losses - which probably wouldn't happen. Overall Equipment Effectiveness is a good, high-level, indicator of production capacity management. If your planned stoppages (for change overs and so on) are too many or too long you will have a low OEE. If your maintenance management of the equipment results in poor reliability and excessive downtime you will have a low OEE. So, for example, if you buy too much equipment and some is left idle because it really is not required, you would have a low OEE. By itself OEE doesn't tell us about causes of losses but it is a good indicator of the effectiveness of production equipment investment and its management. A world-class value for OEE is said to be 0.85 1. Losses from theoretical capacity are generated by any factor that reduces the output of the plant and equipment, including not being required to produce, unplanned downtime, planned downtime, reduced operating speeds, and reduced operating volumes. That is, OEE measures the plant capacity that a company has invested in against the capacity that it is using productively. OEE measures the productive operating capacity of plant and equipment, compared to the theoretical maximum capacity of that plant and equipment. One of the most popular is OEE - Overall Equipment Effectiveness. In operations management there are many metrics that are used to measure operational performance.