PROVIDING ample stock to guard against the possibility of the interruption of production for lack of material was the chief aim of inventory control in 1920. Recognition of the importance of turnover is one of several factors that have led to a study of minimum stocks. Inventories received first consideration in the now well-established financial-control policies of the General Motors Corp. Formerly, placing orders for materials far in advance of needs had been thought necessary to assure the supply, but restricting orders to suppliers to three months in advance has been satisfactory for 10 years. Each car division of the Corporation now submits a definite monthly forecast, based on 10-day reports from dealers of stocks and actual and estimated sales, which estimates the number of cars to be sold by the dealers, delivered to the dealers and manufactured during the current and three forward months. Acceptance of this forecast is authority for the division to proceed with manufacturing and with procurement of material according to it.
In place of large stockrooms, a limited space is assigned for stock near each point where processing begins. The plant is now zoned, with an experienced man in charge of stock in each zone who has little use for any record except a shortage report showing what items need attention. The efficiency of handling has been improved until a supply for three days is normal now. Minimum banks of processed parts are also maintained. An example of the speed of handling is that a carload of frames loaded in Milwaukee on a Thursday afternoon arrived in Pontiac on Friday morning, were assembled into automobiles and a carload shipped Friday afternoon to Milwaukee and delivered to retail purchasers on Saturday afternoon.
Capital employed in inventories and buildings to house them now is estimated to be 25 per cent of what it would be if no improvement had been made in the last decade, and the cost of moving material is only 20 per cent of the former cost. Charts presented with the paper show the inventory investment and inventory turnover of the General Motors Corp. from 1920 to 1931.
Hearty approval of inventory control, as outlined in the paper, is expressed by one discusser who represents a supplier of parts. He also stresses the necessity for cooperation between car manufacturers and parts makers, stating that the latter should not be required to carry large stocks nor perform miracles to satisfy unreasonable and unexpected demands from the automobile plants.
Another point discussed at some length is whether the vendor has kept pace with the car manufacturer in determining how far he can reduce his forces and yet maintain a flexible organization to fill orders promptly. In this connection the experience of a supplier of crankshafts, who reduced his set-up time 75 per cent by using electric lift-trucks, is cited.
Adjustment of orders to meet fluctuations in car sales, whether one or several plants should supply a particular part and advantages of inventory control as enabling changes to be made quickly to correct defects or incorporate improvements are also discussed.
