Issue link: https://iconnect007.uberflip.com/i/1483130
58 SMT007 MAGAZINE I NOVEMBER 2022 for release of product supply based on where and when the pricing is most favorable. On the other hand, prices may suddenly crash as demand falls, confidence fades, and a flood of products come into the market that aim to stay ahead of the trends. ough this is normal practice in the industry, the effects scale con- siderably with turbulence in the supply-chain. As usual, the manufacturer is bearing the brunt of this activity, alongside all the other market challenges they face. ey are being asked to hold stock and not be paid, without the clear understanding of their customer's business strategies. Within the manufactur- ing domain, that is their scope of investment responsibility, inventory cannot be allowed to build up. Production schedules are therefore more oen revisited, and quickly adjusted. A production quantity boom-and-bust pattern emerges, with sudden demand, then suddenly, nothing. ough this pattern may be sub- tle in many cases, it causes a whip-like effect throughout the supply chain. With a keen eye on the level of finished goods, inventory costs, and capacities, production schedules are most effectively optimized on the fly, oen using simple, intelligent visual tools to fulfill com- mitments, but not waste money on unneces- sary semi-finished or finished product stock. e strengthening of the whip-effect is next seen as the need for raw materials becomes a lot more variable and volatile as compared to original ERP forecasts. is is driven by the need to reduce inventory investment costs and storage space of materials, as well as the risk of obsolescence. It may be driven by the man- ufacturer's direct purchasing policy, or from the customer where materials are consigned. In either case, the party with the investment responsibility has the same motivation. As with finished goods, the value of materials would normally depreciate over time, as well as face the risk of obsolescence toward the end-of- life of products and physical degradation dur- ing storage. Recently, however, some materials have been appreciating in value, whether due to scarcity or inflation. e decision on the appropriate levels of raw material inventory to maintain at any time has become a very complex process. With short- term commitments made on shipping dates and rates of finished goods completion, mate- rials need to be in place just in case, but to keep inventory investment levels reasonable, a trusted "just in time" approach is preferred over carrying excess stock. Cases where short- ages of materials occur present a serious risk to the business. Even one missing material pre- vents the start of new work orders, the cut- short of work orders already under way, and the potential for delayed availability for the customer. Extreme efforts to source materi-