White Paper: Lean Study: Inventory Management Of Indirect Material Is A Long-Term Plan...Outlining The Steps For Continuous Improvement

Indirect Material Defined
Indirect material is defined as any inventory that does not go into the final product but is used during the manufacturing process. This includes MRO items, tools, machine parts, chemicals, shop rags and other inventory items. These items play a key role in manufacturing the product but are peripheral to the product being manufactured. This inventory is thought of as a cost of doing business, but in reality, it is a cost of doing business that, with the right technology to define and support inventory distribution, can save millions and dramatically impact the bottom line.

Indirect Materials are Attached to Processes
Manufacturing facilities rely on processes to keep machines running and inventory optimized. These processes in some cases are well defined, but sometimes technology shortcomings do not allow for the correct gathering of information regarding these processes. In other cases, they are well defined but its difficult to control inventory at the plant floor level. Sometimes the defining of plant floor inventory processes have fallen by the wayside because of other important issues. One thing is certain...99% of the processes in a manufacturing facility are accomplished by using some type of indirect material.