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5 Reasons to Build a Custom Stocking Program

Manufac­turers are finding new, innovative ways to use stocking programs to achieve results for themselves and, ultimately, for their customers. The best solutions come from identifying a real problem, then asking the right questions. Sometimes, it even requires re-thinking the problem itself.

1. Gain capacity and free your team to innovate

Some parts just require more time and effort to manufacture. So, it makes sense that, when you want to gain capacity by outsourcing, you should send out the “troublemakers,” right? Well, maybe not. What if you send out the parts you know require less time to man­age in production, and free your team to troubleshoot and innovate? Think of the new capabilities you’ll be able to bring to your next challenge. Plus, you’ll have a back-up plan in place when production bottlenecks come up. In the end, your team will be more efficient and better equipped to deliver for

2. Manage the ebbs and flows of production

There are very few constants in manufacturing. Every day brings new challenges, but one thing is guaranteed—you need to deliver, as promised. When issues arise, one solution is to find a manufacturing partner who can augment your capacity and capabilities. You need someone who can scale up quickly to meet demand, but who won’t become a cost or liability when the pipe slows down. Building a stocking program that includes both raw materials and finished parts is a wiser, dynamic option. When demand increases, you can turn the dial up immediately. When demand slows, you can ease back just as quickly—without the burden of idle labor and equipment.

3. Reduce your exposure and risk

One option for handling large volume orders is to make enough parts to meet demand for two, three, even six months out. Stockpiling works well when you have the space to warehouse inventory, and if your offerings and planned orders don’t ever change. What happens when they do? Another approach is to have a manufacturing partner who keeps a small inventory of finished component parts on hand to supplement your regular production. You’ll have confidence that the two added together will be able to satisfy your largest possible order. This way, you’re never more than one cycle away from filling an order, and not over-exposed to cancelled or changed orders with finished goods and materials sitting on shelves.

4. Respond in real-time to growth

Are you running out of space in your facility? You could add thousands more square feet to your current operation, problem solved. Not so fast, right? Even if you have the space, it could be years before any expansion is on-line. Another option is to find a trusted partner and offload some of your manufacturing capacity and material and finished parts storage to them. This could either be done permanently or until your own capacity is up and running. One benefit of this relationship is not being locked into costly commitments. Best of all, you can change the terms of your agreement to fit your needs.

5. Increase your profitability

If you think no one can match your profitability when you make your parts in-house, you might be surprised. By the time you add in all your real costs, like total la­bor and benefits, facility costs and management time, the numbers start to even out. In addition, the incre­mental benefits of an outsourced stocking program—in­creased capacity, reduced risk, production leveling and responding to growth—make sending your component part production to a trusted partner a smart solution.

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