Inventory Accuracy Hints

Does your company to improve inventory accuracy? Often works on inventory accuracy improvement focus on techniques, such as cycle counting. While this is a very important element in the toolkit of the inventory or materials professional cycle counting in the first place is only a measurement and diagnostic tool. Think of it as SPC (Statistical Process Control) for inventory accuracy. Probably not the way to the inventory cycle count accuracy, be without largeImprovements in material handling, transaction control, reporting and feedback process. For many companies with Cycle Count inventory record adjustments to correct errors is like trying to save the ocean with a spoon, as mistakes can be made much faster than they can be inexpensively remedied.

So what do you do?

An effective inventory accuracy program should be from the following elements:

• Inventory Accuracy metrics(Metrics) - including item / part number identification, quantity and unit of quantity, location and posting date. Some companies also measure other data, such as customer / contract number, configuration, revision letter, quantity, serial number, grade and expiration date. I say business, 95, 98 or 99 +% of the accounts are shrinking rapidly that by mid-double digits, when we visited for our uncompromising criteria objectively. Sometimes companies have invalid criteriaSometimes they deceive themselves, their employees, they sometimes mistaken, sometimes unconsciously or inadvertently.

• A clearly defined material and document flow, control and tracking numbers identified. These should be clearly marked to be in the store and the staff thoroughly indoctrinated. A simple flow chart of the desired system is an excellent educational tool. There should also be material, document and transaction data routing, "drop points", lead times,Logging, batch testing, reporting and auditing.

• adequate facilities, space, storage and handling systems and other devices. Good housekeeping practices are a must. It may be necessary to physically secure the inventory with fences, gates and locks, if floor can not be achieved otherwise discipline. Make sure that there is a place for everything, materials, equipment, documents, and of course humans. Use of signs and markings at thisobvious.

• effective policies and procedures for material handling, storage, labeling, packaging, labeling, data collection, counting of votes and transactions. Use good forms and tools for structural work.

• A training / certification / evaluation program for all people, the length or inventory, or are in a position to influence grip on how well this works. Consider ProAction's Inventory Accuracy seminar. Use APICS materials.

• An ongoingAssessment and diagnostic program such as cycle counting. Such programs can be used in one of several organizations within the company, as long as the responsible manager is sensitive to the needs of the inventory accuracy and the necessary efforts seriously dedicated to the program. That being said, we believe that 3rd party inspection, by an internal or external audit group or an outside consultant is needed to keep the program on track.

• Effective inventory transactionCut-off control and reconciliation procedures, including accounting for all transaction documents. Dare not even about the real cycle counting until you gain control of them, although it is recommended that you start early with a small control group in order to debug the process and begin troubleshooting. , Expand to a larger Cycle Count program only after you know what you're doing.

• Transaction control for transactions and to provide inventory status for allDepartments need it, preferably via an online computer system. Bar-code and other automated data collection systems are desirable, if affordable, but not necessarily run to a precise system. Visual control systems such as Kanban bin, 2--, pallet places, etc, can sometimes be reduced or even the need for most transactions and automated systems, eliminating the in justified cases.

So you can imagine, all this is fairly simple - why not everyone isto do something like this successfully? Actually, it is much harder than it looks, why:

• Setting: Not everyone agrees that inventory accuracy is important. I say: Are you satisfied with the alternative? "It requires a high degree of consensus on the approach, responsibility and" ownership ". In extreme cases, the CEO of the Company may have to lead, to change the culture and monitoring the changes required step.

• The discipline isnecessary, day after day, year after year. This is not a one-time cleaning job that management is to declare victory and can only go back home. It must be a person to keep at least some of the time "accuracy czar," the effort focused and constantly active.

Implementation Ideas

Setting up the system:

• Issue Executive Directive on the need for inventory accuracy and reliability. Formally announce the improvement and maintenance program. BodyManagement authority and responsibility for the accuracy of the data integrity.
• Create transaction and facility flow charts. Train for all involved.
• Fix and use the part numbers (make sure to bill properly structured), locations.
• Write to hold inventory and transaction management, and training materials to train for all involved.
• Publish an integrity policy and the work of these concepts in the business processes and training.
• Check theTo save the adequacy of facilities and process equipment. Make the necessary improvements in the material control approach agreed - space, shelves, bins, conveyors, fences, gates, forklift support, ladders, scales, etc.
• Development of performance measures. Publish them regularly on the paper, bulletin boards, to keep the people responsible, with corresponding premiums are an penalties, performance appraisal, compensation, praise, etc. Use tools such as cycle reflectsCounting / Statistical Process Control.
• Establish an objective auditing program.

Operational recommendations

• Use ProAction recommended that the accuracy of the data and criteria, cycle counting procedures

• Keep charts on the nearby walls refer to them as needed

• Maintain control locator so practical

• Use appropriate storage racks, shelving, containers, pallets

• Make judicious use of automation wherever possible --Conveyors, automated storage and retrieval system (AS / RS), automated data collection, such as bar coding, automated counting / weighing machines, automatic daggers, trucks, packaging, etc.

• Use standard container sizes, weights and quantities. Mark weights and volumes on standard containers.

• Use the right boxes sealed not told by the closed boxes generally require

• Use visual control methods Kanban squares, calibrated transparent plastic containers,etc.

• Post transactions in real time, as practically

• Place the most frequently used items accessible in the city. Store at point of use, if its feasible and controllable.

• Practice excellent budget.

• Be with descriptions, units-thorough measure.

• Purge obsolete different, unneeded material.

• Use good labeling practices.

• Label pursue, monitor, shelf item.

• Array material for easier access andCounting.

Inventory Tracking Approaches

• Perpetual computer or manual processes

• Discrete control issues

• "backwash" control issues

• "2-bin, Kanban or min-max control, visually driven

• "2-bin, Kanban or min-max control, perpetual inventory-driven

• Job lot of control

• Out of control (not recommended)

Testing Methods

• control group (beginning withthis)

• Regular appraisals

• Cycle counting

• spot audits

• Transaction review

WIP Inventory

• Maintain good housekeeping

• report transactions timely as possible, including scrap, adjustments, exceptions

• Use hooks or station numbers on production lines

• Use standard container sizes, weights. Mark weights and volumes on standard containers.

• Have standard, shelvingmarked

• remove minimize WIP, all material not needed for X hours

• Mark containers volumes

• Assign employees the responsibility for the monitoring of certain items

• Use the feeder lines, cells, as needed to make and keep parts on line, where practical

This article is also available on our website: ProAction - Generating Best Practices. It is written in an excerpt from a paper originally proposed by George Miller, the founder of ProAction. It has been modified andUpdated by Paul Deis, ProAction CEO.