Chronic inventory problems stem from the following sources:
“Backflushing” components at job finish
“Backflushing” components at time of job finish is the biggest source of inventory errors. Backflushing is commonly used by light manufacturing systems that do not have time-phased jobs, location control, or lot and serial control. It is a destructive and inefficient practice that converts your inventory into a set of tentative, unreliable location quantities that take no account of materials in WIP. Without reliable location quantities, it is not possible to perform stock counts or to accurately dispatch job issues or order picking. Users will be aware that quantities on the screen cannot be trusted and will be less committed to proper procedures, which compounds the unreliability of your inventory. Transactions recorded hours or days after the actual event, often by different persons than those who actually issued the material, are inherently error-prone.
Not using locations
Using a single, “dummy” location that has no meaning is a major source of inventory errors. Location control enables stock to be stored and tracked in multiple locations, including overflow locations and locations selected on the fly for items with infrequent or one-off usage. Without locations it is easy to make mistakes when performing job issues, order picking, and stock counts.
Using DBA with an outside inventory
Using DBA with an outside inventory, such as a sales inventory, is inherently error-prone and is not compatible with the manufacturing system. DBA is a closed loop inventory system where demand and supply details provide the feedback that drives MRP generation, job release, job priority, and shipment priority. Sales orders and sales inventory cannot be handled in an outside system because it severs the feedback information that underpins the closed loop system.
Inaccurate BOMs and not using issue or dispatch lists
Inaccurate bills of material combined with a failure to issue material using issue lists or dispatch lists is a major source of inventory errors. Bills of material should be as accurate as possible to avoid the introduction of potential errors during job issues. If materials are pulled from stock by memory instead of following actual quantities and locations on an issue list or dispatch list, it is easy for discrepancies to occur between actual usage and BOM usage. On the other hand, when materials are issued from a list, BOM errors will be detected when components do not conform to actual production requirements.
A culture of error-tolerance
Chronic inventory errors perpetuate in environments where BOM and inventory errors are allowed to be overlooked or fixed at later times for expediency sake. A shop floor culture that tolerates errors and does not enforce rigorous and timely error-fixing will be plagued with chronic inventory problems.
