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Inventory Accuracy

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  • #28479

    Schultz
    Participant

    Any folks out there had a project relating to Inventory Accuracy.  Project scope is reducing the root cause errors that ultimatly can result in financial statement adjustments.  Adjustments are created by a number of root causes – IT system timing issues, receiving errors, production reporting errors, conversion factor errors to name a few. 

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    #71058

    Edwards
    Participant

    Charlie,
    Sounds like you and I are working on the same project. My goal is to reduce the amount of stock adjustment write off. So far I have nearly completed the measure phase. Found that 2 business units (out of 5) are much worse than the others (should be able to get this historical data from your internal management accountants). One in particular has large product mix, constand product development with virtual never product deletion. Manufacturing lead time in there is almost 7 days, yet we employ a next day delivery service, so looks like my teams first task is to process map and eliminate all non value add operations (just now there is well over 99% of the time spent queuing). Looking forward to the challenge, please share your experience with us, or if you like leave your e-mail adress. I am not a consutant, just a bog standard black belt, working with a manufacturing company.
    David

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    #89577

    GDS
    Participant

    How did the project turn out? I’m starting a inventory project, where my defect is making an adjustment.(Over or Short). Our current inventory accuracy based on cycle counts runs around 99.97% accurate. That is based on location accuracy not unit accuracy. I’m trying to convince our management group that the customer feels unit accuracy before location accuracy and we should change our metric.
     

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    #89581

    Susan Nikkel C.P.M.
    Member

    As a buyer I have no concern about location accuracy smoothing.  However, I am deeply affected if unit accuracy is off.  This is ultimately the test of proper inventory.
    Susan Nikkel C.P.M.

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    #89597

    Stephen O’Toole
    Member

    Spooky! or is it serendipity?
    I am just starting to embark on an inventory accuracy project too. I am currently working on the financials and so far it’s looking like a lean rather than 6s project. The savings for leaning out the process are at most 2 people $40k per annum loaded. The hassle, stress, powerlessness, disruption to the manufacturing cell etc etc is immense though. Inventory accuracy is one of those “its’s obvious” type projects but as a BB I have to show $returns so far the $ don’t add up.
    I am starting out on the road of BB (this is my 2nd project) so would be interested to share any info.
    Question what is the differentiation between unit and location accuracy?

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    #89602

    GDS
    Participant

    Stephen,
                  Location accuracy = Is location correct? Y/N (Count 10 locations with 1 error you are at 90%)
                  Unit accuracy = Count the same 10 locations, however each location should have 100 units (1,000 units total) The one location that is not correct had 99 units ( missing 1 unit) your accuracy is at 99.90%.
    So the question is which measurement system gives a more accurate reflection of your inventory accuracy? What will the customer feel?

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    #89614

    Adam L Bowden
    Participant

    Hi Charlie,
    I have worked a number of Inventory accuracy projects and by far the most successful method is the implementation of classical lean techniques which not only reduce/eliminate inventory errors but also dramatically reduce the inventory levels thus releasing alot of cash flow.
    Call me if you want to discuss.
    Best regards,
    Adam  720 332 3737  (Mountain time)

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