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This topic is also of great interest to our management, and has led to a collection of reports to help identify a variety of parts that have outlived their usefulness in our inventory. Don't forget tooling that similarly has had great value in the past, but is now sitting idle, except for the $ it is tying up. A related topic is the removal of DEAD engineering ... do you need to store Routings and BOM on parts that will never ever be manufactured again?
As we identify what may be slow moving items, we change their item class to one that means INACTIVE (suspected), because even though one facility might not need it any more, this might not be true for the entire corporation, and may later confirm OBSOLETE (cannot use it for anything else, anywhere else). You may wish to have an item class for items that are really needed, but still SLOW MOVING, then review whether there are components that are exclusively children of this reality.
A lot of this research can be done with Query/400.* If you have any on-hand, there is a date of last activity in the on-hand inventory record. This is by facility. With Query/400 you can do date math to list what's on-hand, multiplied by standard cost, that has not been used in 6 months, or cut-off of your choice. * Be sure to do cycle counting of what inventory you actually do have. When there are errors, BPCS sees shortages and tells us to re-order more, but that could be bogus if we have data errors such that BPCS is consuming the wrong components. If we suddenly run out of something on the shop floor, and have to pay through the nose to expedite replacements in here, that implies there is something wrong with our data, and there may be some OTHER parts that BPCS is telling us to stock pile, that we really do not need. So do those cycle counts, and check out how come any parts had surprise shortages. * There are files used to track MRP requirements and allocation fields (like the data you see in the upper right corner of INV300 summary screen) which you could use to list items which currently are not needed for customer orders or for production, that happen to be on-hand, multiply by standard cost, sort so biggest $ value on top, and include date of last activity. It may be that some items on this list really are needed, but just beyond your MRP horizon, so you might want to plan further out than usual before using this picture to get rid of apparently unwanted parts. * How long do you keep inventory history? Do a no-match between on-hand inventory that does not exist in the history, however far it goes back, or exclude transactions from physical inventory, and miscelaneous corrections, to show just what is on-hand with no history of real consumption.. ** In theory, if we have perfect data, there should NEVER be any inventory adjustments ... we get it, make it, sell it, consume it ... inventory adjustments are symptoms of something wrong with our data or our reporting. Remembering that BPCS treats inventory transfers as adjustments, total up the transactions by item to compute what percentage is adjustments relative to receive, make, sell, consume ... any items with high percentage adjustments need some kind of auditing to find data errors in need of fixing. * The item master has a count of how many hits on the BOM ... due to engineering changes, some components may become orphans ... you can identify such by having ZERO records in the BOM, or no matches vs. MBM (BOM master file). We usually not care about orphans that have no inventory ... that's a case of engineering data on parts we might not make any more ... what we want to identify are orphans that are on-hand, or orphans which have children on hand, which in turn are not used any place else. ** It may be that raw materials have plenty of hits on "where used" but all THOSE parts in turn are slow moving. In theory (some programming needed here) you can start with all end items (that get sold to customers) and identify those not sold in X years (pick some cut-off), then build a "data base" in which the parts are components of parts not sold in X years, and NOT components of OTHER parts sold more recently. You might want to change item class on those hits to something meaning INACTIVE, then sort them by $ value, and see about getting rid of the excess inventory. ** You may wish to look at this by customer ... sales history has quantity sold for each month of the last year ... is there fluctuation in demand that might translate into change in component volume? * Are you using fixed quantity safety stock or dynamic safety stock to compensate for seasonal variations in customer demand? * There are fields used to calculate cycle counting needs and annual usage ... do you have items with low counts there? Or low counts relative to quantity on-hand?
How can I identify raw material inventory that is slow moving and raw material inventory that is not in any released or planned orders.Joe McCormick
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