Re: Identifying slow moving stock

Thanks Mate!

To: "SSA's BPCS ERP System" <bpcs-l@xxxxxxxxxxxx>
Sent: Monday, January 23, 2006 9:39 AM
Subject: Re: [BPCS-L] Identifying slow moving stock

The precise files and fields to do what I describe, this varies with BPCS
version ... we are on 405 CD mixed mode.  Also, date of last activity is
dependent on settings, that can be changed, but not retroactively, in the

Inventory Transaction Effects file ... do you want miscelaneous adjustments corrections and physical inventory to be treated as "activity" for purposes

of date of last activity?

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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