Re: x-ing negative inventory balances

Posted by moderator on behalf of Jim Black <jrblack@attcanada.ca>:
------------------------------------------------------

When I was a Materials Manager at a Fortune 50 company, I was of similar
mind ie. placing accountability on the Controller. It wasn't until I
supervised on the shop floor that I came to realize that inventory isn't
merely that stuff to which the Controller's assess a value and then we
(Production) report at the end of each month. Inventory is the stuff we
(Production) need to make things. It is the stuff that customers buy.

After a physical inventory, the Controllers were happy as long as we had
about as many dollars of inventory as we were supposed to have. What I
discovered is that green paint and red paint are priced about the same so,
as long as we gained as many cans of one as we lost of the other, the
Controllers were happy; however, when I was on the floor, I quickly learned
that customers don't want red things when they order green things. Damn eh!
<smile>

That hands-on lesson taught me that inventory accuracy hurts Production far
more than any other functional group and therefore it is for Production -
the very ones who cause most of the inventory INaccuracies - to take charge
and step up to the plate here.

Companies who try to develop inventory accuracy programs that are
financially inspired are failing to find the right motivator and therefore
often fail in their endeavours. Placing the responsibility on the Controller
is too easy. Everything becomes a financial thing sooner or later so, should
we therefore hold the Controller responsible for everything? In my view, the
Controller is there to maintain the FINANCIAL scorecard only. Functional
groups such as Production (or, if you prefer, Manufacturing) are responsible
for "running the business" in as professional and responsible a manner as
possible - and, as you so rightly point out, inventory accurarcy IS
possible. And, as you also suggest, posting results is imperative!

Regards, Jim Black




At 07:53 AM 6/14/01 -0400, you wrote:


One other thing....be proactive in developing and inventory accuracy
measurement that can be posted and seen by all.  I have always thought the
Controller should do this but have very rarely seen it done by anyone other
than IS.






"McCready, Joan" <Joan.McCready@metaltekint.com> on 06/12/2001 01:38:48 PM

Please respond to MAPICS-L@midrange.com

To:   "MAPICS-List (E-mail)" <MAPICS-L@midrange.com> cc:    (bcc: Gail L
Crane/Johanson/JMC)

Subject:  x-ing negative inventory balances



To the group -

My boss (Dir of Finance) is fed up with negative inventory balances at the
end of the month, and is ready to have me "throw the switch" to not allow
negative inventory.

My question is - what happens to the labor transactions (PMC) when we do
this, and the items issued would cause neg. inventory? Does the transaction
just sit there in error until adequate inventory is received? Any other
implications I need to know about??

I need your responses quickly - next Friday is my boss's last day at the
company, and he is tying up loose ends quickly.  BTW, he just "grinned" when
I pointed out that I'll be the one who gets yelled at when we can't ship
product we haven't "manufactured" yet on the last day of the month!
(grrrrrrrrrr.......)  Can I lock out RM and IP inventory transactions for my
shipping clerk without keeping her from processing shipments correctly
(through COM)??? (She'll just go in and "receive" the MO items so she can
print the shipping papers!)

Thanks as always  -- Joan

Joan McCready, IS Manager      phone:  636-479-4499
MetalTek International               fax:  636-479-3399
The Carondelet Division             www.metaltekint.com
8600 Commercial Blvd
Pevely, MO  63070



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