Re: floor stock items

We came up with a pretty good solution which worked well for all areas of our
company.
Our hardware (screws, nuts, etc.) items are managed by a vendor who has
point-of-use
   bins throughout our manufacturing areas.  These bins are managed by the
supplier,
   using min/max lines to determine when stock needs replenishing.
All of these components are item type 6 and reside in our bills (primarily for
better costing
   detail).
To avoid all of the purchasing and a/p management nightmares, we created a
commodity
   code which ties directly to our raw materials  account.  The vendor invoices
us once a week
   for the inventory that we have consumed, and we then create a p.o. line using
the correct
   dollar figure / immediately receive it in so the vendor can be paid.
That way, when inventory dollars are relieved thru jit (backflushing) during the
week, they are
   replenished at weeks-end by the receipt of the p.o. line/commodity code.
Saves receiving, purchasing, and a/p a lot of work.  But also means that a good
relation/
   partnership must be established between the two companies - occasional audits
of the
   replenishment packing slips and invoices are performed to ensure our company
isn't being
   overcharged.
I should note that we also created an exception report - something of a 'spike'
management tool
   for the vendor (we were able to do this since our items are in the bill / mrp
still creates planned
   orders for non-balancing items).  This has been a valuable tool  for the
vendor - I could discuss
   further off-line.
Brett






"Chick Doe" <Cdoe@barton-instruments.com> on 06/20/2001 04:30:18 PM

Please respond to BPCS-L@midrange.com

To:   BPCS-L@midrange.com
cc:    (bcc: Brett Siikarla/IS/Finance/Corporate/KI-Inc)

Subject:  floor stock items



how do different companies handle 'floor stock' or 'free stock' items. these are
typically the low cost items such as fasteners, nuts, screws, washers, etc.

we currently have these items structured in our bills of materials and we need
to keep them in the bill of materials for several reasons. we also currently
consider these items as inventory item and try to maintain a stock balance on
them. they are removed from inventory as part of the material content of cost of
goods sold.

we are contemplating changing these parts to 'floor stock' items where we would
not consider them as inventory. instead we would expense the purchase price of
these items in the period that they were purchased. if we did this we would have
to not roll up the cost of these items into the higher level units. we would
also probably reclassify these parts as item type 6 (non-balance) items and zero
out the inventory balance for all of these items.

has anybody had experience with these types of items? how do you code them
within BPCS? is there anything to watch out for if we do this?

chick doe
barton instrument systems

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