Achieving Inventory Accuracy: A Daily Guide to Sustainable Excellence

by Donald Sheldon

Overview

Statistical evidence suggests that more than 50% of businesses allow their inventory accuracy records to flounder below acceptable, cost-effective levels. Yet inventory accuracy is one of the most effective methods for minimizing unnecessary costs to an organization and one of the easiest process improvements to accomplish if the right approach is followed. This step-by-step guide to achieving inventory record accuracy in a manufacturing, retail, or distribution facility will help you dramatically reduce the variability and cost caused by inaccurate inventory balance data. Starting at day one, leading expert Donald Sheldon outlines the elements of procedure and discipline necessary to achieve sustainable high levels of inventory record accuracy. The result is Class A 95%+ perfect inventory balances in 120 days with minimal cycle counting required for ongoing maintenance. A robust inventory accuracy control process is not expensive or technology dependent. Bar code technology and steel fencing will not make accuracy a reality, but focusing on consistency and discipline will. If you are a plant manager, inventory control manager, materials manager, warehouse manager or supervisor, this book is a must-read!

Product Details

ISBN-13:	9781932159318
Publisher:	Ross, J. Publishing, Incorporated
Publication date:	07/01/2004
Edition description:	New Edition
Pages:	224
Product dimensions:	6.00(w) x 9.00(h) x 0.70(d)

About the Author

Donald H. Sheldon is president of DH Sheldon & Associates, an international consulting firm headquartered in New York. As a practitioner, this leading expert previously served as Director and General Manager of The Raymond Corporation's Worldwide Aftermarket Services Division and as Vice President of Global Quality and Six Sigma Services for the NCR Corporation. Prior to forming his own firm, Mr. Sheldon was Vice President for BUKER, Inc, of Chicago, a world-recognized leader in management education and consulting. He has been published in numerous magazines and journals. He has been a frequent speaker at colleges, international conventions and seminars and he is certified by APICS as CFPIM (Certified Fellow in Production and Inventory Management) and as CIRM (Certified in Resource Management).

Table of Contents

	Preface	ix
	About the Author	xi
	Acknowledgments	xiii
	About APICS	xv
	Web Added Value	xvi
Chapter 1.	Understanding Data Integrity	1
	Introduction	1
	Is Inventory Really a Bad Thing?	5
Chapter 2.	Building the Case for Data Accuracy as a Prerequisite to High Performance	7
	Costs of Inaccurate Inventory Balances	8
	Material Requirements Planning	9
	Enterprise Resource Planning	10
	Class A ERP	13
Chapter 3.	Day 1-3: Preparing for Inventory Record Accuracy	15
	Morning of Day 1: First Event/Kickoff	16
	Afternoon of Day 1: Creating the Task Team	17
	Determine the Objective	18
	Choose the Team	18
	Determine the Time Frame to Reach the Objective	19
	Choose the Team Leader	19
	Determine the Team Champion or Sponsor	19
	Problem-Solving Skills	20
	Follow-Up Process	21
	Days 2 and 3: Classroom Education	22
	Summary	24
Chapter 4.	Day 4: Discovering Transactions and Inventory Flow	25
	Introduction	25
	Inventory Flow Model and Process Maps	28
	Bills of Material	29
	An Example of What Can Be Accomplished	31
	Unit of Measure	33
	Routings	35
	Backflushing	36
	Transaction Process Flow for Inventory Accuracy	40
	Work-in-Process Storage	41
	The Lines on the Floor	42
	Is Backflushing a Good Idea?	43
	Summary	44
Chapter 5.	Day 5-45: Control Groups and Root Cause Analysis	45
	Control Groups	46
Step 1	Determine Control Group	47
Step 2	Repeat Process to Discover Inaccuracy	47
Step 3	Find Root Cause	50
Step 4	Eliminate the Reason	53
Step 5	Achieve Accuracy	53
Step 6	Verify Process Control	53
Step 7	Cycle Counting	54
	Problem-Solving Tools	54
	Fishbone Method	54
	Brainstorming	56
	Pareto	57
	Documentation of the Resulting Process Changes	58
	Taking a Physical Inventory	58
	Eliminating the Physical Inventory Forever	59
Chapter 6.	Day 8-45: Policies and Standard Operating Procedures, The Training Tools for Process Control	63
	Reason for Documentation	63
	To Provide Consistency in the Business	64
	To Gain Control of the Processes	65
	Training Guides	66
	To Enable Continuous Improvement	68
	Accessibility	68
	Written Procedures	69
	Standard Operating Procedures	69
	Who Should Write the Documentation?	78
	Process Mapping	79
	Documentation Control	81
	Policies	83
	Summary	83
Chapter 7.	Day 9: Inventory Organization and Storage Patterns	85
	Introduction	85
	The Beginning Checklist for Organization	87
	Good Housekeeping/Workplace Organization	87
	Sufficient Lighting	87
	Properly Sized Locations	88
	Clearly Labeled Drop Areas	90
	Proper Counting Tools/Methods	91
	Proper Component Protection as Required	93
	Material Handling Equipment	93
	Accessible Material	95
	Limited Access	96
	Specific and Unique Location Identification	96
	Adequate Availability of System Tools	97
	Point-of-Use Storage	97
	Storage Patterns	98
	Dedicated Storage or Primary Location Storage	99
	Random Storage	100
	Zone Storage	102
	Golden Zoning	103
	Storage Layout	105
	Carousels for Storage	106
	Location Systems	108
Chapter 8.	Day 15 and Beyond: Training for Process Control	111
	Introduction	111
	The Training Plan	113
	What Up-Front Training Is Required?	114
	Who Needs the Training?	115
	What Resources Are Needed to Deliver the Training?	116
	When Can the Resources Be Available for the Required Sessions?	117
	When Can the Attendees Be Available?	117
	What Course and/or Instructor Materials Are Required?	118
	Are Facilities Available In-House or Do You Need to Arrange Outside Facilities?	119
	What Is the Best Way to Deliver Quality Training and Maintain Consistency?	119
	Measure the Results	120
	Institutionalize the Training Process	122
	Documentation Prior to Training	122
Chapter 9.	Day 45: Cycle Counting and Auditing Process Control	123
	Introduction	123
	Physical Inventory	124
	The Objective of Cycle Counting	127
	ABC Stratification	128
	Measuring Inventory Location Balance Accuracy	131
	The Five Steps to Cycle Counting	132
	Scheduling the Cycle Count Process	133
	Who Does the Cycle Counts?	134
	The Typical Steps in the Process	135
	Document	139
	Being Organized	140
	Location Balance Adjustment Authorization	141
	Error Analysis--Weekly Performance Review	142
	Agenda	143
	Quad Chart	143
	Timely Reporting of Cycle Counts	146
	Cutoff Times	147
	Cycle Counting Work in Process	150
	Cycle Counting Long Term	151
Chapter 10.	Day 90: Celebration Number One!	153
	Why Celebrate Now?	153
	Ideas for Celebration	154
	Is This the First or Only Time to Celebrate?	157
Chapter 11.	Measurement of Inventory Location Balance Record Accuracy	159
	Phases of Performance Measurement	159
	Barometric Versus Diagnostic Measures	161
	Inventory Location Balance Record Accuracy	162
	Class A ERP Performance	163
	The Weekly Performance Review	166
Chapter 12.	Bill of Material and Routing Record Accuracy
	Introduction	169
	Bill of Material Accuracy	169
	Components	169
	Process Owner	171
	Measuring BOM Accuracy	172
	Creating the Firewall	174
	Routing Records Accuracy	175
	Summary	177
Chapter 13.	Item Master Record Accuracy Introduction	179
	Assigning Ownership of the Fields	180
	Creating New Part Numbers	180
	Auditing the Item Master Accuracy	181
	Conclusion	181
Chapter 14.	A Word About Technology in the Inventory Accuracy Implementation	183
Chapter 15.	120 Days: 95+ Percent Inventory Balance Accuracy--The Big Celebration!	187
	The Celebration	187
	Data Accuracy Summary	188
	Glossary of Terms	189
	Gantt Chart of the Inventory Record Accuracy Project Plan	197
	Index	201