Inventory%20Control:%20Part%204%20

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Inventory ControlPart 4 Physical Inventory
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Storage and Warehouse
Activities

• Receive Goods Verify Order Quality, Quantity
• Identify Goods Stock-Keeping Unit (SKU)
• Dispatch to Storage
• Hold Goods and Protect
• Pick Goods
• Consolidate (Marshal) Shipment
• Dispatch Shipment
• Maintain Information System

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Cube Utilization 3 Dimensional
Thinking

• Utilize Pallets 48? x 40 ?x 4 ? Platforms.
  Stored with 2? Clearance. Can be Stacked with
  Forklifts.
• Accessibility is Important.
• Use of Racks Can Save on Handling Costs.
• Maximize Cube Utilization.

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Warehouses, Forklifts, and
Pallets
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Stock Location

• Group Functionally Related Items Together Order
  Picking Easier
• Group Fast Moving Items Together Work of Moving
  In and Out of Storage Reduced
• Group Physically Similar Items Together For
  Items that Require Particular Storage Facilities
  and Handling Equipment
• Locate Working Stock and Reserve Stock Separately
  Order Picking in Compact Area

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Stock Location

• Fixed Location - Assign SKU Permanent Location.
  Minimizes Record Keeping but Poor Cube
  Utilization (Typically 50).
• Point of Use Storage Increases Accessibility
  and Decreases Handling. Used with Just-In-Time
  (JIT)
• Central Storage - All Similar Items in One
  Location.
• Floating Location SKUs Stored Where There is
  Appropriate Space. Good Cube Utilization but
  Access More Difficult. Normally Requires
  Computer.

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Order Picking

• Area System
• Zone System
• Multi-Order System

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Inventory Accuracy

• Accuracy Needed for
• MRP Gross to Net
• Satisfactory Customer Service
• Efficient Operation
• Analysis of Inventory
• Inaccurate Records Can Result in
• Lost Sales
• Shortages and Disrupted Schedules Resulting in
  Poor Delivery
• Excess Inventory of Wrong Items
• Low Productivity
• Excessive Expediting

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Inventory Errors

• Unauthorized Material Withdrawal
• Unsecured Stockroom - Theft
• Poorly Trained Employees
• Inaccurate Transaction Recording
• Lack of Audits and Inventory Counts

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High Tech Methods of Recording Stock

• Bar Codes
• Radio Frequency Identification (RFID). Used
  Successfully at Wal-Mart and FedEx.

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Auditing Inventory

• Periodic Inventory George Plossl Said Taking
  Physical Inventory is Like Painting the
  Results Depend on Good Preparation. Normally
  Requires Shutdown, Excessive Paperwork, High
  Labor Costs, Poorly Trained Labor, Hurried Job.
• Cycle Counting Continuous Counts Each Day A
  Items Counted More Frequently than B or C Items.
  Results in Timely Detection of Errors, Trained
  Personnel, and Less Disruption.

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Cycle Counting Example

• ABC Inc. wishes to count A items 4 times per
  year, B items 2 times per year, and C items 1
  time per year. There are 500 A items, 3,500 B
  items, and 11,000 C items. Plan a cycle counting
  procedure.

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Cycle Counting Example
Class Number of Items Count Frequency Number of Counts Per Cent Counts per Day
A 500 4 2,000 10 8
B 3,500 2 7,000 35 28
C 11,000 1 11,000 55 44
Totals 15,000   20,000 100 80

• Note Daily Count 20,000 / 250 80

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Counting Frequency

• ABC Method
• Zone Method
• Location Audit Method

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Text Chapters Not Covered

• Chapter 7 Purchasing SCM 442
• Chapter 13 Distribution SOM 416
• Chapter 14 Products Processes SOM 416
• Chapter 16 Total Quality Management SOM 467

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