Improved Processes Increase
Inventory Accuracy

Overview

A manufacturer in highly technical operations continued to grapple with inventory inaccuracies and lost revenue.

Challenges

Inventory accuracy was at 82% -well below the industry average of 97%. Data indicated more inventory than there actually was.

There was excessive costs and long production lead times to meet deadlines and build rates. Lost inventory and inaccuracies caused significant material cost implications to the company.

Solutions

Analyze current state of inventory processes. Develop processes for driven cycle counts. Maximize use of the ERP system for inventory control and allocation. Conducted a training needs analysis & process delineation for basis of new training models

• Utilize system prioritization tools in ERP to minimize excess consumption by the team.
• Establish reporting tools to determine proper inventory allocation.
• Create Kanban locations to assist in identifying buffer stock to limit inventory shortages.
• Outline minimum and maximum allocations in the ERP system.
• Create minimum and maximum buy relationships with vendors to reduce inventory costs and overlap.
• Develop KPI’s to determine inventory planning and kitting operations to meet the cost performance index (CPI) and schedule performance index (SPI).Results

Results

Inventory reporting is functional to determine accuracy, consumption rates, and direct charge account activity. Leaders have a clear understanding of consumption rates and direct tie-in to the build schedule. Process improvements significantly reduced inventory costs.