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Unformatted text preview: nventory levels may also need to be changed too, so you should review them regularly.
To do this, take the following steps:
a. Put two people in charge:
i. A person to be in charge of inventory review: this person will observe changes in
ii. A person to be in charge of inventory control: this person will control what is
actually in the physical inventory.
b. Decide the timing of the review. This may be:
i. When a production lot is completed.
ii. When a shipping plan is decided on.
c. Review the criteria used to calculate maximum and minimum inventory levels.
d. Give special attention to reviewing costly inventory levels.
e. Respond immediately to changes in demand.
f. Remind the departments of the importance of maintaining appropriate inventory
levels, and keep them informed of factors that have an impact on the inventory
levels. Carry out periodic inventories and keep records
5. There may sometimes be discrepancies between the quantity of goods actually held in
the inventory, and what is shown in the accounting records. Carry out periodic
inventories (checks of the inventory) to find any such discrepancies.
6. Periodic inventories should be taken at the following intervals:
a. Machinery and equipment, and accessories for equipment: about once a year, using
the asset control ledger.
b. Finished products, WIP and product accessories: once or twice every fiscal year,
using the production control ledger.
A Roadmap to Quality 19 Unit 5 - Disposal and Storage UNIDO unit 5.qxd 3/10/05 1:05 PM Page 20 c. Products or components: monthly or according to a regular cycle, using the
production control ledger.
In addition to the periodic inventories, take an inventory of machinery and equipment
any time something is replaced, or something new is installed, and keep a record of
7. Before carrying out these periodic inventories decide on the following:
a. Which items to include:
i. Machinery and equipment.
ii. Finished products, WIP and product parts.
iv. Indirect materials, jigs and tools.
b. The inventory documentation for each item:
i. Ledger (or control list).
ii. Inventory control tags.
8. The periodic inventory should include the following actions:
a. Conduct the inventory according to the “5W 1H” principles (Who does what, where,
when, why and how).
b. A spet with technical knowledge takes the inventory at the job site using the
asset control ledger.
c. If a discrepancy is discovered, contact related departments immediately and direct
them to take appropriate action.
d. Be creative. For example, use shelf identification tags and labels, and use different
colours to separate items.
9. Set up a system for keeping records of the periodic inventories. These records should
include inventory control tags which can be used to track (by type, name, number, or
component type) any discrepancy between the quantity in the ledgers and the quantity
actually found in the inventory.
Figure 5.4b WIP tracking tag (page 24) Set up an efficient storage system for the inventory
10. An efficient storage system will allow easy inventory control as well as prevent
unnecessary items being stored in the workplace. Decide on:
a. Different storage areas for different types of item.
b. The maximum and minimum quantities of each item to be stored.
c. The conditions in which items are stored.
d. The format of documents: incoming and outgoing invoices, and shelf tags (by item,
e. A different person to be responsible for each storage section
(See Text 5.3 for more detailed guidelines on storage.)
Figure 5.4c Criteria for storing and maintaining materials Unit 5 - Disposal and Storage 20 A Roadmap to Quality UNIDO unit 5.qxd 3/10/05 1:05 PM Page 21 Figure 5.4d Inventory quantity control using color Red (Excessive Inventory) Green
(Target Inventory) Yellow
(Inventory Shortage) Inventory Quantity Control Using Color (Source: ”Absolutes in Quality Control for the Manager”, Kazuo Ozeki, Japanese Standards Association, p.53,
1987.) Ensure that inventory levels can be seen at a glance
11. To make sure that shortages and excesses do not occur, display information about the
inventory in such a way that people can recognise the inventory levels at a glance. To
establish such a system:
a. Decide which items in the inventory are to be managed in this way, and the
b. Decide what inventory data should be displayed so that people can quickly see:
i. The standard amount, and the minimum and maximum amounts.
ii. The amount used and the balance remaining.
iii. The refill orders that have been sent off, and the date of the incoming delivery.
c. Decide on the method for displaying this data:
i. PC screen.
ii. Signs, standing plates, tags on articles.
iii. Using different colours.
d. Develop and standardize detailed measures for setting up and running the system. Establish a system to control the movement of items into and out
of the inventory
12. The workplace can easily become crowded if items are supplied before they are needed.
Establish procedures for making sure that the right amount of items go to the right place
at the right time. This includes materials, components, WIP accessories, packing
materials, etc. Decide on: A Roadmap to...
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This note was uploaded on 10/07/2013 for the course MKT marketing taught by Professor Anamika during the Spring '12 term at Punjab Engineering College.
- Spring '12