| Option Matrix Manufacturing Solution Framework - Inventory Control |
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| Inventory Control is designed to support the requisition processing, inventory management, purchasing, and physical inventory reconciliation functions of inventory management through a set of highly interactive capabilities. |
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| Please fill up the form below and we will submit a proposal for your project. Alternatively, you can send email to contact@optionm.net with the project requirements. |
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| Overview |
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| The design of Inventory Control is based on the following key objectives: |
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| To provide information on the availability of stocked items and the status of stocked requisitions |
| To facilitate timely requisition processing |
| To automatically record and service backorders |
| To help minimize inventory investments consistent with service objectives by basing purchasing decisions on usage history |
| To provide automated tools to assist servicing, purchasing, and management of the inventory |
| To improve financial control of the inventory by chargebacks to the user organizations |
| To improve financial control of the inventory by periodic reconciliation of the inventory balances with the physical counts |
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| The Inventory Control module for the Sage Business Works Accounting system provides this level of control by offering high-end features normally reserved for large companies, including light manufacturing capabilities, serial number tracking, and multi-warehouse support. Inventory Control even features an image library that allows you to assign a picture to each part. Improved customer service leads to increased profitability. And, when integrated with the Accounts Receivable and Order Entry modules, Inventory Control can significantly boost your customer service levels while operating as the cornerstone of an effective manufacturing or distribution solution. For more complex project management, Inventory Control can be coupled with the Job Cost module to help track all inventory-related expenses for a project. Inventory tracking is enhanced even more when integrated with the Custom Office module, which creates detailed spreadsheets to provide further analysis of inventory performance. The Inventory Control system offers comprehensive reporting capabilities to keep you on top of inventory status. It can help you bring about the creation of new or improved purchasing policies, sales policies, pricing methods, and even enhanced customer service. By leveraging Sage Business Works, you have the tools to create an inventory system with the depth to meet your |
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| An inventory control system is an integrated package of software and hardware used in warehouse operations, and elsewhere, to monitor the quantity, location and status of inventory as well as the related shipping, receiving, picking and put away processes. In common usage, the term may also refer to just the software components. Modern inventory control systems rely upon barcodes, and potentially RFID tags, to provide automatic identification of inventory objects. In an academic study performed at Wal-Mart, RFID reduced Out of Stocks by 30 percent for products selling between 0.1 and 15 units a day. Inventory objects could include any kind of physical asset: merchandise, consumables, fixed assets, circulating tools, library books, or capital equipment. To record an inventory transaction, the system uses a barcode scanner or RFID reader to automatically identify the inventory object, and then collects additional information from the operators via fixed terminals (workstations), or mobile computers. |
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| An inventory control system may be used to automate a sales order fulfillment process. Such a system contains a list of order to be filled, and then prompts workers to pick the necessary items, and provides them with packaging and shipping information. Real time inventory control systems use wireless, mobile terminals to record inventory transactions at the moment they occur. A wireless LAN transmits the transaction information to a central database. |
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| Click here to submit your project requirements to Option Matrix, India. |
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| Inventory Control Steps |
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| Here is series of steps which define a process for achieving higher levels of inventory accuracy. Your success or failure will be determined by your implementation of these steps. |
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| Attitude. Maintaining inventory accuracy must be an integral part of the attitude of the organization. Like quality, customer service, and plant safety, accuracy must be promoted throughout the organization as everyone's responsibility. This attitude must start at the top levels. All you managers and executives out there want an accurate inventory but are you doing your part through your decisions and business practices to promote it? Processes are often shortcut in the name of "Customer Service" (this also applies to processes for Quality, Inventory Management, and Production Plans) that reduce or eliminate the effectiveness of the plan, which in the long run will reduce your ability to service your customers. Remember that these plans are designed to meet the needs of the customer, don't compromise them. |
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| Process Definition. You'll struggle to make any progress if you have not clearly defined the processes throughout the organization that affect inventory. While defining the processes, you should be looking for opportunities for errors and implementing changes to eliminate or reduce them. Even the most accurate employee will make errors; it is suggested to place formal checks in place of critical operations. Get as many people involved in this step to ensure you have a complete and accurate understanding of the processes. Anything missed in this step will require new procedures and additional employee training later, so once again, "take the time and do it right". |
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| Procedure Documentation. This is the part where you use the previously defined processes to document the procedures that the employees will follow to maintain inventory integrity. The procedures documented here should not be limited to inventory issues; they should be the complete procedure including quality, physical aspects, and safety. This documentation should be as clear and comprehensive as possible. It should be written for a specific task within a specific job responsibility, it should include everything the employee needs to know to complete the task and nothing else. For example: if a stock clerk's responsibility is to notify the supervisor for any discrepancies, that is all it should state in the procedure for the stock clerk even though there will be additional procedures for dealing with the discrepancy. Procedures should also include the correct method for filling out and processing paperwork, the sequence and timing of entering data, and any checks that are required to be performed. If there are any exceptions to a procedure they should be specified in the document, allowing undocumented exceptions to a procedure will decrease its effectiveness. Be realistic, procedures are not a "wish list", they are the documentation of the requirements of a specific task. You must be prepared to enforce compliance to all procedures. Once you are completed with the documentation, it is suggested you first distribute the procedures to a few key employees, then take a couple of weeks for you and the key employees to monitor existing operations to see if anything was missed or if anything is incorrect. Once this is done, the procedures should be officially put into effect and distributed to all employees. |
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| Employee Training. Handing out a written procedure does not constitute employee training. It is important to set a training schedule to go through all the procedures with groups of employees. Take whatever time is necessary to ensure they have a thorough understanding of the procedures. Make it clear that the procedure document is the only way to perform the task. If you did your job correctly in defining the processes and documenting the procedures you shouldn't run into many surprises during the training. Try to refrain from making changes or exceptions to the documentation at this time (unless there is a critical error). Last minute changes or exceptions will cause confusion and diminish the value of the documents. Make notes for possible future revisions of the procedures instead. Set a timetable for publishing and putting into effect revisions (every quarter or six months). Frequent revisions of procedures tend to cause confusion and make it difficult to enforce adherence. |
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| Employee Testing. One should be a big advocate of formal testing of employees on procedures. This is the only way to know if they understand them (or have even read them). Be prepared, this will scare the hell out of your staff. Do not make the tests too difficult, multiple choice questions are appropriate and maybe some true/false. You may also need testing which requires the employee to perform the task in the presence of the tester. Make a point to include items in the test that are known to have been issues in the past. There should not be any penalties for incorrect answers on the test. Any incorrectly answered questions should be discussed with the employee to ensure that he/she now understands the correct answer. You may need to make arrangements to conduct the test verbally for employees with inadequate reading skills or other arrangements if language is an issue. |
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| Monitoring Processes for Compliance. You must begin to monitor the processes for compliance to the procedures immediately. Any actions observed which do not comply with the written procedures must be addressed immediately with the employees involved. As stated earlier, the written procedures are the only way to perform the task. Allowing employees to "do it their own way" (even if their way is a better way) will make it impossible to enforce compliance on other issues and will create problems when changes are made to processes. If they have a better way, consider it for the next revision at which point it would then become "the only way". |
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| Setting Standards. One Should be a big advocate of setting maximum accuracy and production standards wherever feasible. Do your research to ensure the standards those set are high enough yet still achievable. You will have to enforce these standards so it is critical to set them correctly. If in doubt, set them lower, you can always increase them later when more data is available. If you set them too high you have put yourself in a difficult position when it comes time to enforce them. Standards should be set for the specific task being performed. For example, the accuracy standard for a stock clerk stocking in random storage area would be lower than for one stocking in fixed locations. Setting standards requires tracking of the accuracy and productivity of the tasks being performed which makes it more viable when you have several people performing the same tasks. |
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| Tracking Accuracy. Whether you have set standards or not it is suggested to track accuracy organizationally and individually. Accuracy tracking should always be measured as a percentage of total transactions. Tracking accuracy as flat numbers (number of errors) puts your more productive employees at a disadvantage, and at an organizational level will be skewed by variances in business activity. Accuracy tracking should be communicated to staff in a positive manner; it is a tool to facilitate improvement in processes and people. By simply tracking and communicating accuracy to employees you will see immediate reductions in errors even if standards are not set. The fact is we all want to be accurate; the problem is we all think that we are accurate and it's always the other guy who is making all the mistakes. |
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| Accountability. People must be held accountable for following documented procedures. You have spent the time to document the procedures, provide the training, and the testing. If someone is not following the procedures they must be dealt with applying appropriate disciplinary action. It's that simple. You may be amazed as to how much just one individual not following procedure can screw up your inventory. If you don't hold the employees accountable you may as well throw out everything you have done to this point. Mistakes are mistakes and everyone makes them, however, not following a specified procedure is a conscious decision made by the employee to not do what he/she was instructed to do. |
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| Count, Count, Count. We would like to believe that since we have taken the above steps we should now assume our inventory is accurate. Not necessarily. You will have to count it to determine the accuracy, as well as determining areas needing additional evaluation. Year-end physical inventories are tools used by accountants and do very little for inventory accuracy. You should count your inventory on a continuous basis (cycle counting) to maintain high levels of accuracy. This is one of the best ways of identifying problem areas on a timely basis and providing an environment conducive to continuous improvement. The way you count and the frequency of your counts should be designed for your specific type of operation. |
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| Reevaluate. You should be regularly reevaluating your processes and procedures. Results of your cycle count program should point you in the direction of areas where enhancements are needed. Business conditions often change and new processes are added which will require evaluation. |
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| Click here to submit your project requirements to Option Matrix, India. |
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| Inventory management |
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| Inventory management refers to the process of managing the stocks of finished products, semi-finished products and raw materials by a firm. Inventory management, if done properly, can bring down costs and increase the revenue of a firm. |
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| How much one should invest in inventory management? The answer to this question depends on the volume and value of inventory as a percentage of the total assets of a firm. The importance of inventory management varies according to industries. For example, an automobile dealer has very high inventories, sometimes as high as 50 per cent of the total assets, whereas in the hotel industry it may be as low as 2 to 5 per cent. |
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| The process of inventory management is a continuous one and there are various kinds of solutions available. It is advisable to employ specialized staff for inventory management. |
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| The inventory management process begins as soon as one has started production and ordered raw materials, semi-finished products or any other thing from a supplier. If you are a retailer, then this process begins as soon you have placed your first order with the wholesaler. |
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| Once orders have been placed, there is generally a short period of time available to a firm to put an inventory management plan in place before the supplies are delivered. Inventory management helps a firm to decide in advance where these supplies should be stored. If a firm is getting supplies of small-sized goods, it may not be much of a problem to store them, but in the case of large goods, one has to be careful so that the warehousing space is optimally utilized. |
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| From invoices to purchase orders, there is lot of paperwork and documentation involved in inventory management. Several software programs are available in market, which help in inventory management |
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| Click here to submit your project requirements to Option Matrix, India. |
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| Supply Chain Inventory Management |
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| A supply chain consists of three parts - procurement of raw materials and semi-finished products, converting them into finished products, and distributing them for sale. In this context, supply chain inventory management implies that the inventory should be managed in such a way that the supply chain can function without any shortages or excess burdens of large supplies. |
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| Supply chain inventory management starts with the chain of suppliers who supply raw materials and semi-finished products. A person who is managing the supply chain is supposed to forecast |
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| The demand and supply of various products of the firm; the inventory management is done accordingly. If the forecast indicates a higher demand in the near future, greater supplies of raw material and finished products have to be procured. Also, the process must be completed in time and without resulting in cost overruns. |
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| A crucial part of supply chain inventory management involves managing warehouses. It helps in the proper storage and transportation of raw materials to production units, as well as the distribution of finished products through a chain of retailers and wholesalers. Supply chain inventory management ensures that the finished products are delivered at specific locations according to the pre-determined schedule. Keeping in view the dynamic state of markets all over the world, supply chain inventory management has become a crucial factor in deciding the overall profits of a firm. Poor supply chain inventory management could spell disaster for any company. The higher the inventory investment as a percentage of total assets of a company, the higher the damage caused by poor inventory management. To ensure that this doesn't happen, there are various software tools available in market to help in supply chain inventory management. They are cost-effective, easy to use, and expedite various processes involved in supply chain inventory management. Thus, they are increasingly becoming popular. One can get customized software to suit one's specific needs also. |
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| Click here to submit your project requirements to Option Matrix, India. |
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