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Assess Inventory Record Accuracy

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Assess the system’s Inventory Record Accuracy. Once the design is complete and deployed, the stability of the system is going to hinge on the quality of the data that the system relies upon. A goal of 98% Inventory Record Accuracy will ensure that stability.

Measure Inventory Record Accuracy

Measure the baseline Inventory Record Accuracy (IRA) for your material system. Determine sample size of SKUs to count for a reliable measure of IRA. Establish process for measuring hits and misses, and reporting inventory record accuracy on a periodic basis.

Train Materials Staff

Train all staff in the Material department. This is a 1-day training workshop that focuses specifically on the topic of maintain Inventory Record Accuracy. This can be done live or online. We recommend repeating the training once a year.

Set Range Tolerances

Set the tolerance ranges for the “hits vs misses” during Cycle Counts. Tolerance level percentages are set looser for “C” items than “A” or “B” items. For example, “A” items might have a 0 tolerance for accuracy, whereas “C” items might have an 8% tolerance. This is critical when measuring inventory accuracy.

Flowchart All Transactions

Map or flow-chart all inventory transactions that will need to be controlled, including receipts, movements, issues, backflush, scrap.

Audit For Any Hiding Parts

Scour the floor in search of parts that are living outside the system. In some cases material may be stored on the factory floor without having been transacted. This may occur in an environment where part shortages are common, and employees “squirrel” away parts that are commonly in short supply.

Implement Scrap Reporting

Develop a process that makes it easy for operators to comply, but not having to fill out paperwork but still reporting the scrap. Reporting scrap is extremely important since it is largely a manual step. The system won’t know about scrap unless we report it.

Conduct Full Physical Inventory

Conduct a full physical inventory to reset the inventory balances. This should not be done until new procedures are in place and training has been completed.

Implement Stockroom C.C.

Start the Cycle Count program. Once inventory has been recalibrated, turn on your cycle count program to correct errors and uncover the root cause of inventory discrepancies.

Schedule KANBAN Chain Audits

Conduct a Kanban chain audit (pull sequence audit) at least once a month, using the PFEP database information. Check to ensure that the Kanban signaling system is functioning according to its original design, if not, switch to kaizen mode.

Uncover Root Causes of “Misses”

Investigate and uncover the reasons for inventory record errors. Use the cycle count program as a way to uncover the cause for errors. Hold cycle count review sessions weekly to discover and fix process problems that lead to inventory errors.

Track & Report Inventory Metrics

Strive to reach Level V of the Value Stream Maturity Model, by achieving 18 months of continuous improvement in inventory turns and accuracy.