Friday, August 12, 2011

Manufacturing and Distribution Inventory Control

Regardless of the size of your company and the complexity of your manufacturing process, we urge you to enforce a strict set of part numbering conventions and inventory control procedures.

If your company is small and operating on a shoe-string, this demand may not make you many friends, but it is one you must make. Bad habits are hard to break – but in this case time never heals.

If you have only 50 raw materials and 10 sub-assemblies, insist that each have a part number and each be stored in a controlled stockroom. If you allow free access to the inventory, all your efforts to manage your manufacturing business will be for naught.

While you have your management's attention and you are in the process imposing new policies and procedures, establish once and for all how raw materials, sub-assemblies, and finished goods are to be segregated.

In general, only the items you sell belong in your accounting system’s inventory control database. Obviously this includes the finished products you make, but it may also include a quantity of selected raw materials or sub-assemblies you make available for sale as spare parts.

Ultimately, all the raw material items you naively entered into your accounting system’s inventory control database – things you don’t ever sell – will want to come out. These belong in the manufacturing system’s inventory control database.

If this looks like a daunting task, don’t make a big issue of it right now. The better manufacturing systems will offer some sort of item import feature and, if your accounting system supports item exports, an hour or so of work on your part can save many hours of tedious and error-prone re-entry. It’s something to look for in your choices of manufacturing software. Make a note for future reference.

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