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Inventory Management
Part 3 of 4


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Some examples of root causes by Functional areas requir­ing further analysis may include:

Engineering

• Incorrect (BOM) Bills of Materials/formulations
• Incomplete or inaccurate engineering documentation
• Procedures not complete or correct
Engineering/Marketing
• lack of product/component standardization
• engineering changes not coordinated or too many
• complex BOM product structure
• engineering/customer product changes

Engineering/Purchasing

• can't find local suppliers
• single or sole sourcing
Human Resources/Manufacturing
• fluctuating labor requirements/availability
• poor or no employee training program
Logistics
• too many warehouses or distribution centers
• distribution network not streamlined

Management

• no measurements on schedules, BOM, inventory accu­racy, inbound, forecasts
• business systems not integrated/utilized
• lack of discipline within formal/informal structure
• no business strategic plan
• too much paperwork
• lack of inventory policy/procedures
• lack of understanding of what impacts inventory
• not committed to Class A MRP II or Continuous Improvement concepts/philosophy
• lack of business vision
• company/corporate goals not communicated

Manufacturing

• long setups/changeovers of equipment
• poor quality/excessive rework
• single production line
• variable process
• run length economics
• planned facility shutdown
• poor or no equipment maintenance program
• poor product flow within manufacturing process
• old manufacturing/processing equipment needs pre­ventive maintenance
• scrap material not being processed properly or accounted for
Marketing/Sales
• lack of understanding of international buying and/or marketing environment
• actual lead times do not match published lead times
• lack of sales/marketing intelligence
• order entry process too long, not focused, complicated
• options or customer request changes too late in the manufacturing process

Marketing/Manufacturing

• marketing and manufacturing not agreeing on deliv­ery cycles
Materials
• poor data integrity—systems, planning
• inaccurate inventory records
• inadequate scheduling process

Purchasing

• supply constraints
• transportation lead times—long
• price volatility of purchased material
• international distribution/supply pipeline
• early material receipts
• required quantities less than order quantities
• vendor's business systems inadequate
• material title transfer—plant vs. vendor

Quality

• excessive delays for testing/inspection
• no quality assurance procedures
• no TQM system/process at suppliers' plant
• lack of Supplier certification/partnership

To be Continued


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