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Lean Manufacturing Articles

INVENTORY CONTROL AND INVENTORY MANAGEMENT

I'm going to share with you a couple definitions that you will not find in the current literature, but that have served me well over the years. Inventory control is the thing we do to ensure inventory record accuracy. Inven­tory management is the decisions we make assuming inventory record accuracy. If I ran out of handouts be­cause my perpetual inventory records were inaccurate,

then I have a failure of my inventory control system. My corrective actions will include a transaction to get my records back in sync with the real inventory, and they might include cycle counting, additional training, or a lock on the supply room door. If I ran out of handouts because I failed to forecast accurately, or failed to pro­duce to the forecast, or failed to receive raw material to support production, then my inventory management system has failed and my corrective actions will include a hasty order for more handouts and might include a faster copy machine or selection of another vendor.

If I am out of handouts and I know it, because my inventory records say my available-to-promise is zilch, then my inventory management system has failed but my inventory control system is working and I can at least tell you I am out and place your requirements on backorder. A backorder is an example of an inventory management problem. If, however, I believe I have suf­ficient handouts to meet your requirements and only discover I don't when I go to pick them up from the shelf, then I have a stockout and an inventory control problem. The reason I like to distinguish between in­ventory control and inventory management is because it helps to narrow the search for the problem and the solution. A lock on the stockroom door will not com­pensate for a sloppy forecast, nor will an elaborate and expensive planning system accomplish your objectives if your on-hand and on-order quantities are inaccurate.

Inventory control activities address inventory record accuracy. Cycle counting and root cause analysis of the variance, documenting procedures for inventory trans­actions, and training new employees on the procedures are all examples of inventory control. Good inventory control is the foundation of good inventory management.

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 14


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