APICS defines bulk issues as parts issued from stores to
Work-In-Process inventory, but not based on a job order. They are
issued in quantities estimated to cover requirements of individual
work centers and production lines. The issue may be used to cover a
period of time or to fill a fixed--size container.
In practice you requisition from the stores a quantity as a multiple
of how they are held in stock, to use as needed. The item is shown
on the picking list as a bulk issue item which does not require
issuing with the kit of parts. From the shop's point of view, they
just draw on a requisition a supply of the item when they need more.
From a systems point of view, once the issue transaction is
processed, the stock balance is reduced by the full quantity issued,
and the work-in-process area account is charged with the total value
of the parts issued. Once the shops have finished the job they had
the material for, the remainder stay on the work center until needed
again. From a material control point of view, once the issue
transaction has been processed, the stock is out of the system, and
irrespective of the quantity sitting on the shop floor, it may show
as requiring re-order. It can be that the amount on the shops will
keep them going for the next three months, but the item can be
flagged as being required next week and so a priority order is
placed to obtain some for the store. Not a very good situation.
A facility that could simplify the issue transactions when the
manufacturing lead time is short and overcome the shortcomings of
the bulk issue system is called backflushing.
APICS defines backflushing as the deduction from inventory records
of the component parts used in an assembly or subassembly by
exploding the bills of materials by the production count of
This means in practice that the issue of the components is only
recorded when the assembly or product is complete and booked into
stock. It is the receipt transaction which triggers an issue
transaction for each component on the parent bill of material
identified as a backflush item.
Some of the benefits of backflushing include the reduction of issue
transactions to be input, which reduces errors. The quantities will
be as per the BOM, and it can handle small production batches
without increasing the paperwork. One of the most important practical
benefits is that it can handle bulk issue items as discussed above,
as with this approach, the correct quantities are charged to the
jobs the parts are used on.
The disadvantages must also be understood. Most of the disadvantages
are in the way it affects the stores. This concept allows parts to
be issued in convenient quantities and the stores balance is only
updated with the quantity consumed when the job is finished. This is
fine if the manufacturing lead time is short, like half a day, and
the issued quantity will be consumed quickly. If the manufacturing
lead time is two weeks, then it creates a problem as the stock
balance is never up to date. It makes cycle counting cut-offs
difficult, and it can affect the ordering calculations.
Because of the problems experienced with backflushing, the concept
of floor stock can be used in conjunction with it to overcome many
of the problems it created.
APICS defines floor stock as stocks of inexpensive production parts
held in the factory from which production workers can draw without
A second meaning to this term is one used in many software packages
and is a second inventory balance located on the shop floor.
With this concept, a convenient quantity of stock, which can be high
or low value items, is transferred from the store to the floor stock
balance. The items which are to be controlled as floor stock items
are identified on the component record of the BOM, or in some
systems it can be entered in the item master record and then it is
applied to every BOM the item is used on. When a picking list is
created, the floor stock items are identified and the quantity to
issue is shown as zero.
When the assembly is completed and booked to stock, the floor stock
items are backflushed to the floor stock balances, decreasing the
balance held on the shop floor.
This overcomes the problem that the store balances are never up to
date as now the stores balance is updated when the material is
transferred to the floor stock balance. The advantages of
backflushing have been retained.
A further advantage is that the remaining quantity of unused
material left on the shops is still held in the system and so
material will not be ordered incorrectly. The MRP system logic is
that the quantity of stock on the shops in the floor stock balance,
which is an inventory balance, is added to the store balance before
the netting calculation is performed. The jobs on the shop that
will use the item still show a requirement as the issue transaction
has not taken place. This results in the correct balance between
supply and demand being maintained.