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Inventory Control and Backflushing
Part 3 of 3

Part 1    Part 2    Part 3 

Line Side Bin Stock (LSBS)

A further development using these two standard facilities is the concept of having a floor stock balance per work center or work cell, called "line side bin stock." This opens up all kinds of possibilities. As the line side bin stock (LSBS) balance is an inventory balance it allows a works order to be closed by recording the receipt at the work center. It is then available to be used and will be back flushed when the assembly is delivered to another LSBS or an actual store and the receipt is recorded. This effectively allows the linking together of many levels of manufactur­ing without the necessity of booking the items produced into stock, and then issuing them out again on another document.

 


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Many companies do physically move an item from one manufacturing area to another without going via the store because of the inconvenience or due to the physical size of the item. They then try to conform to the system require­ments by sending the paperwork to the stores. Unfortu­nately it is very rarely done well and we end up with jobs completed but not having all the parts issued to it, or we have negative balances in the store.

Now we have a system that actually reflects reality!

Some companies make several subassemblies in parallel and then combine them together in a higher level assembly. The standard MRP logic demands they are produced indi­vidually and then booked to stock on individual works orders. They are then issued out on a pick list for the assembly operation. Now we have a working solution which overcomes these problems as well. The individual sub assemblies are produced on their own works orders but are then delivered to the assembly area where they are used. By processing the receipt transaction to the "LSBS," the "LSBS" balance is increased and either the works order outstanding quantity is decreased or the order is closed.

The process of physically moving material into stock and then issuing it out again, and this can occur at more than one level in the Bill, adds to the lead time. Depending upon how often we give the picking lists to the stores, perhaps daily or twice weekly, it can mean a number of days or weeks are added to the cumulative lead time.

The concept of line side bin stock and backflushing is a practical solution to this problem.

Conclusion

Putting all of these techniques together we can end up with a work cell or assembly line receiving material in several ways:

(a) from stores in exact quantities for a specific job,
(b) from stores in bulk,
(c) from another work center, work cell or assembly line when the item has been produced on a works order,
(d) From goods receiving,
(e) or direct from a certified supplier.

The result of all this is that items can be issued at the start of the manufacturing process, and the parts only go to a physical store once the final assembly is completed and it goes into the finished goods store.

The benefits from this combined approach are:

(a) greatly reduced lead times,
(b) more responsiveness to customers,
(c) less storage space required,
(d) a more productive stores operation,
(e) reduced WIP,
(f) ability to handle smaller batches,
(g) a system that supports the way manufacturing operates.

Overall it reduces your costs, increases your customer service and results in greater profitability.

What stops a company from utilizing these existing fea­tures of their system and introducing these simple but very effective approaches?
Typically it is because they are comfortable and do not like changes in the way they operate.

Perhaps it is time they made the effort to change, to improve their operation, even though it means they have to work at it for a time, and make a few decisions.

Will it really hurt that much?

It may mean they stay in business!

Part 1    Part 2    Part 3 


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