A key factor for measuring business performance in a manufacturing environment is inventory control. Inventory impacts corporate cash flow, production efficiency and on-time delivery of finished goods. Therefore, good inventory management is essential to achieving business objectives. With this in mind, ChemRite’s management team made the design and implementation of an improved inventory control system the lead project of 2010.
Because inventory control involves almost every department at ChemRite, it has taken a company wide collaboration of our dedicated team members to create a custom electronic inventory control system. The team worked along with inventory system experts and industry specialists to determine the best application of current technology for ChemRite’s unique production environment. Driven by an emphasis on customer service, the improvements needed to include the ability to provide “real time” inventory accuracy, enhanced customer reporting mechanisms and complete lot and location control. In addition, ChemRite’s team set out to build a system which improved warehouse organization, streamlined the inventory “flow” process and eliminated a “paper bound” internal inventory practice.
This sizeable project included an internal review of all of ChemRite’s inventory control processes. Early in 2010, the team began with implementing an improved lot control procedure which requires lot control of all incoming inventory. Lot codes correspond to the date incoming material is received and follow the inventory from QA inspection, to inventory storage, movement and finished good consumption. Lots are used in accordance with FIFO (first in, first out) standards. In the event of a quality defect or recall of any component, ChemRite is capable of tracking the exact finished good production which the defective lot of material was used in, eliminating unnecessary finished good rework.
Next, ChemRite’s team structured a process for location control. ChemRite’s production and warehouse facilities were mapped into 3,840 separate bin locations. Each bin location has a unique “address”. The address refers to the facility, row and bin space within each row. Apparent bin location signs were placed throughout ChemRite’s facilities and facility maps were created. Additionally, ChemRite’s operating system was custom programmed to include each bin location and all inventory was assigned to individual bin spaces within the system.
Job functions were also restructured. For example, under ChemRite’s prior receiving process, all receiving paperwork was forwarded to ChemRite’s offices and entered into the operating system the following day. However, this process didn’t provide “real time” inventory access. ChemRite’s team adjusted this process so that receiving is now done by warehouse personnel at the time the inventory is actually received. Also, a process was put in place to provide warehouse material handlers with detailed pick slips for each formula and finished good batch of material. These pick slips have proven to be a much more efficient means of locating necessary inventory for production.
The result of this concentrated effort is an improved inventory control system that we at ChemRite are truly proud of. Once the groundwork had been laid and the internal processes were in place, ChemRite’s team was ready to implement phase two – installing an electronic bar coding and inventory tracking system. This will be the featured subject of next month’s CRCP E-Newsletter.