Contents
Cover
Title Page
Copyright
Preface
Chapter 1: Success or Failure with Best Practices
Types of Best Practices
Most Fertile Ground for Best Practices
Planning for Best Practices
Timing of Best Practices
Implementing Best Practices
How to Use Best Practices: Best Practice Duplication
Why Best Practices Fail
Summary
Chapter 2: Inventory Purchasing
2.1 Include Suppliers in the New Product Design Process
2.2 Use Supplier-Concurrent Engineering
2.3 Avoid Designing Risky-Procurement Items into Products
2.4 Match Product and Part Life Cycles
2.5 Reduce Safety Stocks by Shrinking Supplier Lead Times
2.6 Purchase Supplier Capacity
2.7 Reduce Safety Stocks by Accelerating the Flow of Internal Information
2.8 Buy from Suppliers Located Close to the Company
2.9 Relocate Suppliers On-Site
2.10 Use Local Suppliers for Rapid Replenishment
2.11 Consider Foreign Sourcing
2.12 Use Auctions for Selective Purchases
2.13 Compare Suppliers Based on Total Landed Cost
2.14 Eliminate Approvals of Routine Purchases
2.15 Purchase Based on Material Requirements Planning
2.16 Compare Open Purchase Orders to Current Requirements
2.17 Freeze the Short-Term Production Schedule
2.18 Share Production Plan with Suppliers
2.19 Obtain Direct Links into Customer Inventory Planning Systems
2.20 Require Frequent Deliveries of Small Quantities
2.21 Arrange for Inbound Split Deliveries
2.22 Arrange for Phased Deliveries
2.23 Adopt Rolling Schedules
2.24 Adopt Just-in-Time Purchasing
2.25 Implement Stockless Purchasing
2.26 Centralize Purchasing
2.27 Designate Major Suppliers as Lead Suppliers
2.28 Single-Source Products
2.29 Install a Supplier Rating System
2.30 Use Long-Term Supplier Relationships for Strategic Purchases
2.31 Shift Raw Materials Ownership to Suppliers
2.32 Flag Changes Impacting Advance Material Requests
Chapter 3: Inventory Receiving and Shipping
3.1 Reject Unplanned Receipts
3.2 Obtain Advance Shipping Notices for Inbound Deliveries
3.3 Directly Enter Receipts into Computer
3.4 Automatically Collect Inbound and Outbound Cube and Weight Information
3.5 Repackage Incoming Items into Increments Ordered by Customers
3.6 Put Away Items Immediately after Receipt
3.7 Stage Received Goods for Zone Putaways
3.8 Eliminate the Receiving Function
3.9 Combine the Shipping and Receiving Functions in One Area
3.10 Assign Docks Based on Minimum Warehouse Travel Time
3.11 Require Supplier Deliveries with Open-Sided Trucks Directly to Production
3.12 Ship Using Returnable Wheeled Containers
3.13 Use Dunnage Bags to Cushion Outbound Shipments
3.14 Use Shippers with the Most Consistent Delivery Performance
3.15 Have Delivery Person Deliver the Invoice
3.16 Pay Suppliers Based Only on Receiving Approval
3.17 Provide Pending Shipment Information to the Collections Staff
Chapter 4: Inventory Storage
4.1 Drop Ship Inventory
4.2 Cross-Dock Inventory
4.3 Move Inventory to Floor Stock
4.4 Use Temporary Storage for Peak Inventory Requirements
4.5 Assign Unique Location Codes to All Inventory Storage Locations
4.6 Reduce the Number of Inventory Bin Locations Assigned to the Same Product
4.7 Assign Fixed Inventory Locations to High-Volume Items
4.8 Segregate Customer-Owned Inventory
4.9 Allocate Warehouse Areas to Specific Customers
4.10 Segregate Inventory by ABC Classification
4.11 Store High-Pick Items in Order Fulfillment Zones
4.12 Adjust Case Height to Match Cubic Storage Capabilities
4.13 Adjust Case Stacking or Width to Avoid Pallet Overhang
4.14 Combine Out-and-Back Inventory Moves
4.15 Use Different Storage Systems Based on Cubic Transactional Volume
4.16 Use Modular Storage Cabinets for Low-Storage-Volume Items
4.17 Use Carousels to Increase Picking Efficiency
4.18 Use Movable Racking Systems
4.19 Use Multistory Manual Picking Systems
4.20 Use Gravity-Flow Racking for FIFO Picking
4.21 Use Pallet-Flow Racks for Pallet FIFO Picking
4.22 Create Double-Deep Racking or Stacking Lanes for Large SKU Pallet Volumes
4.23 Use Push-Back Racks for Multiple Pallet Storage
4.24 Eliminate Cross Bracing in Low-Weight Storage Configurations
Chapter 5: Inventory Picking
5.1 Group Single-Line Orders and Pick in Order by Location
5.2 Use Single-Order Picks for Emergency Orders
5.3 For Manual Systems, Pick from the Source Document
5.4 Implement Forward Picking
5.5 Use Wave Picking by Grouping to Consolidate Transactions
5.6 Use Zone Picking to Consolidate Total Transactions
5.7 Use Zone Picking with Order Forwarding
5.8 Use Voice Picking to Record Low-Volume Picking Transactions
5.9 Use Pick-to-Light to Record High-Volume Picking Transactions
5.10 Use Portable Scales to Pick Small Items
5.11 Pick into Multibin Carts
5.12 Store Kitted Inventory in an Accumulation Bin
5.13 Use Standard Containers to Move, Store, and Count Inventory
5.14 Issue Parts in Full-Bin Increments
5.15 Have Suppliers Sequence Their Parts Deliveries
5.16 Avoid Restocking during a Picking Shift
5.17 Optimize Inventory Storage through Periodic Location Changes
Chapter 6: Production Issues Impacting Inventory
6.1 Eliminate Incentive Pay Systems Causing Excessive Production
6.2 Standardize the Number of Shifts Worked throughout a Factory
6.3 Allow Production Workers to Call Suppliers about Faulty Materials
6.4 Invest in Smaller, Low-Capacity Machines Rather than High-Capacity Ones
6.5 Purchase Machines from a Single Supplier
6.6 Produce the Same Parts on the Same Machine Every Time
6.7 Perform Inspections at the Next Downstream Workstation
6.8 Improve Periodic Equipment Maintenance
6.9 Shift Some Equipment Maintenance to the Production Staff
6.10 Preplan Major Equipment Maintenance
6.11 Replace Aisles with Conveyors
6.12 Schedule Smaller Production Batches
6.13 Produce to Order Rather than to Stock
6.14 Reduce Container Sizes
6.15 Reduce Setup Times
6.16 Shorten Cycle Times
6.17 Replace Straight Assembly Lines with Serpentine Lines
6.18 Reduce the Length of the Assembly Line
6.19 Divide the Assembly Line into Segments
6.20 Use Cellular Manufacturing
6.21 Group Machine Cells Near Common Inventory Storage Areas
6.22 Position Local Cell Storage between Workstations and Aisles
Chapter 7: Inventory Transactions
7.1 Reduce the Number of Stored Data Elements
7.2 Record Inventory Transactions with Barcodes
7.3 Record Inventory Transactions with Radio Frequency Communications
7.4 Track Inventory with Radio Frequency Identification (RFID)
7.5 Eliminate All Paper from Inventory Transactions
7.6 Use the Kanban System to Pull Transactions through the Facility
7.7 Eliminate All Transaction Backlogs
7.8 Verify That Receipts Are Entered in the Computer System at Once
7.9 Have Customers Order by Part Number
7.10 Audit All Inventory Transactions
7.11 Compare Recorded Inventory Activity to On-Hand Inventories
7.12 Immediately Review All Negative Inventory Balances
7.13 Replace the Physical Count Process with Cycle Counts
7.14 Use Control Groups to Locate Transaction Errors
7.15 Prioritize Cycle Counts on Next-Usage Items
7.16 Streamline the Physical Count Process
7.17 Install a Warehouse Management System
Chapter 8: Inventory Planning and Management
8.1 Include Materials Managers in the New Product Design Process
8.2 Reduce the Number of Product Options
8.3 Increase Prices for Nonstandard Options
8.4 Increase Prices for Small-Unit Orders
8.5 Convert Information Products to Electronic Versions
8.6 Reduce the Number of Products
8.7 Reduce the Number of Customers
8.8 Avoid Promotions
8.9 Design Products with Lower Tolerances
8.10 Require Formal Review and Approval of Engineering Change Orders
8.11 Assign Inventory Items to Classifications
8.12 Forecast Demand by Product Families
8.13 Segment Forecasted Demand into Stable and Unstable Products
8.14 Centralize Responsibility for Inventory Planning
8.15 Delay the Order Penetration Point as Long as Possible
8.16 Use a Material Requirements Planning System to Model Alternative Lot Sizes, Safety Stocks, and Lead Times
8.17 Reduce Job Releases to Production
8.18 Prioritize Production Based on Delivery Region
8.19 Use Variable Safety Stocks for Fluctuating Demand
8.20 Convert Safety Stock to Just-in-Case Stock
8.21 Eliminate Expediting
8.22 Develop a Product Substitution System
8.23 Question the Level of Customer Service Provided
8.24 Focus Inventory Reduction Efforts on High-Usage Items
8.25 Create a Visual Review System for Noninventoried Parts
8.26 Eliminate Departmental Stocks
8.27 Install a Distribution Requirements Planning System
8.28 Distribute Slow-Moving Items from Regional Warehouses
8.29 Install a Hold and Flow System
8.30 Use Overnight Delivery from a Single Location for Selected Items
8.31 Use Fair Shares Analysis to Allocate Inventory to Warehouses
8.32 Periodically Rationalize the Warehouse Network
8.33 Plan for Product Shutdowns
8.34 Create a Materials Review Board
8.35 Identify Obsolete Inventory via Physical Inventory Tags
8.36 Plan for Service Parts Inventory Levels
8.37 Inspect Returned Merchandise for Usability
8.38 Reserve Otherwise Obsolete Inventory with “Service/Repair” Designation
8.39 Avoid Product Obsolescence with Shelf-Life Control
8.40 Create an Obsolete Inventory Budget for Disposals
8.41 Batch Excess Inventory for Sale to Salvage Contractors
8.42 Sell Excess Items through the Service Department
8.43 Set Up a Reverse Logistics System
8.44 Outsource Selected Warehousing Functions
Chapter 9: Warehouse Layout
9.1 Include Other Issues than Cost in a Warehouse Acquisition Decision
9.2 Generally Organize the Warehouse in a U-Shaped Process Flow
9.3 Organize the Warehouse by Storage Zones
9.4 Maximize Vertical Storage Space
9.5 Tailor Vertical Storage Space to Manual Picking Needs
9.6 Enclose Building Supports in Racks
9.7 Use Narrow Aisles in Manual Putaway and Picking Zones
9.8 Avoid Aisles Adjacent to Outside Walls
9.9 Use Automated Storage and Retrieval Systems
9.10 Use Automated Guided Vehicle Systems
9.11 Use Conveyors to Reduce Employee Travel
9.12 Avoid an Excessive Level of Warehouse Automation
9.13 Eliminate the Quality Review Area
9.14 Enlarge the Receiving Area
9.15 Design Just-in-Time Docks for the Largest Anticipated Trucks
9.16 Lock Down the Warehouse Area
9.17 Plan for Maximized Warehouse Space Utilization
9.18 Eliminate the Warehouse
Chapter 10: Cost Accounting
10.1 Eliminate Purchase Price Variance Tracking
10.2 Eliminate Tracking of Work-in-Process Inventory
10.3 Eliminate Scrap Reporting in the Production Area
10.4 Charge the Entire Inventory to Expense
10.5 Use Specific Identification Costing with RFID Tags
10.6 Have the Cost System Separate Value-Added and Nonvalue-Added Activities
10.7 Assign Overhead Based on Square Footage Used
10.8 Do Not Credit Internal Departments with Sales When Production Is Completed
10.9 Report on Landed Cost Instead of Supplier Price
10.10 Report on the Total Cost of Product Ownership
10.11 Implement Activity-Based Costing
10.12 Assign Overhead Personnel to Specific Subplants
10.13 Implement Target Costing
10.14 Limit Access to Unit-of-Measure Changes
10.15 Review Cost Trends
10.16 Review Material Scrap Levels
10.17 Revise Traditional Cost Accounting Reports
10.18 Audit Labor Routings
10.19 Follow a Schedule of Inventory Obsolescence Reviews
Chapter 11: Bills of Materials
11.1 Audit Bills of Materials
11.2 Conduct a Configuration Audit
11.3 Modify the Bills of Materials Based on Actual Scrap Levels
11.4 Modify the Bills of Materials for Temporary Substitutions
11.5 Eliminate Redundant Part Numbers
11.6 Standardize Parts
11.7 Review Inventory Returned to the Warehouse
11.8 Use Bills of Materials to Find Inventory Made Obsolete by Product Withdrawals
11.9 Identify Inactive Inventory in the Product Master File
Chapter 12: Impact of Constraints on Inventory
Overview of the Theory of Constraints
Overview of the Constraint Buffer
Alternatives to the Constraint Buffer
Expedite Zone
Buffer Manager
Buffer Hole
Buffers for Labor Operations
Assembly Area Buffer
Inventory Releases
Batch Sizes
Summary
Chapter 13: Inventory Policies and Procedures
13.1 Create a Policies and Procedures Manual
13.2 Train the Warehouse and Accounting Staffs in Inventory Procedures
13.3 Cross-Train for Mission-Critical Activities
13.4 Train Using Training Teams
Chapter 14: Inventory Measurements
14.1 Percentage of New Parts Used in New Products
14.2 Percentage of Existing Parts Reused in New Products
14.3 Raw Material Content
14.4 Bill of Materials Accuracy
14.5 Item Master File Accuracy
14.6 Economic Order Quantity
14.7 Distribution Turnover
14.8 On-Time Parts Delivery Percentage
14.9 Incoming Components Correct Quantity Percentage
14.10 Purchased Component Defect Rate
14.11 Percentage of Receipts Authorized by Purchase Orders
14.12 Percentage of Purchase Orders Released with Full Lead Time
14.13 Putaway Accuracy
14.14 Putaway Cycle Time
14.15 Scrap Percentage
14.16 Average Picking Time
14.17 Picking Accuracy for Assembled Products
14.18 Average Picking Cost
14.19 Order Lines Shipped per Labor Hour
14.20 Shipping Accuracy
14.21 Percentage of Products Damaged in Transit
14.22 Warehouse Order Cycle Time
14.23 Inventory Availability
14.24 Delivery Promise Slippage
14.25 Average Back-Order Length
14.26 Dock Door Utilization
14.27 Inventory Accuracy
14.28 Inventory Turnover
14.29 Percentage of Warehouse Stock Locations Utilized
14.30 Square Footage of Warehouse Storage Space
14.31 Storage Density Percentage
14.32 Inventory per Square Foot of Storage Space
14.33 Storage Cost per Item
14.34 Average Pallet Inventory per SKU
14.35 Rate of Change in Inactive, Obsolete, and Surplus Inventory
14.36 Obsolete Inventory Percentage
14.37 Percentage of Inventory > X Days Old
14.38 Percentage of Returnable Inventory
Appendix: Summary of Inventory Best Practices
Glossary
About the Author
Index
