Process re-engineering can be interesting and exhausting at the same time. Inventory management can get tricky and not always does a software application come to your rescue. Last week was one such day. We were brainstorming on inventory management with two aspects, one integrated with SAP and the other keep the business process lean on the ground.
In the middle of all these discussions our sourcing team for Yantree Robotics had to interrupt us, as they were struggling with one such issue. Our regular vendor was way over the delivery date and orders were being held up. When asked for an explanation, his reply was that, the assembly shop ran out of screws and his procurement team had no idea. Hence, the delay. The vendor was summoned to show up at our office that afternoon.
On his arrival he was more of asking for help than making excuses. His struggle was real and he was hoping we could fix it for the long term with some sort of an ERP solution.
Santosh, our vendor, is himself a graduate engineer with industrial experience of 18 years. He said “You guys solve operational and business problems with bigger enterprises, but can you solve my problem? And, I am on a Budget!”. Its true, a small scale enterprise cant afford the costs of complex ERP’s but also get their business hit by these issues.
It was my colleague, Rohan who had the first response and asked him about his problem. Santosh told him that most of his stock items are normally managed by his ERP but small object inventory like PCB mounting screws, etc. often have stock mismatches and are difficult to manage. He further added, that due to improper inventory control of these items sometimes their product deliveries get delayed.
While Santosh was expecting some complex application solution from us, Rohan in turn gave him an inexpensive easy to deploy solution that anyone can implement. Rohan called this solution as his ‘Grandmother’s Glass Jars.’ In other words a 2-BIn system with visual inventory control.
The 2 bin inventory control is a standard method mainly used for small or low-value items. He further combined this method with a household glass jar. His perception about the glass jar is that, tea and sugar never get Stock out at home. Why? It’s simple, you can see through the jar ank know when to re-order.
So the final solution involved figuring the rate of consumption of the screws. So once we had the all the math and stats in place we had our safety stock, minimum stock, reorder stock and maximum stock quantities.
Now, it was the turn of Jars. For ease of understanding lets call Jar no.1 as the reserve Jar and Jar no.2 as the operational jar. The safety stock and minimum stock quantities were poured in the Reserve Jar, the level was marked with a red tape and tagged as minimum stock level. Then, the reorder quantity was poured in the same jar, the level marked with a yellow tape and tagged as reorder level. A reorder card with part code, part description, part location, reorder quantity and vendor was placed in the jar on top of the screws. The Jar was closed. The remaining quantity was poured in the operational jar and the material was placed in the store with Operational Jar placed in front of Reserve Jar.
When the operational jar gets empty with regular consumption, the reserve jar will be opened. The person who opens the reserve jar will first get the reorder card, which he was instructed to put into a post box that was mounted in the store. Now, he could start consuming the material as he normally does. The procurement team was instructed to empty the post box every morning and places order for items in the box.
When fresh material arrives, reserve jar is emptied into the operational jar(This took care of the FIFO operation) and reserve jar is filled with fresh material upto the yellow tape and the reorder card is placed in the reserve jar. The balance quantity is poured into the operational jar. The Jars again placed in the same way, reserve Jar behind the operational jar. And the process continues. This was implemented for 43 types of screws/washers/rests/etc.
The stock levels were easily monitored and managed as no report was required. The Jars told the story loud and clear.
It took us 4 days to implement this and we billed Santosh to sponsor a team lunch.
Note: In above solution, selection of correct sized jars is mandatory.
“Production loss can be avoided by visual stock monitoring as erroneous entries can cause system and physical stock mismatch but visual only tells the truth.”
Lean techniques and their application play a pivotal role in reducing or completely eliminating production losses, no matter what size the enterprise maybe. And, believe it or not the best inventory management solution lie in your own kitchen.
Vishal is lead Technology Consultant and founder member of Ranadive Consultancy Services Pvt. Ltd. He is carrying Engineering degree in Electronics & Telecommunication Engineering from University of Pune. He is a multifaceted professional with core competencies in Computational techniques, ERP & Business Consultancy. With more than 14 years of experience in his field