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More Transactions, More Errors
Error creation rate
is roughly proportional to the number of transactions. Many systems require far more transactions than necessary
and, thus, accumulate more errors than necessary.
These errors must
then be removed with cycle counting or physical inventory.
Reducing
transaction volume improves accuracy and reduces cycle
counting labor. It also reduces transaction input labor. In some
instances, the cost of transactions can exceed the cost of the items
being tracked!
What Drives High Transaction
Volume?
Complex Processes
Some inventory systems have excessive transactions because the
underlying
manufacturing process is complex and disjointed. Figure 8
illustrates how a functional layout and organization has complex
material flows. the system may require two
transactions for every material move.
Data-Equals-Control Fallacy
People sometimes assume that more data makes for better
control. However, this is only true when the data is both manageable and
well-managed. It must be accessible, well-formatted, concise and monitored frequently.
Many inventory systems are built with far too many
transaction points under the assumption that this gives better
inventory control.
One Method For Everything
Assumption
Another unspoken assumption that
sometimes
underlies scheduling and inventory systems is the
idea all products and processes should use a single method. This
needlessly complicates a system.
Most factories have a wide variety of products,
volumes and demand characteristics. Some are amenable simple, visual
control while others are not. If one method is used for everything,
that method is usually a complex computer-driven MRP/ERP system.
Unnecessary Data
Inventory system designers may collect data because
it seems easy and the data might be useful. This may include
unnecessary transactions. Once installed,
the transactions are institutionalized and rarely get reviewed for
necessity.
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Figure 8-Functional Layout Flow &
Transactions
Reduce Transactions With...
Cellular Manufacturing
Cellular layouts can reduce material moves and
transaction volume by 80% or more. compare figure 9 with figure
8.
For more on ...More on Cellular
Manufacturing,
Figure 9-Cellular Layout Flow &
Transactions
BOM Simplification
Complexity and unnecessary transactions may result
from complexity in the BOM.
Multiple layers of subassemblies seem to lend order and logic. Or, they may be
service parts. These extra levels then carry over into
manufacturing. The result is unnecessary inventory and transactions.
BOM Simplification Example
Backflushing
In Backflushing, the inventory system is setup to
relieve inventory of piece parts when a transaction is made for
completion of an assembly. There may be several levels of
subassembly in the BOM that the system assumes takes place.
Backflushing and Phantom subassemblies are alternatives to
restructuring the BOM.
Kanban, Broadcast, Direct Link
& ROP
Kanban and broadcast are simple visual systems that
operate outside the MRP framework.
Used appropriately, they can simplify the scheduling and
inventory system. for more on this, see our page on
Integrating kanban and Other methods.
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