Quality Objectives - Inventory Accuracy Improvement

[noboost4you]

We're having a tough time being able to define a new objective we'd like to monitor/improve. Inventory accuracy is important to us, the customer, and our financial partners. We have began cycle counting and have limited data. Each day we count 5 different parts. After one week we have data on 25 parts; physical count vs. ERP count. How can we turn this into an objective? Do we go by % or dollar value?

I think dollar value.

If we count 1,000 o-rings and the system shows 1,250 o-rings, that's a discrepancy of 20%. However, that 20% equates to $2.50.

If we count 99 bodies and the system shows 100 bodies, that's a 1% error. However, that 1% equates to $50.00

O-rings are expendable; bodies are not. We should be more concerned about the bodies being correct rather than tiny o-rings that could fall between the cracks in the floor.

How should we monitor this and will it satisfy ISO 9001:2008 requirements?

Regards,
Bryan

 

[dkusleika]

Re: Quality Objective - Inventory Accuracy

In our company, percentage has more of an impact on quality. We have components that cost more than $1,000 and some that are less than a penny. If we need 200 $.01 items to complete a build and we have 199, then we might have delays and our customer doesn't care that the delay was caused by a small component or a big one.

I'm not saying that's true for every company. But for us, it's more important that the quantity be right regardless of the value.

 

[harry]

1. Dollar value fluctuates whereas % does not.

2. It is dependent on how you organized your inventory. Low value items like washers can be monitored by weight. O-rings could be organized in bundles or packs of 20, 50 or whatever figure you choose.

 

[Golfman25]

I would focus on Dollar Value. You'll have a lot more success with management if you went to them with solutions to correct $100+ problems than a $2.50 problem. Since you're just begining, keep track of both -- % off (plus and minus) and dollar value (plus and minus). When you get enough data, take a look at it. My guess will be that your % and dollars will probably be pretty close. Good luck.

 

[Howard Atkins]

We're having a tough time being able to define a new objective we'd like to monitor/improve. Inventory accuracy is important to us, the customer, and our financial partners. We have began cycle counting and have limited data. Each day we count 5 different parts. After one week we have data on 25 parts; physical count vs. ERP count. How can we turn this into an objective? Do we go by % or dollar value?

I think dollar value.

Use what is important for you, if the fact that you might have less could stop production then number, if money is the problem then money.
The indicator is for you not the auditor

How should we monitor this and will it satisfy ISO 9001:2008 requirements?

Regards,
Bryan

The standard requires

4.1
c) determine criteria and methods needed to ensure that both the operation and control of these processes are effective,

e) monitor, measure where applicable, and analyse these processes, and
f) implement actions necessary to achieve planned results and continual improvement of these processes.

8.2.3 Monitoring and measurement of processes
The organization shall apply suitable methods for monitoring and, where applicable, measurement of the quality management system processes. These methods shall demonstrate the ability of the processes to achieve planned results. When planned results are not achieved, correction and corrective action shall be taken, as appropriate.
NOTE When determining suitable methods, it is advisable that the organization consider the type and extent of monitoring or measurement appropriate to each of its processes in relation to their impact on the conformity to product requirements and on the effectiveness of the quality management system.

my emphasis

This is for you and for you to find out if your process is effective.
Define your objective,
Ask what do I want

• to save money?
• to ensure on time delivery?
• a combination?

This will help decide what to measure, but remember the most important part is
When planned results are not achieved, correction and corrective action shall be taken, as appropriate.

 

[somashekar]

If you have done a ABC classification of inventory based on the inventory value than an Objective perhaps like ...
" To put necessary systems in place and to achieve inventory accuracy of within 0.1% for class A; 1% for class B and 5% for class C parts within week number xx of year 2010, monitoring the same once every 4 weeks. "
Inventory is money blocked and you are not to lose money. Rather you must account for inventory and be able to minimize and ideally eliminate loss if this is what you are up with.

 

[noboost4you]

If you have done a ABC classification of inventory based on the inventory value than an Objective perhaps like ...
" To put necessary systems in place and to achieve inventory accuracy of within 0.1% for class A; 1% for class B and 5% for class C parts within week number xx of year 2010, monitoring the same once every 4 weeks. "
Inventory is money blocked and you are not to lose money. Rather you must account for inventory and be able to minimize and ideally eliminate loss if this is what you are up with.

Yes, we are in the beginning stages of classifying inventory into ABC categories. I like how you split up the objective into 3 classifications instead of lumping them altogether because we could be 48% off on a C item and only 2% off on an A item, but collectively its 25% total error. I'm going to run with this and see how management feels about it.

Thanks