Rick Feldt Nathan Croll An ongoing challenge in the food industry is maintaining adequate inventory while avoiding stock outs and out of code products. Throughout the supply chain, from the manufacturers to the grocer, profits shrink when excess inventory is carried or physical inventories are inefficiently managed. Three competing objectives govern almost all organizations: 1. Sales — preserve sufficient on-hand inventory to satisfy every possible ( or impossible ) customer request 2. Production — achieve the lowest cost-per-unit through long production runs which are often independent of sales forecasts 3. Inventory Management — maintain the appropriate level of on-hand inventory to satisfy customer demand while minimizing cost However, the most profitable objective common to all stakeholders should be to create an efficient supply chain which meets customer expectations while maximizing sales and minimizing inventory costs. Warehousing and rent, labor costs (moving, counting and maintaining, etc.) and diminished product quality represent the “hidden” costs of high inventory levels. Those costs also put added pressure on cash flow. A successful inventory management program requires close collaboration among sales, purchasing, suppliers, customers, production, warehouse and shipping, combined with a well-conceived and implemented sustainable methodology like cycle counting. Achieving inventory accuracy is critical to the bottom line. Inventory is often the largest consumer of capital for an enterprise. It is imperative that a business have accurate inventory records to be effective and efficient. Poor inventory accuracy may result in stock-outs of inventory and require a business to carry higher inventory levels than necessary, which requires more capital. Common causes for inventory inaccuracy are: 1. Imprecise material requirement planning 2. Inaccurate bill of materials (BOMs) 3. Lack of shop floor discipline (BOM’s not followed, non-recorded transfers, etc.) 4. Ineffective root cause analysis of inventory issues 5. Accounting system not configured correctly Inventory accuracy is […]