Inventory requirements in a manufacturing company go far beyond the simple stock tracking offered by general accounting systems.
Unlike distributors and retailers, a manufacturing company has two inventories, on hand inventory and work in process. Work in process not only includes material issued from on hand inventory, but also tracks accumulated setup, labor, subcontract services, and manufacturing overhead.
The essence of lean manufacturing is to maximize shop throughput using the least amount of work in process.
In DBA, lean manufacturing is put into practice using two control panels on the Jobs menu.
The Job Control panel determines when jobs can be released to the shop floor. Jobs are only released when the item's first work center has open capacity and material is on hand.
The Shop Control panel manages work in process. This indicator down here enables material to be issued to jobs on a just in time basis to keep work centers and aisles clear for efficient material handling. Using the queue control feature, Jobs are paused when downstream work centers are temporarily full and are not accepting new job sequences. Queue control prevents the shop from getting overloaded and helps you manage your bottleneck work centers.
Manufactured items are received to stock on this screen as jobs are completed. Job labor and overhead costs are absorbed into each item's inventory cost, which gives you accurate inventory costing and cost of goods sold. This type of costing is not possible with general accounting software.
Work in process is supported by your on hand inventory, which has a number of features that are optimized for manufacturing companies.
Manufacturing companies need more decimal places for costing and pricing, especially when small parts like washers, o-rings, springs, and fasteners are involved. Here you can specify the number of decimal places you need for pricing and costing.
Manufacturing companies need more item sourcing information than the one supplier typically offered by general accounting systems. Each item's allowable suppliers are designated on this screen, including your default supplier and the item's manufacturer. A conversion multiplier allows you to buy in your supplier's unit of measure and convert the quantity to your unit of measure upon receipt.
Efficient manufacturers keep on hand inventory and work in process to a minimum. The item settings on this screen is where you set reorder levels and lead times that are used to generate your jobs and POs to be completed and received on a just in time basis. Here you can also designate items as CTO items, meaning custom to order where jobs are generated directly from sales order lines.
Lot control is a must for many manufacturers and in some industries, a legal requirement. On this screen each item can be designated for lot control, expiration date tracking, serial control, and revision tracking.
Manufacturing efficiency is enhanced when you can store and track inventory in multiple locations such as bulk storage areas and work center issue locations. At the item level, you can specify a default receipt location and primary storage location, as well as other allowable locations.
Stock counts for cycle counting or physical inventories or stock takes are entered on this screen.
Manufacturing companies often have special item labeling requirements, not only for internal identification and stock tracking purposes, but to comply with customer or legal requirements as well. You can create an unlimited number of custom label formats on this screen. Item labels can be generated as needed at time of PO receipt and Job Receipt prior to receiving items to stock or shipping items to customers.
There are four major screens where inventory gets updated: PO Receipts, Job Receipts, Job Issues, and Order Picking. In most cases, you can use the Pre-Fill option to update all the line items in a single process.
A unique feature in DBA is inventory dispatching. When a work center supervisor needs raw material or components to run a job, he or she can dispatch the items on the screen first and then print a dispatch list that is given to the stockperson to use for gathering the items from specified locations. Dispatching gives you real time inventory updating and is ideal for lot control and multiple location environments.
If you wish to explore these inventory processes in more detail, see our System Workflow video series. In particular, view these segments: Receive POs, Label Received Items, Issue Material, Enter Job Receipts, Label Finished Receipts, Receive Multiple Outputs, and Pick Orders.
A true manufacturing inventory is an absolute requirement for reaching your full efficiency potential. DBA provides you with the tools you need to maximize shop throughput while keeping work in process and on hand inventory as lean as possible.