Feature Spotlight Series: Inventory Management
This Feature Spotlight blog series takes a deep dive into various features available in AIM’s ERP software solution, AIM Vision. Today’s Feature Spotlight blog focuses on best practices to get the most out of AIM Vision inventory management features.
Inventory accuracy is a make-or-break challenge of every manufacturer’s operations. Businesses require complete traceability and detailed lot tracking for many reasons:
- Having an accurate inventory count gives companies the ability to forecast and stay competitive. Management gains a real-time audit log with accurate part balances, tracking inventory from purchased and used raw materials through lots produced and shipped.
- World class inventory management systems reduce the need for physical and cycle counts while confirming their accuracy, giving management data for root cause analysis, containment, and resolution.
- Automating inventory counts with bar codes and mobile apps makes the process faster, reducing costs and maintaining reliable data. Learn how the AIM Mobility Physical Inventory app saves time and resources by replacing error-prone hand-written or manually keyed physical count tags. Management gains real-time inventory data directly from the shop floor. Users have saved up to 50% of time devoted to physical counts.
- Manufacturers deliver products on time more frequently with reliable production schedules built on accurate inventory data, resulting in higher customer satisfaction.
- Confidence in inventory data gives manufacturers higher profits and resources that can be directed to other operations while saving costs. Similarly, reliable inventory data promotes lean manufacturing processes by reducing waste.
Best Practices in Inventory Management
Here are examples of best practices to get the most out of AIM’s inventory management features. This first section focuses on efforts to maintain inventory accuracy, from raw materials to finished goods.
Inventory Management – Accuracy
Inventory accuracy is determined by a number of factors. The on hand quantity must be accurate. Inventory should be located in the correct location, and the location quantities are accurate. If serial or lot number tracking is utilized the quantities should be correctly identified by warehouse bin / location.
Here are some Inventory Management features in AIM Vision that promote accurate inventory:
- Use the Item Master to define all Raw, WIP and FG part numbers for manufacturing, and all purchased MRO items.
- Track each Item Type to classify Raw Materials, Purchased Parts, WIP and FGs.
- Control obsolete material or slow-moving stock with the Inventory Obsolescence Report.
- Backflush components when product is produced based upon Bill of Material usage, or use Consumption, which relieves all inventory of a bundle of raw material once it is released into the production process.
- Create a Production Rate Validation tolerance setting to warn or error for manual production postings so the system can help check for production posting entry issues.
- Put manufactured products on hold or scrap them to keep your inventory of produced product and raw material as accurate as possible using AIM’s disposition function.
How to improve inventory quantity accuracies
Some additional features that help maintain inventory quantity accuracies include:
- Make lot adjustments as needed to track inventory in real time.
- Eliminate the incorrect number of containers being shipped per part number by employing scanning technologies like scan for shipment..
- Establish a Maximum Net Available quantity per item. Used when running the MRP Over/Under reports to identify too much inventory on-hand.
- Enter the Planned Weekly Usage for each part, as an alternate to letting MRP calculate, so that the Inventory Days on Hand report can use this quantity to calculate the average daily quantity on hand. Sometimes preferred for standard reporting as daily usage calculated from the requirements can fluctuate based on demand and horizon.
- Manage inventory level changes and control costs by managing min/max quantities by item number and/or inventory value by item type .
How to improve inventory location accuracies
Another aspect of accurate inventories is having the material in the proper location. Inventory can be tracked by warehouse or via the location tracking system.
- Determine which parts are using which components, and specify the component usage quantity using warehouse controls within the Bill of Material to relieve from specific warehouses.
- Move inventory (and lots) from one warehouse to another for inventory value reporting by warehouse using the Warehouse Transfer function.
- Identify the precise location (bin, row, etc.) of every lot of inventory (FG, WIP, and Raw) using AIM’s Lot Location System.
- Record designated storage locations for Raw Material and WIP with AIM’s Location Tracking System.
How to improve your physical inventory count process
Physical and cycle counts get your electronic records back in sync with your physical inventory locations and quantities. Use these features to help improve your count process.
- Identify the frequency in which a part needs to be cycle counted by setting Cycle Days on each item number.
- Use the Cycle Days feature to track inventory cycle counts and the date of the next cycle count.
- Request the Cycle Days Report to track which parts are overdue for a cycle count based on the needed frequency.
- Use AIM’s Physical Inventory utility on a regular basis to take Physical Inventory counts of all your Raw, Work-in-Process (WIP) and Finished Goods (FG).
- Scan bar codes to perform your physical inventory counts with AIM Mobility Physical Inventory app.
- Conduct Physical Inventories by Lot and maintain lot control throughout the physical inventory process.
Inventory Management – Customer Returns
AIM’s inventory management functions include options for tracking and managing customer concerns and returns.
- Utilize the Customer Concerns Entry to record all Complaints from your customers or issue your customer a return material authorization number.
- Record returns via the Customer Returns Entry for all product being returned from your customers.
- Report on Inventory Returns, sharing these issues with the team, and work to correct the root causes.
Inventory Management – Engineering
When working with inventory management, it is essential to have a system to manage engineering activities and revisions.
- Manage engineering revision levels within AIM with AIM’s Engineering Tracking feature.
- Know the most recent drawing associated with a part by noting the Drawing Number on each item.
- Track the most current engineering change associated with a part by noting the Engineering Change Level in the item master.
- Indicate the most current engineering change date associated with a part by noting the Engineering Change Date in the item master.
- Designate when a component will become part of the BOM and when it will no longer be part of the BOM with effective dates in BOMs.
Inventory Management – Financial Reporting
AIM Vision financial management transactions integrate into financial solutions, such as Microsoft Dynamics GP. AIM Vision transactions generate AR and AP invoices, cost of sales, cost of production, cost of scrap and inventory receipts. Use these best practices for financial reporting:
- Use warehouse locations to separate your inventory in your financial reporting.
- Apply GL Class Codes to associate a GL Class and GL Accounts to a given item number.
In conclusion, the AIM Vision ERP software solution offers world-class solutions for inventory management accuracy. By following these best practices, manufacturers gain the most effective and efficient use of their AIM Vision ERP.
Looking for consulting help to get the most out of your AIM ERP? Contact us today.