1. ManEx Minute - 412008 - Part Shortage Tracking
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Issue 412008  

Greetings,

Let me start by thanking everyone who responded to the survey last week. You had many good ideas and suggestions and we are preparing to incorporate many of those suggestions into future newsletters. Keep your eyes open for the changes, I think they will make the newsletter even better.
 
For this week, we will address component shortages. We will address how to record, track and fill those shortages to keep production running.

Please click the "ManEx Case Solution" link, after the case, for the method recommended by ManEx.

As always, we look forward to your participation and feedback as you gain new insights and become a more effective provider of Electronic Manufacturing Services.

Sincerely,

David Sharp
ManEx, Inc.
Business Case - Inventory Control
Component Shortage Management
 
North Eastern Company* (N.E. Company) has a good handle on the material stream and generally has all components ready when production begins.

As is typical in manufacturing, production has attrition with each build.  Fortunately, settings in their system allow purchasing and kitting to automatically adjust order and kitting levels for the expected attrition. However, occasionally parts are lost, or attrition levels are higher than expected and production does not have enough to finish the build.  Depending on the lead time, this can cause serious issues with delivery.

How can N.E. Company report and track these shortages? How do they ensure they have used all possible inventory before ordering more? How do they inform purchasing of the shortages in order to get replacements? How does kitting know when the parts come in and which kits need those parts? How do they account for the shortages so as to prevent issues with future builds?
Business Case Solutions
  1. Additional Communication- One approach is for production to send an email, leave a note on the desk, or leave a voicemail for the responsible party to check and replenish a component shortage.  While this certainly can work, this may require separate communications for each person involved and allow for finger pointing if there is an issue because traceability is difficult or impossible.  Additionally, this lack of traceability can make in nearly impossible to audit for process improvements when there are issues.

  2. Excel File- Using a centralized excel file will allow production to report shortages along with needed details, purchasing to order replacement components, kitting to fill the shortages when they become available, and quality to review shortages for possible production process improvements.  However, there are some significant issues with this method: it requires users to step outside the normal processes which increases opportunities for human error, it may require double entry to ensure the system has complete information, it lacks controls to ensure the information recorded in the excel file is complete and correct, and users may not keep it updated unless time permits.  This is also difficult to audit for process improvements if needed.

  3. Stand-alone System- Some companies create or purchase a stand-alone communication tool for shortage reporting.  Depending on the system capabilities, this may make shortage reporting easy and allow for accurate reporting and traceability.  However, integration may be a challenge and it may require double entry.  This is also an "extra" step that users may skip when they don't have sufficient time for other tasks.

* Company name has been changed.

ManEx Case Solution
Make YOUR Mark
 
Here is a list of upcoming topics. Please email your thoughts, comments, and suggestions to mym@manex.com
  1. MRP by BOM
  2. Excess Inventory
  3. Order Status Updates
  4. Part Cross Reference
  5. Serial Number Tracking

If you have any topics you would like to see addresses in future newsletters, please send them to topics@manex.com.

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1.1. ManEx Solution - 412008 - Part Shortage Tracking


ManEx Case Solution
 
ManEx recommends using Kitting & Shortage Management to request, track, and fill shortages.  This integrated solution promotes complete communication between departments and ensures the latest information is available for staff and system to replace missing components.
 
Using the integrated solution will affect the following departments as described:
 
Production: Production personnel are able to view all parts pulled for a kit, see if extra parts are in inventory or on order, request replacement parts, and check the status of the request.  They are also able to document the reason for the unexpected shortage to facilitate process improvements.
 
Inventory: Inventory personnel can quickly view shortages for a given Work Center, Work Order, and Component.  They are also able to see on hand and on order information for a component allowing them to more quickly replace the parts.  Upon kit completion, they are able to track actual usage by kit and compare that to expected usage.

Purchasing: When shortages are reported in ManEx and inventory does not have sufficient quantity to fill the shortage, MRP creates a kit shortage demand so that purchasing may order replacement parts.  This kit shortage demand is differentiated from standard demand so purchasing personnel can take appropriate action to reduce production downtime.
 
Receiving: Receiving personnel have visibility of all kits currently requiring incoming components and can receive directly to the kits.  This time saving step also prevents needed components from sitting on the shelf while production waits for the parts.
 
Sales: When shortages are tracked in ManEx, sales personnel are able to to see which parts are preventing delivery.  This enables them to communicate more effectively with the customer and avoid many surprises from production delays.
 
CONCLUSION
 
NE company was able to quickly transition shortage tracking from their external tracking system into ManEx.  They immediately realized the benefit of tracking shortages in the same system they used to purchase and kit those parts. 
 
This integration reduced line down time and helped identify a small but significant hole in their old process.   The external system required a user to periodically match shortages between the disconnected systems.  If the shortage was reported shortly after this manual synchronization occurred, it could be as much as a day later before the new shortage was finally ordered.  Tracking shortages within ManEx allowed for instantaneous reporting and faster turn times on the shortage.