ManEx KB

I am excited for the year ahead. Although many in the industry have seen a slow down, I have been pleasantly surprised by how many are still doing well and even growing.

As we all know, this industry is very cyclical. Fortunately, that knowledge allows us to work within those cycles instead of being at their mercy. We can use the slow times to increase efficiency and prepare for the busy times. We can use the busy times to evaluate our efforts and reap the benefits of our preparation.

One process that can have an impact on efficiency, but is often overlooked, is kitting. If not done efficiently and correctly, it can cause production delays and hurt overall profitability. For that reason, this issue will focus on the kitting process.

According to the last survey, only a small percentage of parts are auto-kitted. This means that most parts are pulled manually and therefore small inefficiencies can impact overall performance and time required to pull the kit. This is especially true when not all parts are consigned. Therefore, we will attempt to address this problem and help you better streamline your kitting processes.

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

Kitting

North Eastern Company* (N.E. Company) has an opportunity to review their practices and procedures before the next upswing in business. With the last peak they noticed that kitting was occasionally backlogged and hoped to find a way to streamline that process.

They identified AVL control, consigned inventory management, and labeling as the most time consuming steps in the process. As these are critical pieces of the services they offer, they wanted to find a way to keep the process lean while maintaining the capabilities.

How can N.E. Company select which kits to pull and when? How do they make kitting as efficient as possible? What can be done to reduce the delay caused by handling both consigned and turnkey parts in the same kit?

* Company name has been changed.

Business Case Solutions

In a contract manufacturing environment, there are three main approaches to managing internal assembly revisions...

Read the full Business Case Solution

ManEx Case Solution

Regardless of the method selected, ManEx has the tools to document and control assembly changes and revisions...

Read the full ManEx Case Solution

In YOUR Own Words

KITTING

No responses provided for this topic. Please submit your comments and ideas so that all may benefit from your wisdom and suggestions.

Make YOUR Mark

Please share your ideas and insights on a topic below. Use the questions to direct your response. You can submit your thoughts to mym@manex.com by clicking the topic title. Where appropriate and space permitting, we will post responses in a future newsletter so all may benefit.

Production Attrition and Scrap

How do you track attrition in production?

Do you purchase and kit for expected attrition?

How do you determine attrition levels?

What procedures do you have to identify scrap sources and minimize production attrition and scrap?

Do you charge customers for unexpected attrition or absorb the cost?

Counterfeit Components

What percentage of your parts are considered at-risk for counterfeiting?

What are you doing to ensure your components are not counterfeit?

Have you been impacted by counterfeit parts? If so, how?

Are you promoting your counterfeit measures to your customers to increase confidence?

To suggest a new topic please send an email to mym@manex.com.
To see additional topics, please click here.

©2008 All Rights Reserved. ManEx Minute is a weekly email distributed by ManEx, Inc.
Developing with YOU in mind!

1.1. Business Case Solutions - 15 - Kitting

Business Case Solutions

One of the challenges unique to contract manufacturing is purchasing, kitting, and producing according to 3rd party specifications and often mixing in 3rd party provided components. This requires tight inventory control, excellent documentation, and validation. To be effective in this environment, kitting must allow for visibility of part manufacturers, use of consignment components, and efficient tracking and labeling,

Visibility of Part Manufacturers -

Ideally, users are able to load multiple manufacturer part numbers under each internal part number, and maintain accurate documentation on which manufacturers are approved for each customer and assembly. This reduces the part number count, saves space in inventory, and allows for proper configuration according to customer specifications.

Another common solution is to setup a separate part number for each customer part number. While this allows kitting to pull any part from inventory under that part number (assuming purchasing purchased only approved parts, and receiving labeled it correctly) it reduces crossing and increases the number of parts in inventory. However, this may work well for parts with low commonality and frequent usage.

Some would suggest creating an internal part number for each part manufacturer and list each approved part on the bill of material. While this eliminates the crossing problem and allows kitting to pull from approved parts, it also significantly increases the number of active parts and makes it difficult to configure each bill of material to allow MRP to accurately drive demand.

Use of Consigned Components -

Whether the assembly is in transition from consigned to turnkey, or the customer wants to always provide a select set of components, consigned inventory is fact of life in this industry. While the customer may pay a flat charge for handling consigned components, if the process isn't efficient, consigned components are likely to be a drain on profits.

Some companies choose to not load consigned parts into their system. This is especially true for one-time builds, or small and infrequent runs. However, this creates a liability if the assembly is run often enough or has enough extra components for subsequent builds.

Without specific provisions for handling consigned inventory, it may be best to track consigned inventory on separate spreadsheets or systems outside the MRP. This is not as efficient as built in capabilities but may be necessary to maintain accurate records.

Efficient Tracking and Labeling -

Once kitting personnel pulls components for the kit, they must be able to label accordingly and document actions taken to ensure the system stays current.

1.2. ManEx Solution - 15 - Kitting

ManEx Case Solution

ManEx has several standard and optional features designed to streamline the kitting process. This provides unmatched visibility and control. Additionally, planned upgrades to increase visibility, documentation, and ease-of-use are close to completion.

Kitting Schedule - ManEx provides a list of kits to pull with due dates, and quantities. This allows kitting to know what needs immediate action and when it is due. It also provides the number of components in each kit to help determine time required to pull a kit and better plan kitting activities.
Kitting by Work Center - Instead of pulling all parts for all work centers, ManEx allows kitting by Work Center. This enables kitting to better manage all kitting activities and pull only what is currently needed for any given work center.
Kitting Assemblies with No Components - For proto-type, small quick-turn, or one-time consigned production builds, ManEx allows production to process assemblies with no components and record shortages. This enables a faster turn and eliminates the work of loading and processing a Bill of Material that may not be needed after the current run. If the assembly is later converted to turnkey or becomes a regular order, users can load components as needed.
AVL Control - ManEx provides full visibility and control of internal and customer AVLs. This allows purchasing to consolidate purchases to increase buying power, and production to produce according to customer specifications. It also makes it easy for kitting to know what is approved for a given kit and pull only approved parts.
Consigned Inventory Tracking - ManEx allows users to create and manage assemblies with both turnkey and consigned components. The fully integrated consigned inventory management will allow users to track and use consigned parts as needed.
IPS Module - The optional In-Plant Store module offers several key benefits to the kitting process. In addition to facilitating management and control of vendor owned inventory, many use it to track customer provided inventory. This provides complete visibility for customer records and allows and seamless transition from consignment to turnkey once the consigned parts are consumed. Unless a component is exclusively and permanently consignment, the IPS module may be the best way to manage it in ManEx.

In Process Upgrades

IPKey Tracking - As part of the Bar-code module, ManEx is finishing an upgrade to add capabilities for complete and detailed tracking of inventory at the package level. In addition to benefits in other areas, IPKey will significantly simplify kitting. Scanning the bar-code will allow users to check AVL, record lot/date code and serial number information, issue package quantities, and print kit labels all in one step. This also adds the potential of tracking actual material costs for each Work Order.
Production Machine Interface- Another benefit of the IPKey upgrades is the ability to interface with third party interfaces with production machines. This will allow ManEx to feed kit information to the machines and for the machines to feed usage information back to ManEx.

CONCLUSION

NE Company was able to implement process changes and convert many of their consigned part numbers to IPS parts. They are planning to implement the IPKey changes as soon as they are released. While current production levels make it difficult to fully realize the benefit of the process improvements, management is confident that these changes will keep kitting as lean as possible and protect their margins.