PentaMet reviewed production planning and inventory control procedures at a metals manufacturer and discovered inefficient inventory and scheduling practices contributing to increased costs. The review included:
- Scheduling practices and parameters
- Work order creation and entry
- In-process inventory
- Obsolete inventory
- Warehouse stocking and replenishment practices
PentaMet’s review revealed:
- Procedures that failed to maximize the amount of product shipped to the customer. Excess material produced was transferred to stock instead of offered to the customer resulting in years of obsolete inventory.
- In-process inventory was over-valued and over-stated.
- Manufacturing capacity was not fully utilized because like orders were produced sequentially in small lots instead of being combined to increase efficiency.
- Procedures were not in place for creation of warehouse stock items, periodic review of inventory turnover and stock replenishment.
PentaMet presented results of the study to management and developed a program to educate the involved employees in more efficient inventory and scheduling procedures.