Inventory Control, Essay Example

Description of Concrete Experience

Subtopic 1: Forecasting and Control Methods Including Project Management Tools

I started working 20 years ago as a controller and am now the director of construction for a transportation company. I handled the accounting and financial reporting as a controller. As the director of construction, I handle the project management and over-all planning, coordination and control of a project. This starts from the projects inception, until the project is fully completed. My main task is to ensure that the client is fully satisfied with the final project. I also make sure that the project is fully functional, and cost effective. Also, time is very important in directing a project, so I make sure that the project schedule is on time. To put this job into simpler terms, it is a job which requires the overseeing of a project so that it is produced with success.

Also included in my list of duties is project management, this is the use of schedules to ensure that progress is kept on track within the working environment. I use things such as Gantt charts to set goals, tasks and events for the project.

Subtopic 2: Parts Requirements Planning (PRP)

I completed this with the production and the planning of inventory control system which I used to manage the manufacturing process. I conducted this type of planning using a software, however at times, it can be accomplished by hand.

When doing this, I initially have three objectives to meet. These are ensuring materials and products are available for production and delivery for clients, to maintain cost-effectiveness in the inventory, and to plan manufacturing activities, schedules and purchasing.

Planning is very important in parts requirement manufacturing. This is so that customers are happy with what we make them. Through my experiences I went through very different scenarios in this aspect of the job. Such as, when a company purchase too little of an item to be used in manufacturing, or even the wrong item, completion dates are then not met, and we end up with an unhappy client. Or, there are times when we purchase too much of an item, then this comes into problems of finances, money goes to waste. However, sometimes suppliers require us to purchase a minimum, and this is when excess purchasing is necessary.

Starting a schedule on time is also very necessary; doing this ensures on-time completion.

Subtopic 3: The Theory and Application of “ABC” Inventory Management

As a controller I dealt in inventory control with things such as Last-in-First-out (LIFO), First-in-Last-Out (FIFO) and weighted average inventory. This varies depending on what projects I would be doing.

With this, the job was concerned with minimizing the total cost of the inventory. I had to oversee this and make sure of three things in decision making when it comes to the inventory regarding costs of:

• Holding the stock
• Placing an order
• Shortage (this is when the stock is insufficient and does not meet the demand)

We dealt with the ABC classification of inventory, however not as much as the three stated above. This is when I am to classify items according to their annual sales volume. By doing this, I can identify the small number of items and determine which are the important ones to control in-order to be cost-efficient. This can be done using soft-ware, or something as basic as Microsoft Excel to be used as a measuring tool for the decision procedure.

Subtopic 4: Production Detail Planning

To be able to conduct my duties of effective production detail planning, there were many variables to be considered. Besides the costs associated with the labor for completing a project, the inventory and overhead, there were costs in relation with lead times to be looked out for. Detailed scheduling allowed me to carefully review and mitigate lead times through scheduling. This was done project based, with the specific product structure. I had to oversee the product structure, which is just making sure that the order of things for the project to be completed is on schedule, and is practical.

Subtopic 5: Master Scheduling

Master Scheduling refers to a software or application we use in the job. This allows us to efficiently manage our inventory including future load. This type of application allows us to do a number of tasks which are just done by a computer, rather than manually, which is more accurate.

This is generally when we input information on software which includes production planning and resource requirements. Then, the computer processes all that information and determines if the plan is feasible or not, if our company has the sufficient capacity to do a certain project in given time. This is much easier than manual estimation, and the software is very accurate most of the time. It is able to illustrate how master scheduling and rough cut capacity relate to how we run our company through operations and planning.

Subtopic 6: Learning Curves

This is essential in project management. With the learning curve, I can revisit all my past experiences and see what went wrong or what it is we did right. For projects which were unsuccessful, the learning curve helps me and members of my team to reflect on the problems we encountered in a project and see what ways we can overcome them. When something is successful, completed on time or even before the due date, we look at our management, planning and scheduling and see what it is we did right and how we can do that again.

In my past experiences, the importance of the learning curve was not emphasized, but with recent technologies, it has become a practice in the working environment which helps the management as well as the staff for more efficient means of completing a project without repeating past mistakes.

Reflections

Subtopic 1: Forecasting and Control Methods Including Project Management Tools

I have observed that there are a lot of new technologies which have emerged recently in terms of forecasting and control methods. A decade or so ago, things were done almost manually, and this was very time consuming. In terms of control methods and project management tools, we had to do this manually without the help of computers, and sometimes this lead to inaccuracy.

Even with a simple Gantt chart, when you are to complete the task manually, there may be some details that you miscalculate or leave out. However, with new software, you can easily be corrected of your mistakes, yet still have full control over your management.

I see this as very crucial to the job, because if you have an unreliable project management tool, then tasks can be left incomplete or half done due to insufficient time which is allocated for them. To be able to complete a project efficiently and on time, certain things need to be taken in to account and calculated properly so there are no bumps along the way. When a mistake is made, this costs the company a lot of time and effort to fix. And, most of the time, time and money is all we have, and we cannot afford to lose either.

Subtopic 2: Parts Requirements Planning (PRP)

The parts requirement planning is also crucial for a company because it refers to the inventory and how to control it. This function includes inventory control, billing of the materials in processing and some elementary scheduling. Mostly from my experience, what I have noticed is when you go wrong in your inventory, this greatly affects your budget, and a lot of money will be wasted.

Since your inventory is your source of revenue, you have to treat whatever it is in there like gold. However, it is not advised to over-stock on inventory that in turn results in money wasted and inventory items stagnant; just wasting space.

There are times when parts requirement planning systems fail, though. This is said to be mostly in connection with the integrity of the data which is input in the system. Any errors with the inventory data, bill of materials data, or even the master of production schedule can result in largely incorrect output. Logically, that seems to follow, however we must always take in to account what type of information we are inputting because even if we are off by a few items, the end output may be very different from what we are expecting, and again this can result in the loss of money. Another problem is how we have to specify very accurately how long a factory will make a certain product from the component parts which we receive. Sometimes, that information is just not readily available. Sometimes, this system also assumes the “leading time” without really considering the quantity of the products we are to manufacture.

We usually have no problems when systems have a 99% data integrity level. This way, we can ensure that we get the right results, so that we finish the project on time and satisfy out clients.

Subtopic 3: The Theory and Application of “ABC” Inventory Management

This refers to how we categorize stock. However, I use more of the LIFO and FIFO models instead of the ABC management. This more known as selective inventory control. However, in my experience the LIFO, FIFO and weighted average are the most popularly used techniques to manage inventories. I like this method because it’s very basic and straight forward, it lives up to its name and can easily be identified.

LIFO, which is last-in-first-out refers to an asset management and evaluation method. It is when you assume that assets which are produced or obtained last are the ones which we use, or the ones which we sell first. I think this is more efficient when you have a large inventory. Though, I have seen that it does have its disadvantages, and people have said that it shows less profit than the FIFO system of management.

FIFO method is when our assets are sold according to the order in which they are bought. We use this method when our inventory prices are slightly stable or even falling. This to me is much easier to use, and it’s very systematic, you don’t really need to calculate much if you knew which items came in, in what order.

Weighted average is when we determine the importance of each quantity on an average. This requires more computing as compared to the previous two explained. This is mostly used when we have a lot of the same item in our inventory.

Subtopic 4: Production Detail Planning

Because workers move around the working environment so fast they need to be able to have a plan to stick to which tells them what job they are supposed to accomplish and what time they are set to complete it. This is so that production will not be held back, and so that are set due date or time is met without any set-backs.

The difficult part here is sticking to the detailed planning, but mostly creating the detailed planning. Since all we have at the start are estimations, we don’t really have a solid notion of how long it will take to complete a project, even though we try to be as accurate as possible. There are times when we do come across some problems along the way in which defers us from our initial target completion date. However, we do have to be ready for those things in case they do happen. We try the best we can, and we use the best possible software there is to ensure that all times and scheduling is as accurate as possible.

Subtopic 5: Master Scheduling

Using master scheduling software, I have learned that it is very important to get to know your project management tools as well as all your options. You need to be able to get the best software which matches your business/company and for your budget. I learned this by sampling a number of programs to help me identify with the features they provide. Of course, throughout the years there have been improvements in the software which makes the task much easier. However, you still do need very accurate software which does match your company or business type. This is very crucial to your company.

In this category, I did a lot of research on which best software there is, and what they offer. If anything is wrong or inaccurate in your master schedule, everything in your production will be affected. This can cause you to be set-back in a project, and lose you valuable time and money.

Subtopic 6: Learning Curves

As I’ve worked with a number of teams and very different people, I have noticed people’s working patterns and methods. This is very useful in the learning curve. Because the learning curve allows us to reflect on a project which has been accomplished, we can compare it to future projects so that we make sure that it is better the second time around.

A lot of the people I have worked with value the learning curve, yet some people still don’t see the importance of it. In order for the learning curve to work well, a team of people has to understand that a projects worth, if it is completed, contains a lot of key learning facts which we can use along the way. This tool can provide cut-backs for teams, and can save valuable time if they just took the time to review it, and understand its full importance.

Generalizations / Principles / Theories

Subtopic 1: Forecasting and Control Methods Including Project Management Tools

The project scope is generally the appropriate methods you have to follow in order to complete a project. To be able to do this, a few steps have to be taken in to account:

• The duration of tasks
• Their structural work breakdown into groups

This can be done systematically using software, and the logic between tasks and how to categorize them are defined using an activity network diagram, this is so that we can identify which critical path the project is supposed to take. There are very necessary resources in which we have to look into, these are the estimated amount as well as their costs.

When these are already identified, progress can be measured using the baseline throughout the project life, and we have to ensure that all tasks are accounted for and have a set date for completion.

No task or item must be left out, because the estimated completion date requires for all data to be there. These inputs include things like the project charter, which is the statement or scope of the project and the concept proposal of the project. After we have input all this, what we get is the project requirements, the project schedule and also the project management plan.

Subtopic 2: Parts Requirements Planning (PRP)

This system provides answers for several questions, these are:

• What items are required?
• How many items are required?
• When are these items required?

To be able to get all this, certain data must be included in the input. These are: the independent demand on the bill of materials, how much is required at what time, when the client requires the quantity, what we presently have in our inventory, inventory status and records and all the planning data which is mentioned above.

With all this data, we generate two outputs and reports, these are:

• the recommended production schedule
• the recommended purchasing schedule

This is crucial so that we can tell the required minimum start and the completion dates so we can set our tasks for a goal. This in turn satisfies the demand from the master production schedule. Also, this will lay out both the dates and the items which are purchased. When the items should be received into the facility, as well as the dates which they were ordered have to match the production schedule.

Subtopic 3: The Theory and Application of “ABC” Inventory Management

The inventory classification process known as the “ABC” inventory management is the process in which a range of items (such as finished products) are analyzed and they are fall under three categories. These are:

A: Very important

B: Average importance

C: Relatively unimportant

Each category has be to be handled in a different way, and more attention must be devoted to category A, then B, less with C. This is when you group items according to their annual sales in terms of volume; this is all done for effective inventory management.

There are a lot of software to be used in order to calculate this type of inventory which uses JavaScript to construct an empirical cumulative distribution function, this is a measuring tool for decision making in the ABC inventory.

There have been developments which make this a lot easier. You just have to input values and click a button, the system will do the rest. However, like all the other software, accuracy in your input is very crucial and can make or break your schedule.

Subtopic 4: Production Detail Planning

This can be divided into three types of planning: aggregate planning, product structure and detailed scheduling. Production is generally scheduled at an aggregate level. This means that all machines are under the category of “machine resources” and employees are under the category of “labor resources”. The average hours or time is calculated by dividing machines by the people who are supposed to run them. Then the average rate of production is adjusted to meet the schedule deadline.

The product structure is used in planning to reduce “lead times”. This results in less idle time by the workers, and more progress can be made towards the completion of a certain product. The process of doing this is by determining what step should be taken first in order to complete the next step.

With detailed scheduling, this ensures very efficient production. When it is used correctly, detailed scheduling can prevent idle time, lead time and bottlenecks during production. Detailed scheduling combines inventory control with capacity planning so that you can see all the resources available and the cost of storage to come up with a detailed schedule of production.

Subtopic 5: Master Scheduling

Master Scheduling is generally a plan for production, staffing and inventory. It tells us when a product is demanded, and what quantity is demanded. The master schedule plan should be able to identify the significant processes, parts and other resources to ensure the timely completion of a project.

This demands for very accurate input because the output is directly related to profitability of the products. Operations need to be synchronized within the workplace to ensure efficiency in production. When you have an effective MPS you should be able to calculate the following:

• Production, planning, management of information and purchasing
• Business planning and forecasting in detail
• Enabling marketing to ensure delivery commitments are met
• Increase the efficiency in the workplace.

Subtopic 6: Learning Curves

The learning curve generally applies to high-tech manufacturing. This is so that ideas will be reflected upon and it can help with production management and inventory management. Not only can it assure that the final product is properly delivered at the end, but there is a learning process with the application. It can be used to preserve jobs, learn from past mistakes and improve on performance.

Testing and Application

Subtopic 1: Forecasting and Control Methods Including Project Management Tools

It is simple to use traditional forecasting tools to generate a company’s performance indicators. This can be done by simply doing some research so that you can understand the characteristics of your own performance and get to know how others work.

Observation is very important. You need to be familiar with the application of the software you are using for your project management and determine your overall mission. There needs to be a variety of options, and you are supposed to measure the effectiveness of each option. There is no stable way to say what your projects future will be in complete certainty. You need to be able to have the right project management tools available for you to complete the job.

Subtopic 2: Parts Requirements Planning (PRP)

There are bugs in parts requirement planning software. However, this involves the accuracy of your input. So, as long as you are sure of the information you put before heand, then you should be okay with your output, and it should not greatly affect your project outcome.

Many assumptions are made in this phase, yet there is no level of certainty. You just have to make sure that the software you use is 99% accurate, so you can make accurate decisions for your project schedule.

Subtopic 3: The Theory and Application of “ABC” Inventory Management

The ABC inventory management is very straight forward and has much different software available for its execution. However, I am not too familiar with this process, and am more comfortable with LIFO, FIFO and weight management inventory means of control. It is still effective for me as well as the company, thus I do not believe that there is any need yet to change my process of inventory management.

Subtopic 4: Production Detail Planning

Detailed scheduling may seem like the best option, yet it does come with its limitations. For one thing, it is based on the forecasts of a customer’s demand and it is subject to many assumptions. The affect of these subjective assumptions can mitigate a lot of quantitative data. Also, when creating this detailed schedule you must take into account your familiarity with the software you are using, you can be limited in terms of effectiveness in the project outcome just because someone does not know how to correctly use data given.

Subtopic 5: Master Scheduling

Like all software, master scheduling does have its limitations. Schedules do not generally include all aspects of production, it only shows key elements. Familiarizing yourself with the product and opening up your options when it comes to software is crucial. You have to be able to pick the one that is right for your company’s size and budget to ensure effectiveness because master scheduling is prone to limitations such as:

• The width of the time bucket
• Planning of the horizon
• Time fencing
• Schedule freezing

Subtopic 6: Learning Curves

The learning curve is very useful in project management. Employees need to learn and embrace the value of this tool in their project plans. I have not been using this for that long, yet I understand the need to familiarize myself with this tool in order to optimize project management. Also, it increases the chances of a future project’s success, which will in turn save a lot of money and will make the project more profitable.

The learning curve can give workers a degree of comfort, and they can apply what they have learned to their projects, which then they will be able to make cutbacks on finances where they see possible, or even needed. The learning curve can save a lot of time and money for a company.