A manufacturing
company’s inventory has three components: raw material, work in process (WIP), and
finished goods. Of these, WIP is the hardest type of inventory for many companies to
control. WIP includes components and assemblies that are currently being worked on as well
as semi-finished products and assemblies that are waiting between work centers.
It is natural to want to have
high WIP buffers between manufacturing operations in order to minimize the possibility of
shortages. The disadvantages of this approach are:
- More capital is tied up in WIP, thereby incurring
excessive interest costs.
- Higher occupancy costs (rent, insurance, heat,
light, taxes, etc.)
- Larger quantity of product to rework if problems
are found or design changes occur.
- Poor visibility of quality problems.
- Poor responsiveness to changes in the production
schedule.
- Greater exposure to obsolete inventory costs.
The annual cost of WIP inventory
can be as high as thirty percent, providing ample incentive for reducing the WIP levels.
Taken to extreme, WIP can be reduced all the way to just in time (JIT) levels with a
single unit batch size.
As WIP and batch sizes are
reduced, accurately tracking the flow of materials, assemblies, and products becomes
increasingly important. Bar codes have successfully been used to track WIP in a variety of
industries.
A bar code WIP tracking system
can have many forms. In its simplest configuration, a computer (microcomputer,
minicomputer or mainframe) is connected to a series of on-line readers and at least one
printer. Each work center has a reader that an operator uses to log products or assemblies
as they pass through. Assuming that the products themselves are not individually bar code
serialized (in many cases they are), a paper work order follows the actual product flow.
The work order has a bar coded
work order number and lists all of the operations that are to be performed. Each operation
description has a bar code next to it that uniquely identifies the operation number.
As an operator completes an
operation, the bar code reader is used to enter the serial number or work order number,
the operation code, the employee ID, and the quantity completed. If exceptions are
required to the normal routing, this can also be indicated through the scanning of
appropriate preprinted labels.
The data collection network
time-stamps each transaction and updates a data-base. The collected database can be used
as feedback to a material requirements planning system, and can also provide reports on:
- Work order status
- WIP levels
- Bottlenecks
- Productivity
- Yield
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