By Mike Hart
Knowing what to make or purchase and when to do it is a big challenge. Do it right and you can deliver on time using less inventory and WIP. Do it wrong and you are plagued with excess inventory, chronic shortages, high expediting costs, and late deliveries.
If you do not have an MRP system, most likely you are using some type of shortage list methodology to figure out what to make or buy. Most accounting systems offer an item reorder level that enables you to use a shortage list to compare the reorder level with stock on hand, demand from open orders, and supply from open jobs or POs. In theory, any item that falls below its reorder level is a candidate for a new job or PO.
Knowing what to make or purchase and when to do it is a big challenge. Do it right and you can deliver on time using less inventory and WIP. Do it wrong and you are plagued with excess inventory, chronic shortages, high expediting costs, and late deliveries.
If you do not have an MRP system, most likely you are using some type of shortage list methodology to figure out what to make or buy. Most accounting systems offer an item reorder level that enables you to use a shortage list to compare the reorder level with stock on hand, demand from open orders, and supply from open jobs or POs. In theory, any item that falls below its reorder level is a candidate for a new job or PO.
