Many companies aren’t aware that that they can remove the need for a stock take if they deploy a shop floor tracking solution.

We regularly visit companies that set time aside monthly, half yearly or annually to complete a stock take.

When this happens, all production stops, stock take systems are deployed, and time and effort is spent reconciling the stock count figures against system theoretical values.

This process comes at a significant cost to the company e.g. time to organise the event, implementing cut-offs, paying staff while there is no production, post-production reconciliation efforts, etc.

The need for confidence when expressing financial statements is well understood and supported.

We wonder if the Financial Management are aware that they can remove the need for a stock take in many factories if they deploy a shop floor tracking solution.

Here’s how it works.

A shop floor tracking solution for stock take

A Works / Production order is opened and contains both routing information and bill of materials (BOM) information. The BOM defines what stock must be issued to manufacture the end item, and the routing defines what processes the product must complete during the manufacturing process.

The shop floor feedback system can capture numerous data elements. The ones affecting the need for stock take are:

  1. To know that what stock has been issued to a works order.
  2. To know that a job has entered production i.e. that the first operation has started.
  3. To know the start and end of all operations as either recorded information or a determined calculation e.g. if we start operation x then operation x-1 must be complete.
  4. The completion of the last operation.
  5. To receive the complete items into the stores.
  6. The system may need to record details concerning scrap and rework operations as well

If feedback has been received against each production order as it progresses through the production process, then it is possible to use the ERP system to define the items in WIP and the value of WIP at any point in time.

And viola: there will not be a need for stock take.

Not covered in this discussion are the merits of using cycle counting to both correct inventory records on a continuous basis and to investigate and correct the causes of system error.