Manufacturers are aware that enterprise resource planning (ERP) systems for manufacturing have limitations, especially in managing inventory. The systems were not designed for inventory management because they assume that materials are ordered by the job, purchased in sufficient quantities to produce the product, and then shipped directly to the customer. As manufacturers grow and move from a made-to-order to a made-to-stock system, they need to hold inventory to meet customer delivery schedules and cope with supplier lead times. However, the ERP system cannot adapt to this change, resulting in difficulty tracking inventory. Problems that arise from this include production delays, bottlenecks, short shipments to customers, increasing inventory write-offs, and customer penalties related to delays or label non-compliance.
To address these problems, more people and paper-based processes are added to the system, which is not scalable beyond a 25% increase in volume. That is why RF Plus™ was created, which addresses the materials management blind spot that manufacturers inevitably face as they grow. RF Plus™ represents best practices when it comes to materials management, and has dozens of features that represent these best practices.
Here are seven of the top best practices for barcoding in manufacturing:
- Data Capture: Barcodes are the fastest and most accurate form of data entry at the lowest cost. Popular barcodes include 1D symbologies like code 39 or UPC, which are typically used for part numbers and lot codes. Beyond ID barcodes, the 2D version can encode as much as one page of information. Manufacturers can put 2D barcodes on their finished product which contains the complete bill of materials and work order number. This works brilliantly from a service perspective, as customers calling in for service need only email a picture of the 2D barcode, and the service technician is dispatched with the right replacement parts. Data capture is not limited to scanning. For example, the latest version of RF Plus includes the ability to take pictures or video associated with any action such as inbound receipts and shipments. These images can then be sent with shipping documents or used as evidence of damage on inbound goods.
- Real-Time Transaction Processing: The most critical pieces of information needed in a manufacturing facility are the arrival of raw materials, usage of raw materials, and the shipping of finished goods. The quality of a company’s decisions will be affected by the extent to which an inventory management system processes this data in batch or real-time. If a company lacks real-time data, the warehouse team will be spending several hours a day looking for product, have too much money tied up in excess stock, and customers will be disappointed with sudden stock-outs that are not reported by the system.
- Bin Locations: As many as half of all manufacturers are not using locations properly. It is not uncommon to see a few locations like Main or Finished Goods as the only storage locations in the warehouse. Proper identification of all the locations in the warehouse is necessary to find anything quickly. We advocate using the acronym ZABLB (zone, aisle, bay, level, bin) to properly identify all the locations in your warehouse. Furthermore, you should designate location types in the warehouse such as bulk, production, overstock, and pick areas. Most companies have areas designated as such, however, they are not formalized but part of the company’s tribal knowledge.
- Inbound Processes: The arrival of goods triggers a series of processes including labeling, inspection, PO updating, and putaway. How these functions are performed impacts downstream activities like manufacturing, picking, and shipping. Unless your supplier is amenable to printing your barcoded part ID on your purchased parts, RF Plus has an alias function that supports the cross-reference of supplier part ID to your own part ID such that you can scan supplier barcodes. For putaway, your inventory management system, when required, should also take into account FIFO (first in first out) and be able to direct your staff to put the product into pick or overstock locations.
- Trace: Chances are if you are not using barcodes, you’re not using trace information such as lot or serial numbers to further identify your materials. This is essential for basing inventory turns on FIFO or providing customers with traceability information. Furthermore, you may have to track multiple trace fields. One of our customers, an aircraft parts manufacturer, has over six trace fields. If they ever have to add additional trace fields, RF Plus is able to automatically accommodate that new field.
- WIP (work in progress) Tracking: The creation of a finished good usually takes several operations. Many times, parts waiting for the next operation can’t be taken to the next department because they’re backlogged, or the next operation isn’t scheduled until the next day. So in the meantime, these parts, which are not officially a raw material or finished good, are put away to a location that is not recorded in any system except someone’s memory. Such as was the case of an automotive supplier whose product was placed in milk crates, and then placed in an aisle of their warehouse until it was required. This can lead to delays and even lost inventory. To avoid this, it’s important to have a WIP location in your warehouse and an inventory management system that tracks the movement of parts through each step of the manufacturing process.
- Automation: The last item on our list of best practices is to automate your processes as much as possible. The manual process of checking inventory, counting stock, and performing data entry is time-consuming and prone to errors. Automation can help you to streamline these processes, improve accuracy, and free up staff for other tasks. RF Plus can automate several processes, such as scanning incoming goods, printing shipping labels, and sending email notifications to customers, to name a few.
In conclusion, managing inventory can be a challenge for manufacturers, especially as they grow and start holding more inventory. Barcoding is one solution that can help you to manage inventory more effectively, and RF Plus™ represents best practices when it comes to materials management. By following the seven best practices outlined in this article, you can improve the accuracy of your inventory, reduce bottlenecks and delays, and provide better service to your customers.
