COMPUTER FORUM: The Evolution of Your Information System - Part II
If your business isn't ready to change with and take advantage of the constantly evolving technologies, it may not survive in today's rapidly changing world. That principle was the reason that, a couple of columns ago, the question was posed: What is the best way for a plastics industry business to incorporate the next level of information management? Your response prompted this series of columns on the evolution of your information system.
Although a popular home or small business accounting system seems to be the starting point for many businesses, there are additional ways that your computer can help you organize your processes and speed up operations. All operations have certain principle resources in common; customers, products, vendors, inventory and operations. In Part One of this series, I discussed the inclusion of customers in your information systems evolution and the customer oriented view of your product resource. In Part Two I will discuss the addition to your system of inventory and the inventory-eye view of your product. Next issue, I will discuss adding operations (lets call it work flow management) into the system and then tie it all together with the integration of all these resources.
Because the plastics fabricating industry is among the most diverse of businesses, the term inventory can have a large variety of meanings, and its management can impact your work flow in a lot of ways. In an attempt to simplify, let's try to break it down using some important aspects of your business processes. In manufacturing, inventory most often means variable plastic resins going into discreet products (rod, sheet, tube, film). Plastics fabricating is at the other end of the spectrum, however, and inventory tracking means a veritable alphabet soup of possible relationships to products as well as to customers. And then there is plastics distribution, which is somewhere in between with discreetly defined inventory used inconsistently for distribution to fabricators for innumerable discreet products. That all sounds very theoretical. Let's try to make sense of these concepts, by looking at some examples of each of these processes.
In the manufacturing plant, managing inventory is often a matter of knowing the contents and quantities of your raw materials and using that information to quote costs and delivery dates to your customers as well as to place orders with vendors. In the actual processing of a customers order, knowing what inventory goes into a product becomes important. But what about the up-front quoting, inventory stock allocation and production planning at that time. How can you accurately quote a short delivery date without being able to appropriate the stock needed to complete the job? That can't be done by looking in an inventory bin, or even by keeping a non-centralized listing of inventory in a computer. What is needed is the ability to track jobs through your inventory management system from the job quoting to final production. So you can see that inventory management, even in the theoretically simple manufacturing environment, can be difficult to manage. What will happen when you then get into the more complex custom distribution or fabrication areas?
Next, lets take a look at distribution. Here, we need to define discreet as opposed to variable components. A discreet component can be picked from inventory storage and distributed as-is, while a variable component is modified or partially utilized for the filling of an order, leaving a remnant for the potential usein orders for smaller than discreet items. An example of the latter could be a sheet that is cut to size for an order - if only a partial sheet is to be used in the process, costing, or tracking the use of the remnant inventory can be nearly impossible. Now try keeping track of the number of ways that cutting a sheet to fit a job can be done and the complexity becomes almost overwhelming in the manual tracking process. An automated system can simplify it to a great extent by grouping what was once scrap into potentially useful inventory
Finally, lets look at fabricating. With custom shapes, odd cuts and sizes and forming, it would seem that managing the fabricating process would be beyond reasonable control. In reality, since scrap and waste is often built into the quote on the front end, it really becomes simple again. Since use of stock can be apportioned to certain measurable dimensions for a given job, and since any reasonable length remnant is reusable (and restockable) the costing and tracking of its use can be simply managed by assigning discreet partial units to inventory for the management process.
Product from an Inventory Viewpoint
Viewing product from an inventory standpoint may seem irrelevant to the management task at first glance. After all, inventory is merely taken from storage in the production process and becomes product. However correct that may be for a discreet distribution process, it is more complex in the manufacturing and fabricating sides of the business. It is not a one to one, (or multiple number to one) relationship here as it is in distribution. What this does to the inventory management process is throw in the extra wrinkle of managing variable component usage.
The software you choose to manage your business should take the processes you use to achieve your output into account. In our next column we will address this issue in more detail. (Note: Part One of this series can be found on-line at www.plasticsmag.com). Keep in mind that if the software you are testing seems to fit at first, check it again to make sure it fits both your management and your production style.
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