The Importance of Real-Time Inventory Control
Written by: James K. Allred

For many companies, real-time inventory control is akin to the weather. Everybody talks about it but nobody does anything about it. Yet real-time inventory control is a critical component in the quest to reduce cycle time and "break the time barrier."

Just how important a factor it is can be established by examining the dual aspects of the concept: "real-time" and "control."

"Real-time" implies immediacy and accuracy. Right now. No waiting. Exactly what's in inventory? How many and where are they and can I get them? If you don't know you have it, or where it is, you can't use it.

Take a look at your material receiving process. Do batches of material sit on the dock or in some other black hole for hours? Days? You should be able to measure the elapsed time from material receipt to induction into your system in minutes, not hours-and certainly not in days. You should anticipate material arrival and provide for immediate induction into your system-using bar codes and scanners, not a tangled paper trail. When work stations or distribution points cannot get the material they need, when they need it, productivity and response times slump dramatically. Too often, failure to have real-time information is the culprit.

The other crucial aspect, "control," is frequently overlooked entirely. Even the best reporting systems, those in which material input and output are entered without delay, cannot withstand undocumented substitution, simple misplacement, and pilferage, without breaking down. When material is stored in remote storerooms, unsecured racks, or out on the floor, control is lost and before long your "real-time" data is of little value.

The answer to this dilemma is to capture the inventory physically while you're capturing the information about it. Material storage systems should be like that perfect material dispenser, the ubiquitous vending machine-compact, convenentily located, readily accessed, and truly secure. No money, no candy bar. No material accountability, no material. Period.

The results of poor inventory control are devastating to throughput. Recent studies indicate that the time spent waiting for or locating the right material is often the largest single cost- and time-adding factor in the production cycle. Inability to get the right material when needed leads inevitably to long cycle times and large safety stocks. Stocks that choke the floor with work-in-process (WIP), while carrying charges soar.

Worst of all, without real-time inventory control you can never attain the cycle time reduction you need to stay competitive. And the time barrier will remain unbroken.

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