The purpose of tracking time in a job shop is generally better understood than that of tracking material. Diverging views exist to what we should record, who should be recording, and above all, why we should record.
We can backflush material, can’t we?
Of course we have an estimate for each job: we have a costed routing and bill of materials, the total of which represents the calculated cost price of the parts to manufacture. When it comes to tracking formaterials, we have two values that we may want to keep a tab on: the applied cost per material and the consumed quantity. The bare minimum of tracking is to use the values of the bill of materials (also known as backflushing). Slightly more involved is tracking the quantities used, but rely on the inventory valuation to determine the cost per item. Most involved is to create a dedicated purchase order and use it for the cost per item. When we backflush, there will be no difference between calculated quantities or cost and recorded quantities or cost.
The benefits of tracking material
The most obvious effect of tracking the actual material quantities is that the inventory is updated accordingly. That is a clear advantage when we use the inventory levels as an input in the purchase process. The second advantage is that it provides insight in the accuracy of the estimate and into our shop efficiency. With a bespoke part, we would assume that the estimate is imperfect, but with a repetitive part they could be a fluctuation in our process. If there is a bias in our historic estimates (“over time, we under/overestimate our steel consumption”), we could adjust for future ones. For repetitive parts, consumption trends may be used in process improvement programs such as lean initiatives.
A common way to track material consumption is to write quantities and serial/batch numbers on the shop paper. These quantities could be used by the warehouse keeper / purchaser to update the inventory levels, or by the cost accountant to determine the actual production cost. Not only will these processes be delayed until the shop paper is returned to the back office, but errors due to reconstruction (“what was it that I used yesterday?”), faulty codes and quantities, and loss of paperwork may occur. A real-time tracking system that is deployed at the source (the operator) and that is designed to avoid entry errors would save admin time, and improve accuracy.
The same benefits should be applied to the receipts of products: quantities received, disposition (like bin location) and serial/batch numbers. Once finished, inventory status can be updated real-time so that deliveries can be prepared. This may help in improving delivery performance.
A modern shop floor material tracking system supports hand-held terminals such as tablets and mobile scanners, and has a user interface developed for use by operators: easy and void of clutter. Get Smart Shop Floor here.