Preservation of Inventory
Self-Preservation is the first law of nature– By Samuel Butler
These days we preserve our mobile phone and its password much more than our physical health! In our household, we preserve vegetables and fruits by keeping in the refrigerator. Majority of middle class preserve some money in banks for a rainy day like COVID-19 or recession.
Similarly, in the industry, preservation is key to their sustained success and is the backbone of any successful organization. One of the key outputs of design Process is the preservation of material. Depending upon the kind of industry, preservation of products and services is to be ensured. Services may be intangible but it is equally important to preserve knowledge and skill so that customer expectations can be met. Similarly, for Products, adequate and timely preservation is must to avoid its deterioration and usability.
Following IATF subscribing OEM’s have Customer Specific Requirements (CSR) related to Preservation which are stated below.
- FCA USA: As per packaging and shipping instructions manual
- Peugeot: As per Logistics Manual ‘MLP’ 20540_14_00015
ISO 9001: 2015 and IATF 16949, Clause 8.5.4 & 184.108.40.206: Preservation & supplemental; specifies few requirements related to Preservation.
Preservation: Organization has to ensure that preservation of material (Raw material, finished goods, documentation, fixtures, gauges, machinery etc.) is maintained from internal and external provider till the time it reaches/accepted by customer end so that it can meet the intent of the customer. The organization should determine those outputs which can deteriorate or degrade and affect conformity of the product or service and implement appropriate preservation methods. The preservation also includes customer property (tangible or intangible) which may be supplied for testing/ measurement/fitment verification, knowledge, material, tools, customer premises, intellectual property or personal data etc. Preservation includes identification, handling, contamination control, packaging, storage, transmission or transportation, and protection.
- Identification: Product or services should be adequately identified by name/number/bar code/by location etc. Like in Computer, name of files should be clearly defined so that it is easy to access them.
- Handling: While getting raw material from the supplier for internal processes and despatch to the customer, the organization should have effective methodology to handle it effectively like an overhead crane, forklift, temperature-controlled tankers etc.
- Contamination control: The material should be contamination free while processing and transportation. Example: In Banbury, foreign particles like iron have to be avoided. At clinics and hospitals, preserving the hygiene and cleanliness
- Packaging: The material at different stages (Supplier-Organization-Customer) should be adequately packed so that its integrity can be ensured. Example: Corrugated boxes, containers etc.
- Storage: The storage of product should be in such a way that required environmental conditions like temperature, humidity etc. can be maintained. Example: Free from dust or leakage from the roof during the rainy season.
- Transmission/Transportation: When moving the material from one location to another, adequate transport means needs to be utilized for the safety of the material from damage and pilferage. Example: Transmission of Electricity from one grid to another with minimum wastage. Use of Silica gel during shipment by Sea to control moisture.
- Protection: While the material is in storage at different stages, the protection of tangible and intangible product has to be ensured. Example: For an IT company, maintaining the data integrity by regular backup and protection from the virus. Protection from rats and rodents. In some cases, like medicines, sweets, chemical etc., on the labelling, preservation guidelines are specified (Specific temperature, away from sunlight etc.). Free from electrostatic discharge for electronic components. For school/college/any other academic organization, the preservation of question paper, answer-sheet and results.
Condition-based monitoring: In any organization, there are different types of material. Some have an unlimited shelf life like plastic components but the majority of them have limited shelf life like ink, sheet metal components, food products, painted components, rubber components, medicines, chemicals etc. Apart from it, there are different type of material which requires storage at a certain temperature and humidity like tankers carrying milk to different locations. To ensure that inventory is in good condition and environmental conditions are maintained, a systematic condition-based monitoring system has to be adopted by the organization wherein they will periodically review the condition of the inventory and its work environment. This kind of monitoring can be done by a competent person at a defined frequency based on the experience, information provided by the supplier or customer requirement. Where required, for ensuring the effectiveness of this process, records of the monitoring can be maintained.
First in, First out: The FIFO method follows the logic that to avoid obsolescence, a company would sell the oldest inventory items first and maintain the newest items in inventory. In any manufacturing organization, the material flows at different stages (incoming, in-process, final stores, transit, transporter warehouse, supplier end etc.).
- The quality and performance of the material have a certain shelf life. If it is not utilized within the prescribed timeframe, the properties start getting degraded. Like in the case of medicines and food products. While there may be many products, which may not be impacted by shelf life but if they are not been consumed within some timeline, due to model change or specification change, they may become useless.
- Organizations can define some methodology to identify the material at different stages of the process with date/colour code/bar code / Computer programming etc. Based on any defined process, an organization can periodically monitor and ensure the movement of material as per the date or time when stored in a particular process/location.
- In certain products like chemicals, paints, Tyres, finished good corrugated boxes etc., stock rotation is another process to ensure the adequate health of the raw material/product. Example: Solids in the paints tend to settle down when the container is kept for a long time in one position. As part of stock rotation, the position of the container can be shifted/rotated at a defined frequency as prescribed by the supplier or product designer. Something similar happens with tyres and packed corrugated boxes as they get deformed if stored in one position for a long time.
Obsolete Material: In the manufacturing process, due to model change or excess inventory, sometimes material passes its shelf life or can not be used. Such kind of obsolete material has to be adequately identified so that it does not mix with good quality material. Either they have to be scrapped or reused based on the concession/deviation process from the organization or customer. Example: Post COVID lockdown, due to non-usage, many raw material or finished products may have become obsolete at different stages like inside the organization, transit, customer warehouse etc.
Customer Requirements: Many times, customers also specify their requirements related to preservation, packaging, shipping and labelling through their purchase order, drawing, technical specification and supplier manual. Example: Maruti Suzuki has specific guidelines regarding packaging and labelling of components in plastic bins with bar code and label. Many customers have approved transporter for shipping their material.
- For many companies, controlled environment like temperature and humidity is considered as an additional cost and is generally avoided!
- How often the effectiveness of FIFO is ensured in the organization?
- Stock rotation is a logical requirement for the preservation of material. How often organizations ensure their effective implementation?
- How often organization review and train their employees to verify labelling related to preservation instructions?
ISO 9001: 2015
IATF 16949: 2016
This is the 58th article of this Quality Management series. Every weekend, you will find useful information that will make your Management System journey Productive. Please share it with your colleagues too.
Your genuine feedback and response are extremely valuable. Please suggest topics for the coming weeks.