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VISIT WWW.APICS-FLWC.ORG For ALL the Current Chapter Information The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success FLWC Education Programs Two Cycles of CPIM Review Courses – July 2005 – April 2006 – January 2006 – September 2006 MPR 10/14 – 10/21, 2005 BSCM Jan. 13, 20, & 27, 2006 Fast Trak CIRM by 12/31/05 CSCP, 1st Qtr. 2006 In House Review Courses Seminars/Workshops The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success “Data Accuracy Challenge” FLWC 9-13-05 G. L. (Jerry) Kilty, CFPIM, CIRM [email protected] 727 725-7674 The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Introduction Data Integrity The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Data Integrity Requires DISCIPLINE The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Learning Objectives: Identify the many causes of data accuracy issues Utilize two different problem solving techniques that focus on determining inaccuracy causes Compare physical inventory to cycle counting Introduce three techniques of cycle counting The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Cause & Effect Diagram Methods Milieu Man Scrap Received Incorrectly Carelessness Data is Not Accurate Substitution UOM Materials Measurements The Association for Operations Management Carousel Machine Advancing Productivity, Innovation, and Competitive Success Cause & Effect Diagram Methods Milieu Man Scrap Received Incorrectly Carelessness Data is Not Accurate Substitution UOM Materials Measurements The Association for Operations Management Carousel Machine Advancing Productivity, Innovation, and Competitive Success Cause & Effect Diagram Methods Milieu Man Scrap Received Incorrectly Training Data is Not Accurate Substitution UOM Materials Measurements The Association for Operations Management Carousel Machine Advancing Productivity, Innovation, and Competitive Success Affinity Diagram Steps Training Accuracy • State the issue in general terms from Fishbone Chart Pass it one to the right The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Affinity Diagram Steps APICS Fund. APICS BSCM • State the issue in general terms • Record ideas on cards (postit® notes) Cycle Counting The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Affinity Diagram Steps Pass to the right Training APICS Fund. Cycle Counting APICS BSCM • State the issue in general terms • Record ideas on cards (postit® notes) • Display cards onto issue form Systems Training The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Affinity Diagram Steps APICS Fund. Cycle Counting APICS BSCM Systems Training The Association for Operations Management • State the issue in general terms • Record ideas on cards (postit® notes) • Display cards • Sort the cards in logical groupings Advancing Productivity, Innovation, and Competitive Success Affinity Diagram Steps Header Cards APICS APICS Fund. APICS BSCM OJT Cycle Counting Systems Training The Association for Operations Management • State the issue in general terms • Record ideas on cards (postit® notes) • Display cards • Sort the cards in logical groupings • Create header cards Advancing Productivity, Innovation, and Competitive Success Affinity Diagram Header Cards APICS Company Programs OJT BSCM course for inventory clerk Company Pol. & Proced. Training System Training Fundamentals for inventory clerk Part Identification Instruction Cycle Counting The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Affinity Diagram Steps Training 1. Send Inventory clerk to APICS Courses 2. Distribute P & P manuals 3. Demo system features The Association for Operations Management • State the issue in general terms • Record ideas on cards (postit® notes) • Display cards • Sort the cards in logical groupings • Create header cards • Create action plan Advancing Productivity, Innovation, and Competitive Success Go To WWW.APICS-FLWC.ORG For the Results The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Data Integrity Key Areas Customer data bases Supplier data bases Bills of material Inventory records Sales & operations plans Forecasts Master schedules The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Data Integrity Key Areas Item masters Purchase orders Lead time data Capacity data Information flows Production flows The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Inventory Record Audits Physical Inventories Cycle Counting The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Why take a Physical Inventory? FINANCIAL! The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Periodic Physical Inventory Expensive Time consuming Exhausting Creates more inaccuracies Disruptive to production The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Measure in Units, Not $$$$ Part Unit Shelf Inventory No. Cost Count Record 1 $ 50 38 40 2 $ 10 68 66 3 $ 10 60 61 4 $ 90 11 10 5 $ 65 23 23 Total 200 200 The Association for Operations Management Adjustment Unit $$$$ - 2 - 100 + 2 + 20 - 1 - 10 + 1 + 90 0 0 0 0 Wrong Wrong Wrong Wrong OK 1/5 or 20% Perfect Accurate No Fin’l Adjustment! Advancing Productivity, Innovation, and Competitive Success Cycle Counting Sample Counts Investigate as to cause Cause codes assigned Performed by trained personnel Corrective action implemented immediately The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Cycle Counting Methods 1. Count and adjust 2. “Quick fix” 3. Long lasting accuracy The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Count and Adjust Popular, but not effective Does not necessarily correct the record Does not identify or correct the problems Does not replace the need for a physical inventory The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Count Frequency Schedule Example Number of Items 2,000 3,000 5,000 Classification A B C Total counts Workdays per year Counts per day The Association for Operations Management Count Frequency 12 4 2 Number of Counts 24,000 12,000 10,000 46,000 250 184 Advancing Productivity, Innovation, and Competitive Success A “Quick Fix” If record accuracy is below 95% Create a control sample Count the same sample each week Measure accuracy (Be brutally honest) Investigate as to cause Fix the problem Keep counting same sample until 100% accurate The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success A “Quick Fix” Is performed by trained personnel Corrective action implemented Does not replace physical inventories Once 100% is achieved for sample, select another controlled sample and start over Do this until satisfied that most problems are corrected The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Long Lasting Accurate Inventory Records Accuracy maintenance Count frequency determined – – – “A” = 12 “B” = 4 “C” = 2 4 2 1 Once record accuracy is @ 99.9% Does REPLACE the annual physical inventory! The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Count Frequency Schedule Example Number of Items 2,000 3,000 5,000 Classification A B C Total counts Workdays per year Counts per day The Association for Operations Management Count Frequency 4 2 1 Number of Counts 8,000 6,000 5,000 19,000 250 76 Advancing Productivity, Innovation, and Competitive Success Benefits of Accurate Data Improved revenue Produce the right parts On-time shipments Improved fill rates Improved customer service The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Benefits of Accurate Data Reduced inventory Less expediting Reduced shortages Less obsolescence Less freight cost The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success Key Conclusions Discipline Use Cause & Effect and Affinity Diagrams as tools to identify key problems Cycle counting approach, with root cause analysis, can be applicable to all data integrity issues Measure accurately The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success The End Thank You! G. L. (Jerry) Kilty, CFPIM, CIRM [email protected] 727 725-7674 The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success