Material Management 101

Cradle to Grave
Improving Inventory Accuracy
Reducing Waste
Increasing Operational Efficiency & Real Estate
Procedure Development & Improvements

Developed by Monica Soileau

General Overview for

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Informational Purposes Only
Everything starts with Customer Demand

Shipping Customer

Informational Purposes Only

General Overview for
Finished Raw
Goods Materials

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 Company X Process Flow

Customer
Scheduling Purchasing
Order

Receiving Gathering

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General Overview for
Informational Purposes Only
 Material Flow In-House
Return Raw
Production Material to Weighed back
to Receiving
B-South

Empty Drum Trailer

Gathering per FIFO or Disposed of as
Waste
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General Overview for
Informational Purposes Only
 •Raw Material are received in, verified against Received Goods Note, sends sample to
Lab, QC Approved, entered into ERP System, and turned in to Purchasing
•Purchasing verifies that the correct entry was made. This is our Inventory
Receiving Reconciliation Process

•Scheduling enters batch to be produced into ERP/MRP System, place batch on the
Master Scheduling Board, and prints tickets.
Scheduling

Informational Purposes Only

General Overview for
•Material Handlers utilize the batch tickets to pre-stage the batch, practicing Fifo, and
create an outbound ticket.
Material
Handling

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 • Production receives the raw materials for their batch and
verifies them against their formula to ensure that the
proper materials are there.
• Production begins to produce
Production • The empty drums are logged in at the appropriate empty
drum trailer and is written off the system

Informational Purposes Only

General Overview for
• Production is responsible for returning the appropriate
amount of left over RM to B-South.
• Material Handlers are responsible for picking up RM from
Returns B-South and returning back into Receiving.

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 Scheduling Flow Chart
Nothing happens without the Customer or Raw Materials
Choose color coded paper insert.
Choose color coded plastic tag.
Yellow = HSD - Mill Batch
Before process Black = MTO
Pink = Neutral Base
begins - Product type and Blue = Core/Stock
Brown = Pseudo Neutral Base
size is determined through Red = Rail
Green = Neutral Base Bases
scheduling procedures White = Part B
(NWTE,NCLR, etc)

Informational Purposes Only

General Overview for
Determine the next opening
Choose which tank/pot
date in the schedule according
according to
to the formula chosen, size of Request batch
equipment/manpower
batch desired, sales order date on BaaN
availability and by your batch
Scheduling needed and/or replenishment
size
warehouse shipping schedule

Place tag on the schedule

Write all board in the appropriate Print a shortage sheet on the batch and
informantion on date/equipment slot give shortages to Purchasing
the tag according information
gathered.
department. 7
 Purchasing Raw Materials Flow Chart
 It is critical to have an accurate inventory count in ERP/MRP System. If we reflect more than we really
have, then we will never hit our Reorder Points. This is the source of the Pink Slips evolving, because we
really don’t have the inventory as reflected in ERP/MRP.
 Drum heels that are not written off is one of the main root causes that misleads us into believing that we
have this raw material on-site. When the inventory level dips below a set point, this raw material will
appear on the Buyer’s report. (Empty Drum Truck Log is very important for auditing what is gone and now
empty.)
 When we bust bags, spill materials, or use them without charging it or writing it off, this also gives us false
inventory in ERP/MRP System that is not really available for usage.

Open Item
Print Planned

Informational Purposes Only

General Overview for
Data
Select R/M to
Purchase R/M MRP PO's tiitm0101m000
review
timrp1421m000 review data for
selected R/M

Open Planned
Inventory No
Transactions Yes Mark quantity Review of all
Decide to
by Item and due date R/M on report
order R/M
tdinv1550m000 on report complete?
review data for Yes
selected R/M No

Disregard R/M

Select a PO
Open Maintain Open Transfer and open
Planned MRP
PO's
Planned MRP
PO's
Maintain PO
tdpu4101m000
edit delivery,
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timrp1121m000 timrp1260m000
edit the PO print report quantities,
price, etc...
while placing
the order
 Key defects that cause inventory inaccuracies

• Items being written off, but not removed from shelves.

• Poor Housekeeping
• Incorrect entries into ERP/MRP System
• Not using scanners on all materials, accurate physical count, and accurate locations
documentation
• Receiving in wrong amounts
• Raw Material Tote and Drum Heels not being written off causes false inventories to be
reflected in BaaN, thus preventing the system to ever hit the Reorder Point.
• Unreported Spills not being written off, indicating that we still have material here.

Informational Purposes Only

General Overview for
• Tank Cycle Count is impacted when the Wash Solvent Log Sheet isn’t filled out by each
shift.
• Tank Cycle Count is incorrect when tank transfers are not being reported or done in ERP
System. Bulk tank trucks show up for delivery, but don’t really have adequate room to
offload, causing demurrage and other costs to incur.
• Containers, boxes, and drums not being charged to a batch or written off accordingly
• Raw Materials are being written off as Lost Material, because the proper transfers to
the proper locations weren’t made.
• When additional raw materials are delivered to the Production floor, they aren’t being
accounted for against that batch each time.
• Incorrect Lot# being charged against a batch
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• Lost raw materials end up expiring without being used, causing us to waste it, then
force to pay for disposal as hazardous waste.
Raw Material & Inventory Control Steps toward improvements

• Always follow FIFO when staging/charging and physically using raw materials.
• Real time charging of raw materials reduces inaccuracies and better inventory control.
• Stage and charge exact amounts/lots used.
• Document all discrepancies of full unopened raw materials.
• Document on scratch sheet or on the back of the BOM. Sheet must be turned in with
BOM.

Informational Purposes Only

General Overview for
• Excess / spilled material must be accounted for.
• All inventoried items / raw materials must be accounted for.
• Excess / spilled material must be written off or logged on the manufacturing wash
sheet.
• Inventory heels by location must be addressed / corrected before bringing over new
inventory.
• Raw materials must be in the proper condition and consolidated when placed in the
designated return aisles.
• The proper procedures / documentation must be completed when putting empty
drums on the proper trailers. These log sheets are reviewed as needed to address 10
inventory issues.
“Do Not Inventory”
The example below reflects how poor housekeeping
can contribute to lost materials or inadequate account
of raw materials remaining onsite.

Materials returned to B-South must have appropriate

labeling , lid or cap re-attached, tote caps on for
shipment, and no spilled materials on the lids.

These all can result in an Audit finding.

This includes employees coming in contact with the
raw materials.

Informational Purposes Only

General Overview for
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 Continuous Improvements = Closing the Gaps
• Raising awareness through training

• Developing consistent training plans and procedures

• 5S + Safety = Sorting, Straightening, Shining, Standardizing / Organizing Bin

Locations, Sustaining through Audits allows us to easily identify defects to eliminate

Informational Purposes Only

General Overview for
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Implement write-up sheet for Material Handlers
Addresses the following gaps identified by field audits and feedback
from the Receiving Warehouse Personnel:

a. When production makes verbal requests for additional material, this

material is not being tracked nor allocated to that WIP every time. This
allows us to capture this material to ensure that the inventory balances in
ERP/MRP System are correct.

b. Establishes Accountability among the MH Team by noting who they

Informational Purposes Only

General Overview for
relieved and it reflects if each team member is carrying an equal amount of
weight.

c. Standardization establishes consistent work practices among the group.

Auditing conducted daily by Supervisor creates sustainability.

d. The items on the write-up sheet, reflects expectations.

e. Sustains Improvement Efforts, everyone doing a little something each day

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to maintain organization and housekeeping.
 General Overview for
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Informational Purposes Only

 Communication is the Key
The benefit of each person conducting shift relief communication directly to their relief,
ensures that important items are not filtered out or forgotten.

Any tasks that are not completed can be communicated to their relief to ensure that they
know exactly where to take over the shift and where to start.

If the scanners are reflecting a raw material, but cannot be found by the end of shift, they
can pass this information onto the oncoming personnel.

Informational Purposes Only

General Overview for
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 New and Improving: Closing the Gaps together
Receiving work process to help close gap on inventory discrepancies

Material Handlers new work process of returning raw materials to receiving

Receiver Responsibility for Verifying Drum Weights

The buyers will provide a weekly report of deliveries, assign Receivers Raw Material Drum Trucks to weigh, and display this
calendar on the Board at the Receiving Building.

A weekly calendar with incoming drum loads will be provided to the Receivers and their Supervisor. The Supervisor will
determine which product and vendor to audit. The Supervisor will assign a Receiver a drum truck load to be responsible for
individually weighing each one, while documenting the variances on the “Receiving Log for Drums” sheet. They will follow
their normal receiving work process to ERP/MRP System in and Put Away material on the PO against the “Received Goods
Note”. The log sheet will capture drum variances and will be turned into the Receiving Supervisor, who will in turn will monitor
these drums until they are empty.

This will allow us to have the accurate inventory documented before the material is initially brought to Production.

Another benefit for making the appropriate inventory adjustments after drums are received, is that it will allow us to track
data on each vendor shipment and will provide our Corporate Procurement Manager with measurable discrepancies that will
in turn, enable them to approach the vendor for credit.

Material Handler Responsibilities for Returning Material from B-South

Material Handlers, from each shift, will each be responsible for returning a minimum of 1 pallet of raw materials from the B-
South Return Isle. Each item will be individually weighed and the actual weights will be documented on a log sheet. This log
sheet will be compared to the inventory remaining in ERP/MRP System. These discrepancies will be addressed accordingly. 16
This log sheet will be turned in daily to the Material Handler Supervisor.
General Overview for Informational
Purposes Only
RECEIVING LOG FOR DRUM PURCHASE ORDERS
DATE: ______________ RECEIVER: ______________
PO #:_____________
PO #: _____________

P.O. ACTUAL
ITEM BAAN LOT# WEIGHT WEIGHT VARIANCE

Informational Purposes Only

General Overview for
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Cartons, Containers, and Tank Farm RM

Once Reorder Open Maintain

Point is Purchase Orders
Order Cartons
reached, it will tdpur4101m000
& Containers
appear on the place orders
Buyers Report, accordingly
MRP

Review daily
tank chart. Open Maintain
Calculate Purchase Orders

Informational Purposes Only

Yes

General Overview for

Order gallons can use Need to
tdpur4101m000
Tankfarm R/M for each order?
place orders
item. Mark in accordingly
appropriate slot
on Tank Chart
and MRP. No

Skip R/M

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Carton and Container Write-offs & Daily Carton and Container Count Sheet
Relocation
Date:
Name:
On 3rd Shift, the Receiver completes the “Daily
Carton and Container Count Sheet” and turns it MRP
into the Buyer responsible for maintaining this Item # Description Count Difference Location
Inventory
inventory. The Buyer verifies that the inventory is
correct in ERP/MRP System, but if it isn’t, she CT4X1RLQ Cartons
turns that discrepancy into the Receivers’ CT4X1R Cartons
Supervisor to make the necessary inventory C05MFG MFG Pails (Black)
adjustment after research is completed. C0003 Quart Can Lined
C0003U Quart Can Unlined
C0005 Pint Can Lined
When production, packaging, or any other C0005U Pint Can Unlined
personnel requires drums, pails, sample cans, lids,
Black Drums
ring locks, or boxes, the Receivers need to make a
determination on what it will be utilized for. The Red Drums
answer determines the transaction type they will White Drums
be required to use. Totes

Informational Purposes Only

General Overview for
3rd Shift Responsibilities
The transaction is either a write-off or relocation.
Trash Cans Dumped? Yes No
If it is for packaging to fill a batch in, it must be Aisles
relocated to Cntanr location. If it is for anything Swept? Yes No
else, it must get written off using TDS code. (This Fill "A" Warehouse with
includes the lids too, not just the drums.) Containers Yes No
Write or relocate as required Yes No
In some cases, if the items called for is already in Raw Material Orders Complete? Yes No
the Cntanr location, no scanner transaction will be Order Numbers:
needed. There is a new location that has been Verified that samples are in QC if required? Yes No
added for the C05UB drop trailer in BaaN called How many bins opened up?
DROPTR. All Forklift Battery Chargers in
use? Yes No
Drums – write off or relocate Check Building R, A, and Receiving Docks for
Pails – relocate Water? Yes No
Pumps on? Yes No
Sample Cans – write off
Boxes – write off
How many rows in the drum 19
trailers?
Lids – relocate Drums transferred or written
Ring locks -- relocate off? Yes No
 Benefits of Accurate Inventory

General Overview for

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Informational Purposes Only