We are trying to come up with a best practice process with regards to issuing reeled components to a job. If we have a requirement for a reeled component on a job currently will will issue the whole reel quantity to a job, not the required quantity (We currently buy to Job). Now we do this so the reel cannot inadvertently get issued to another Job however this also causes us issues if we need to process a material milestone against the WIP quantity as well as financial CoS issues.
What i need to know is if there are any other users out there that issue reeled components to Jobs and how they do it as i am sure the way it is currently done in STI is not best practice and actually causes us more problems than it solves?
Have you considered backflushing the components.
I have seen this work well with reels.
Hmm, not thought of that. Are you suggesting buying the component to stock and then when the product is completed the system will then backflush what has been used?
The only problem i see with that is that it still means that the reel in stock is still potentially available for other jobs?
Yes - that’s what we implemented, but there was not the requirement to limit it’s use to particular job.
However, if you continue using the buy to job, then you stop the reel been issued to the wrong job, however, when a number of units on the operation are completed, the correct amount of components are issued to the job retrospectively, giving you your material milestone.
The backflushing works without issue, however, I have not tried the ‘buy to job’ element, but I can’t see why it wouldn’t work.
Andrew thanks for that. I am wondering whether in reality we actually need to stop the excess quantity of the reel being issued to another job? I am not sure what we are actually gaining from it as opposed to what we are having issues with.
Perhaps have the inventory UOM as Reel of 1000 for example and have that in your BOM.
You just then need to ensure that a reel is picked from stores and disposed as per the business requires.
What is the reason you cant use part of a reel on another job?
If this is standard inventory that can be used on multiple jobs because the same material being called out on the bom, then Backflush is the ideal way to handle this.
Rightly or wrongly the business in the past has always issued the whole real to the first job so that they know they whole of that real is in WIP (This is something i do not agree with for many reasons).
Personally i have come from an environment where we only issue what is required by the job to the job so i am struggling to get my head around the whole process and all i am seeing are the issues it will cause when we start to use MRP and Planning and Scheduling tools.
We use reeled materials. All of our materials are to stock though
If you are worried about the material for one job not being available for another job (double dipping) I think issuing material is fine. We take it a step further and use Fulfillment Workbench/Material Request Queue to reserve/release/issue. This lets us earmark a specific reel for a job long before we are actually ready to issue/pick the material for the job.
If you are concerned with issuing the SAME reel for 2 jobs that may be running at the same time on different machines, which is a concern of ours, maybe using lot # tracking on your reels is the way to go? We use this and it helps identify different reels of the same material.
Garret, thanks for the reply, we use Lot FIFO already so all our parts are Lot Tracked. I really can’t get my head around why they do this. I get that if a reel is issued to one Job then they want to issue the whole reel quantity to that job to show it is in WIP (Although i don’t believe they should be doing that). I am beginning to thing the overall issue here is the way we have setup the parts as well. If it is a reeled component it is still set as EA UOM and we book in the actual quantity as opposed to a Reel.
My fear moving forwards when we start using MRP is that when we issue the whole reel quantity to Job A and Job B then gets scheduled, it will be asking Purchasing to order another load of the reeled component even though Job A may only be using 1000 of a 10000 component reel!
When you say that the reel while in stock is available for other jobs, does that mean that someone will come along and just take it off the shelf to use somewhere else, or does that mean that Finance doesn’t see it in WIP? Or something else entirely?
If the actual problem you’re trying to solve is inventory visibility and the costing of return of unused portions, backflushing is probably the most elegant solution.
There are all sorts of timing and tracking concerns that will need to be addressed…,. if not immediately then probably someday. How long does this operation that uses the reeled component take? Hours? Days? Weeks? If it is anything less than a day, backflushing should solve the problem quite handily. If it’s between a day and a week, you can probably still backflush BUT you’ll need to develop processes so that whoever needs to know something about that job or that reel can get what they need, AND some process to handle month-end concerns. If it’s over a week backflushing won’t work very well, if at all.
Ernie, thanks for responding. The whole reel will obviously be issued to Job A (It has a requirement of 1000 components and the reel is 10000), however we are currently issuing all 10000 components to the Job so already have an excess in there. They issue all 10000 as it shows that the whole reel is in WIP, this maybe the right thing to do or not, i just cannot get my head around it and all i can see are the issues that it will cause us when running MRP etc…
I was thinking about backflushing as it was mentioned for this earlier but i dont think the production guys like the idea of that for whatever reason. I am fighting against 20 years of doing it the way they have and facing responses of ‘we have always done it that way so don’t see what the issue is’!
Take a step back.
In previous posts I understood you to say that the Reel is a UOM of EA (so all 10,000 units on it are considered a single entity) and it is purchased direct to the job. In that case, you’re kind of screwed. Until you can change the UOM of the reel such that each unit on the reel is a separate inventory item, there really isn’t anything you can do to make this any different.
I agree with you that the current process is not a best practice.
Sorry Ernie, what i meant was that if the reel contains 10000 components then we will book 10000 components in.
Okay, so since it’s purchased direct then 10,000 components’ worth of cost and quantity are now on that one job that in reality only needs 1,000.
While I don’t think that’s a good process, as long as the unused 9,000 components are returned to inventory BEFORE any finished goods are transacted off the job, your WIP and inventory values will be corrected.