Wayfarer Consulting, LLC

The Challenge:

Improve inventory accuracy.

Trace lot and serial numbers of key products

The impact:

Understanding and implementation of inventory control features within Oracle greatly improved inventory accuracy and lot/serial number traceability

The Outcome:

Reduced two physical inventories per year to a robust cycle counting program

Implemented traceability capability that greatly reduced scope of recall, minimizing impact from FDA

Background:

A growing medical device manufacturer had just implemented Oracle and needed to get inventory under control. Company knowledge and understanding of the Oracle application was a hindrance, though transactional integrity was the root cause of inventory inaccuracies.

I developed the following plan:

• Learn the Oracle applications
• Develop standard work instructions for inventory transactions
• Train my team and others about properly reporting transactions

It did not take long to learn the basics of Oracle.  Management invested in training which was invaluable.  Within the first three months basic inventory transaction procedures were established.  The impact was immediate.  Prior to this, material handlers did not know how to issue only available components to a work order, so nothing was issued until the work order was completed (which proved the material had been available).  There could be a three-week delay, between the actual issue and the system transaction!  Training on partially issuing material to a work order exposed latent material shortages.  They buyer had to scramble to bring in material as this was the last month of the fiscal year with a big sales push.  The factory produced more units that quarter than any time before or since!

Initially, my Inventory Control Coordinator audited transactions done my material handlers, but that quickly evolved to the Coordinator running a cycle count program since the audits proved the actual transactions to by virtually 100% accurate vs. the paperwork. With improved timeliness of transactions, and an appreciation by all of the importance of reporting problems, the cycle counts improved to 98% accuracy!  However, the perception of inventory accuracy lagged the reality.

The next physical inventory did not relieve the stress.  There was a discrepancy in the count of seven expensive pieces of the company’s flagship equipment.  It took a week to fully resolve the issues (with constant update demands from the CFO).

This added an element to the plan:

• Track the units by serial number in Oracle

I made the decision to start to track equipment by serial number in the system.  This took coordination across multiple sites for training on new transaction procedures, and serial number accounting.  The transition was smooth, though training should have been more extensive in the distribution center since some order pickers did not appreciate the need to validate serial numbers shipped vs. serial numbers transacted.

The next step was to track the lots of key consumables. The success of serial tracking of equipment and the frustration of being unable to accurately track inventory for a powder mixture for the primary consumable prompted the effort to track lots. Similar coordination was required to implement the lot tracking across multiple sites.

The success of this effort is demonstrated by the following example.  The company received a customer complaint about a particular lot of the consumable.  Upon investigation, a recall was ordered.  In the past, all shipments within about two weeks of the production of the lot in questions would be recalled since there was no way to be sure which customers received the lot involved. Since lot tracking through Oracle was in place, the materials manager was able to produce a report within hours of which customers had received the lot in question.  All cases were accounted for, and the size of the recall was reduced so much as to lower the severity in the eyes of the FDA.  The Regulatory department was so impressed that they asked for the lot tracking to be extended to more products.

Another frustrating aspect of inventory control was dealing with discrepancies in shipments for product between the factory and the distribution center which was located in another building in the same city.  Many attempts were made unsuccessfully to resolve this issue. The ultimate solution involved implementing a capability in Oracle called Internal Orders.  This capability allowed plants to treat distribution centers like customers, and distribution centers to treat plants like suppliers.  This created a specific handoff between the facilities that enabled resolution of any discrepancies.

Implementation of this solution required a great deal of support from IT to apply patches to the Oracle applications, Finance to ensure that the accounting of the new transactions done properly, and the plant and distribution centers.  All agreed that the new process met their needs and worked well.  There was the added bonus that it improved the planning processes as well.