Friday, September 4, 2009

Inventory Management Function Descriptions

When an organization is trying to implement a systematized inventory management process or trying to improve the one that is already in place, the real life tactical question arises as to what the functions of this process should be and who should do what on a day-to-day basis. The following list offers one way to break the process up into functional areas of responsibility which should have all or some reporting responsibility to the one responsible for the material management of the organization. Depending on the total value of inventory, the importance of inventory management and the size of the organization, these roles may be satisfied by either clerical or managerial staff, but the importance of the function needs to be paramount to upper management.

Inventory Quantity Management
(typically reports directly to Material Management)

  • Maintain the location master data within the ERP system
  • Verify the item master data within the ERP system
  • Verify system BOMs and shop floor backflushing transactions
  • Perform/Monitor all inventory transaction processing: Issues and Receipts
  • Assure valid inventory quantities throughout the system for all inventory items and locations (the goal should be 99+% accuracy)
  • Develop and conduct a cycle counting program
  • Integrate with Engineering, Inventory Valuation Management, Purchasing and Operations
Inventory Valuation Management
(typically reports directly to Accounting)
  • Perform standard item cost and cost roll-up maintenance
  • Track and validate last cost and average cost updates
  • Continually assure valid inventory values throughout the system for all inventory items
  • Analyze cost variances and periodically update the standard costs
  • Integrate with Inventory Quantity Management, Purchasing, Engineering and Operations

Purchasing/Vendor Management
(typically reports directly to Material Management)

  • Review and maintain open purchase orders for required adjustments
  • Create and maintain new purchase orders per material requirements
  • Create and maintain new purchase orders per outside service requirements
  • Assure the need for material before purchase orders are created
  • Maintain relationships with venders and work to improve the integration with each
  • Integrate with Inventory Quantity Management, Inventory Valuation Management, Engineering and Operations
  • Integrate with Master Planning to determine purchased part requirements

What other functions wold you include?