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If your company is manufacturing or distributing products, then inventory control is a critical part of your business. Even if you have perfectly trained people and perfectly designed product, you must have the right parts at the right time to build or ship your products. Inventory ties up capitol that can be used better in other areas and slow moving inventory can go absolute forcing the company to take a loss on the cost of goods. This is why companies spend billions of dollars for Enterprise Resources Management (ERP) and Materials Requirement Planning (MRP) software.

The people at ISO understand that you can not have a customer focus without having an inventory focus. Although they not have any inventory accuracy requirements, they do require that you take certain precautions with your inventory.

ISO 9001 Inventory Control

First you must use a controlled purchasing process to ensure that you order the correct parts. Once the parts come into your facility through your receiving area, they must be controlled. On this web site, the inventory control process covers any inventory from the point it enters the facility as part (including customer supplied good, raw goods, sub-assembles or finished goods) and leaves the facility as part of customer fulfillment.

The ISO 9001:2000 standard requires that certified companies address the following areas:

Segregate good and bad parts

Using incoming inspection, in-process testing and non-conforming materials management the company must separate conforming and non-conforming parts. Non-conforming materials should be managed using the standard non-conforming materials procedure while conforming materials are managed using the standard inventory procedure.

Assure That Only Good Parts Are Used

The company must have system in place to assure that non-conforming parts are not used in production. Non-conforming part must be identified as non-conforming and protected from accidental use. This is managed using the Non-conforming materials (NCM) procedure.

Unique Identification Of Every Part

The engineering design process should create unique part number for every component and assembly. These part number should be clearly labeled on the parts or part storage areas.

Identification Of Every Parts Status

As parts are tested and measured, their status should be obvious. This is simple for non-conforming materials that are tagged as bad parts. The most vulnerable area is where parts are in-process and may have failed testing but are not yet tagged. If a second operator starts working on a set of parts, it must be obvious that the parts are good.

Proper Handling Of Parts And Assemblies

All inventory must be handled to reduce damage to the parts or assemblies. This can include the installation of special Electro Static Discharge (ESD) equipment to in electronic assembly areas. It also includes boxing and packaging of finished assemblies to ensure that they arrive at the customer without damage.

Protection of inventory

This is much harder than it sounds. Many parts have special requirements that must be covered in your inventory control system and procedure. The following parts should be addressed in the inventory control procedure
o Item with special handling issues like ESD sensitive component or fragile component.
o Item with special environmental (temperature or humidity) requirement. Some item may require refrigeration or minimum temperature to keep the product from expiring. Even items like a pump may require special environmental requirement because they can be damaged if they freeze.

Stock with a shelf life

Item with a defined shelf life should be labeled in a clear way so that the item is not used past the expiration date. This should be part of the incoming inspection procedures. Part should not be put into stock (placed on the shelves) until they have been labeled according to their special needs. Labels, adhesives are glues are a good example of a parts that requires special attention. Some electronic component (batteries, solder) also have a shelf-life.

All inventory should be rotated. Stock must be rotated to make sure that the older stock is used first. This is called First-In First-Out or FIFO.

Customer Supplied Inventory

You may not think you have customer supplied inventory but if your organization service the products that you sell, then you do. Any product that is sold to the customer and then returned is considered customer supplied inventory. This inventory must be protected and labeled to assure it in not damaged.

Lot Traceably

For critical component and assemblies, the company must have lot irascibility. An example of this would be a electronic assembly that is potted for safety reasons. If you found at a later date that the potting compound was defective, the company must recall all defective product in that production lot. For the same reason, you may also need to track lots on some incoming parts like heater or detectors.
Lot traceability is especially critical for final assemblies. If the company has products that are serialized, then the company must maintain records so that serialized assemblies can be recalled.

Summary

All or none of these special situation may be applicable at your facility. They are listed here to generate ideas about your inventory before you write or update your inventory control procedure.

Sample Inventory Control Procedure