Manufacturing and Distribution Best Practices

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Best Practices are well known because they play a critical role in boosting profits and reducing costs. They are part of your “journey” by encouraging you to continuously improve your operations. They are also a way of thinking and acting and apply to every department. The following is based on our thirty years of working with the Macola® software.

Part 1

Accurate Data

Top management should set the example by placing a high value on sound systems/accurate data.

Processes

Department managers should document in writing how office work is to be processed.

Individual Ownership

Assign individuals to take ownership of crucial master files (i.e., inventory items, bills of material, customers, and vendors).

Part 2

Inventory Accuracy

Set a goal for having 99% on-hand quantity accuracy. Cycle counting is tedious but will improve the accuracy of your annual physical inventory. Improving accuracy eliminates numerous day-to-day issues.

Creating new customers, inventory items, and vendors

Document in writing (with screenshots) how to key in new inventory items, customers, vendors, etc. Determine what data fields need to be populated and those that can be left blank.

Dates

Decide how to use the various date fields when keying customer and purchase orders. For example, which date field will be used to determine when an order needs to be shipped or when to expect delivery of a purchase order.

Codes to be used for analysis

Create a small number (ex. under 15) of customer types, product categories, material cost types, etc. from which you can analyze your operations.

Part 3

Data Clean-up and Accuracy

Close out fully received purchase orders and completed production orders on a regular basis so they do not continue to appear on your open order reports.

Replenishment Methodology

When it is time to replenish inventory via a purchase order or production order, you need established policies re: when to order and how much. Accurate vendor lead times, reorder levels, and safety stock levels require ongoing analysis.

Training

Someone needs to be designated to conduct the initial and ongoing training of your staff to assure a smooth workflow and continuous improvements.

Part 4

Timeliness & accuracy of reporting/posting transactions

Customer shipments, purchase order receipts and production quantities need to be keyed and posted as real-time as possible each day.

Record retention

Establish a retention policy for each of your critical transaction files. Purge or archive old and unneeded transactions each month.

Timely wrap-up of physical inventories and month-end closings

Set a goal to reconcile your physical inventory in one day and your month-end closing in less than two days.

Computer network & SQL database

Maintain an up-to-date computer network and SQL database software to avoid slowness. Test your database recovery procedures quarterly.

Performance metrics

Develop metrics (ex. on-time customer shipping) to continuously evaluate your performance. Encourage suggestions for improvement at all levels.

We welcome your feedback! You can write to us here.

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