FLOOR STOCK & LINE SIDE BIN STOCK

This is recording the issue of components used in an assembly or subassembly by exploding the bill of materials by the production count of assemblies produced. In other words, after the assembly is produced and booked to stock, the receipt transaction triggers issue transactions for each of the parts used in accordance with the bill of material (BOM) quantities. 
 

The logic behind this approach is to have a second inventory balance called floor stock. This allows stock to be transferred in bulk from the component or raw material store to the shop floor. Production then use this material as needed in the manufacturing process. When the assemblies being produced are shipped to stock, the receipt transaction causes the issue transactions to be created for the components used and backflushes them against the floor stock balance. The result is that the store balance is not affected so the main disadvantage falls away. As the items to be processed in this way are indicated on the BOM, the issue picking list shows an issue quantity of zero for these items (or the word floor stock) and the backflush action knows which items to include. From the MRP logic point of view, as floor stock is an inventory balance, it is added to the stock balance for the netting calculation and the floor stock item requirement records for the uncompleted WIP are outstanding demands which are also used in the calculation.

Thinking on this approach, it means that a roll of wire can be issued for a particular job and the system keeps track of the remaining quantity until it is needed again. Where small quantities of parts are continually issued to "kits" for assembly -such as screws or washers a great deal of time and effort is consumed. In fact, often it costs more to control and issue the item than the item costs. Using the floor stock method, it allows the washers to be weighed into bags of 1 000 on receipt, and then transferred by the bag to the shops floor stock balance, and the issue transactions generated by back flushing when the assembly is booked into stock.
 

A more recent and improved version of floor stock I have come across is called "line side bin stock". This system allows you to identify a "floor stock" balance at each work centre if needed. This opens up all kinds of possibilities. As the line side bin stock (LSBS) balance is an inventory balance it allows a manufacturing order to be closed by recording the receipt at a work centre. It is then available to be used and will be back flushed when the assembly is delivered to another "LSBS" or an actual store and the receipt is recorded. 

This effectively allows us to link many levels of assembly together without the necessity of booking into and then out of stock. This stores movement may take up to a week depending upon how frequently we give picking lists to the store. Many companies want to make several subassemblies in parallel and then combine them together in final assembly. The MRP logic demanded they were booked to stock and a picking performed to issue them for final assembly. Now we have a workable practical solution which even the accountants like. 

If you are moving towards Just-in-Time with small batch manufacture this type of approach is a tremendous advantage due to the way it reduces wasteful activities such as unnecessary transactions and stores handling.

In summary, the line side bin stock approach allows a work centre to receive in exact quantities or in bulk from stores, receive from lower level manufacture one full batch quantity, or receive a continual supply of part quantities. It will also handle Kanban control without difficulty.

In these days of increasing material and inventory holding costs we need to find ways of working more efficiently to reduce our costs. If you have an MRPII system, talk to your software supplier on how he can provide this facility if it doesn't already have an equivalent. Don't forget, it will reduce your manufacturing lead time, your handling costs, your stores space and allow you to handle smaller batches. Over all it reduces your costs and increases customer service and profitability. 

December 1996