Any industry can not produce a goods or products without material and it’s movement. For every movement of material in the industry, there is a reason. If material movement is not effective then
- There could be increase in cost of material movement
- The time required to produce a product.
- Issues in the quality of the product because of unnecessary movement of material.
- Overall increase in product cost because of not using resources effectively.
So Let have a look at different types of material movement that usually takes place in the industry.
===> You may also like ” What are the Quality Processes that industry can have”
Receipt against PO –
This is a material transaction which is done against the purchase order. Generally, the material is raw material required for production. But also transaction of tools, consumables are done in this category. This transaction increases the inventory levels in the factory.Against this transactions, entries in Accounts Payable will be triggered for payment to the supplier. This Material is generally stored in the separate warehouse (Generally it is called as RM warehouse) from where it is issued to production.
Movement between locations and Warehouses within factory during production process-
Once the raw material is received in the factory, it will be moved to different locations based on need like Inspection and Bulk location. It will be issued to Production from Bulk location and will be moved between machines for different operation and warehouses till it is moved to Finish goods warehouse. This is WIP phase of the material which is being moved.If the movement of material in this phase is not effective then there could be a delay in shipment or increase in inventory carrying a cost.
Once the goods are ready, it will be shipped to the customer. In this transaction, the material is moved from Bulk to Pick and then to staging location from where it is loaded in the vehicle.This transaction triggers the accounts receivables for getting paid from the customer. This transaction reduces the inventory level in the factory.
Sales Return is the transaction where we receive the shipped material back from the customer because of rejection after the quality check. Customer may charge for the rejection. This material is stored separately for the further action on it. This material received through Sales Return Order.
Purchase return is returning the rejected material received from the supplier. Rejection can happen at receipt stage or on the production line(Because of Supplier Fault). This rejected material stored separately for identification. We can penalize to the supplier for rejection. This material is sent through Purchase Return Order.
Movement of Rejected Material-
While production some product may not be as per the specification. These are called as either rework or rejection.In this material movement, these goods are stored at an appropriate location for further action.Rejection can be scrapped or converted to another item with different specification and rework can be reprocessed.
Over to you…
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