Material Inward Process & Significance of Proper record-keeping
The material inward process also known as the receiving process, involves the receipt of materials, inspection of the quality of materials received, and recording the incoming materials. It plays a crucial role in ensuring the right quality of materials are available for production at the right time. When the material inward process works like a well-oiled machine, it guarantees smooth production & enables timely deliveries for a manufacturing company.
In this article, we will understand the material inward process and the significance of proper record-keeping during the material inward process.
Material Inward Process
The material inward process requires collaboration among various teams such as the inventory team, procurement team, warehouse team, and quality control team. Each one of them plays a significant role in enabling a smooth material inward process. A typical material inward process involves:
- Assessment of Materials Required: Requirement for various material type such consumables, spare, raw material etc. is calculated by comparing the inventory in hand and material required. The material requirement varies depending on material type, production plan, maintenance plan etc.
- Purchase Order: The procurement department creates a purchase order providing details such as make/model/type, quantity, and other specifications
- Goods Arrival: The supplier delivers the goods /materials to the factory premises neatly packed in containers/packages, depending on the nature of the materials ordered.
- Matching: Materials received are verified against a packing list or bill of lading and also examined to check for any damages during transit.
- Inspection and Quality Check: Materials inspection & quality checks are carried out to ensure they conform to desired specifications. Whenever necessary samples are tested & analyzed.
- Reconciliation and/or Rejection: When materials pass inspection & quality checks, they are accepted into the inventory. However, if there are discrepancies in quality/quantity, then manufacturers may reject the delivery & inform suppliers to resolve the issues.
- Inventory Update: When materials are accepted, inventory records must be updated to reflect the new stock levels. This will ensure accurate inventory information & help plan production schedules properly.
- Record Keeping: Record keeping is a critical aspect of the material inward process. Detailed records must be maintained at every stage of the process. Right from the placing of purchase order to materials received to inspection results to quality reports, and any deviations or issues identified during the process. On the other hand, incomplete or inaccurate records may lead to major concerns such as lack of visibility, lower productivity higher costs, etc.
Let us now look at the challenges most manufacturing companies face in the material inward processes when records are not maintained properly.
Challenges in the Materials Inward Processes
Manufacturing companies face challenges during the material inward process. Some of the common challenges are a lack of accurate inventory information, poor coordination among teams, delays in receiving materials, errors in documentation, etc. Let us look at some of them.
- Inaccurate or Incomplete Documentation: When material inward process documents are inaccurate or incomplete, it becomes difficult to track inventory levels and determine the availability of materials for production. It could lead to overstocking or understocking.
- Poor Communication / Coordination: Poor communication/coordination among concerned teams can lead to confusion about the quantity/quality to be ordered. It can result in delays and increased procurement costs.
- Delays in Inspection and Quality Check: If the quality team delays the inspection of incoming materials or materials are not properly inspected, then defective or substandard materials may get used in the manufacturing process. This could lead to product quality concerns, rework, or customer complaints.
Importance of Proper Recording Keeping in Material Receiving Process
Accurate record-keeping is essential in the Material Inward Process for several reasons:
- Traceability: Sometimes material movement involves multiple transit points such as receiving at a port, shipment to a transit warehouse, shipment to a factory, etc. Detailed records enable the traceability of materials from the source to the manufacturing process. In the event of quality issues, you can identify specific batches or suppliers involved.
- Quality Control: Maintaining quality details against the incoming material is essential to track and monitor the quality. This ensures that the material received is as per the desired quality. This also helps the production team to know the quality of raw materials and maintain the quality of the finished goods accordingly. They help identify patterns or trends in material quality.
- Inventory Management: Accurate record of incoming material helps the organization in maintaining correct inventory records. This enables to manage supplier-wise lot, make, SL No, warranty, and storage location. All these details help in effective production planning.
- Purchases Efficiency: Detailed records help the purchasing team to know the order balance status and act accordingly. The purchasing team can view the vendor’s performance.
- Costing and Accounting: Material inwards consists of many cost components such as material cost, freight, insurance, handling charges, etc. Maintaining proper records helps capture all such expenses and determine the landed cost.
- Supplier Management: Keeping records of received materials allows manufacturers to evaluate and monitor their suppliers effectively. It helps identify reliable suppliers and track their performance in terms of quality, delivery, and compliance.
- Insights in the material incoming process: Maintaining proper records provides valuable insights and helps identify opportunities for improving the efficiency of the supply chain and reducing the material cost. E.g., lead time, local vs open buying, buying volume, etc.
- Regulatory Compliance: Proper record keeping helps meet statutory compliances, regulations and demonstrate adherence to established processes, and maintaining quality standards of manufacturing
How ERP helps increase efficiency of Material Incoming Process
An ERP system improves material inward process and record keeping in manufacturing by the following means:
- Automation: ERP automates & streamlines processes, and enables real-time recording and tracking, thus reducing chances of manual errors and omissions.
- Integration: ERP integrates all departments, and functions for seamless information flow and accurate record keeping.
- Purchase Order Management: ERP automates procurement processes, and provides alerts and reminders for approval, thus reducing manual effort, increasing records accuracy & speeding up the purchase process.
- Quality Management: ERP captures inspection results and non-conformance details for complete traceability & retains proper records.
- Document Management & Access: ERP provides a centralized database with real-time accurate information, and enables easy access to information on the Go.
- Real-time Inventory Updates: ERP software integrates gate management, quality inspection, and inventory modules to automatically update material received, ensuring inventory accuracy.
- Reporting and Analytics: ERP provides standard reports as well as trends analysis for monitoring processes & making decisions for improvement.
- Compliance and Audit Support: The ERP system helps maintain historical data for audit purposes & meet regulatory compliances
By leveraging ERP manufacturers can automate manual tasks, improve record-keeping & data accuracy, and enhance overall efficiency in the material inward process.
Summary
Efficient management of the material inward process is crucial for manufacturing companies. By tracking incoming materials accurately, manufacturers can optimize their stock levels, minimize waste, avoid overstocking or stockouts, optimize inventory management reduce production delays, and improve quality control. All this will ultimately result in cost savings and increased profitability.
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