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EMS handbook

5. Inventory control

Physical inventory represents company capital sitting on a warehouse shelf. If the Enterprise Resource Planning system reports 1,000 critical components in stock, but the physical location only contains 800, production will likely be interrupted. High data integrity between physical inventory and digital records is essential.

This chapter outlines the operational disciplines of factory Inventory Control. The framework includes continuous ABC cycle counting, strict adherence to First-In-First-Out (FIFO) consumption, and thorough investigation of material variances to systematically maintain high inventory accuracy.

  • 5.1 Inventory classification: ABC analysis

    Applying the same level of physical control to a highly complex, expensive FPGA and a standard passive resistor is inefficient. It misallocates labor and exposes the operation to trackable financial v...

  • 5.2 Inventory control operating model: KPIs, ownership, audit cadence

    Inventory represents both financial capital frozen in time and significant operational risk. Without a structured control model, discrepancies between physical floor stock and digital ERP records will...

  • 5.3 Excess & obsolete inventory

    Excess and Obsolete (E&O) inventory is not merely a warehouse storage challenge; it represents a significant financial concern often stemming from MRP planning discrepancies, engineering design volati...

  • 5.4 Strategic stockpiling

    Strategic stockpiling is a deliberate decision to hold inventory above standard targets to mitigate specific, high-probability supply chain risks. While this involves paying holding costs and tying up...

  • 5.5 Cycle counting & reconciliation

    Inventory data accuracy is the foundation of reliable factory operations. If the ERP system indicates sufficient material exists but the physical shelf is empty, production will stop. Conversely, over...