Material Variance 1

[tyroneortiz]

Hi all,
I got a big problem. Right now one of my projects is decrease the material variance in my department. Last month the material variance for my department was $31,439.33
As I said I need to improve this trending by July. How can I work with this issue because is affecting my goal and my manager goal.

Please Help Me to develop a plan and to run it with excellent results.

 

[MikeHalloran]

- Spend more time on the shop floor with a clipboard and a calculator, looking suspicious.

- Visit the local scrap dealers and look at their inventory; it may once have been yours.



Mike Halloran
Pembroke Pines, FL, USA

 

[tyroneortiz]

Hi Mike,
What you want to tell me when you said
Visit the local scrap dealers

Tyrone Jr.

 

[MikeHalloran]

It smells like someone is stealing material.

Drug addicts will steal _anything_ that can be sold for cash. Scrap metal dealers don't ask where the scrap comes from.

Do you conduct random drug tests in your plant? Start.



Mike Halloran
Pembroke Pines, FL, USA

 

[BillPSU]

First
Determine which materials are inaccurate. Monitor usage of these materials on shop floor versus bill of material. Fix bill of material if in error.

Monitor your incoming materials. Do quantities and dollars match what you receive. Possible problems from purchasing and vendors and receiving.

Monitor materials for scrap and non-production usage.

 

[Pressed]

The subject is wide and it may not be related to theft, here is some reading for ya, hopefully these won't be a review.

[URL unfurl="true"]http://www.gh.accaglobal.com/publications/studentaccountant/43946[/URL]
[URL unfurl="true"]http://www.sacl.vuw.ac.nz/vuw/fca/sacl/files/WP27.pdf[/URL]
[URL unfurl="true"]http://www.principlesofaccounting.com/chapter%2022.htm[/URL]
[URL unfurl="true"]http://sine.ni.com/csol/cds/item/vw/p/id/126/nid/124100[/URL]
[URL unfurl="true"]http://www.bestsoftwareinc.com/PDF/pfw/broch/PFW_BatchMstr.pdf[/URL]

.
But if your issue is inventory loss, then there are plenty of books on that subject available.

==========================================
Business Card

http://mech.e.tripod.com

__________________________________________
Cycle Heaven.......

http://www.tailofthedragon.com

 

[MedicineEng]

Regarding this I remember a story in a previous job (happened before I was working htere so this is what I was told); We received some special raw material in aluminium containers, that were supposed then to be returned back to the supplier for refill. If hte container was lost or damaged, we had to pay. Well, after some time, somebody started to dig into this and found out that almost all containers that were delivered to our site were reported damaged by the supplier. The fact is that the containers were really damaged as verified. It was also a fact that it was a warehouse guy that was jamming the forklift against it to sell to the scrap metal guy.
The guy was fired and the containers were not damaged again.

 

[griffengm]

tyroneortiz,
What kind of material is causing the variance? Gold? Steel?
Chemicals?
What does the variance amount to in terms of volume or weight?
How can that much material be moved?
My wife worked in a place making electrical switches with gold contacts. Pilferage moved in less than teaspoon lots.
In our shop, that much variance would amount to roughly 30 tons of steel. We had variances like yours at one time. Investigation found that most of it came from poor nesting of parts processed on our CNC punches.
Chemicals could have their own set of problems such as improper handling, poor housekeeping, and valves and stoppers improperly used.
Just food for thought.

Griffy

 

[CompositeGeek]

Check your Bills of Material for accuracy

Composites and Airplanes - what was I thinking?

There are gremlins in the autoclave!

 

[MfgEngineerCACE]

tyroneortiz,

I think Bill hit it on the head; review your inventory stock list and perform a visual count of stock. Verify usage on the production floor (material scrap, part rejects, etc.) and relate it back to the raw stock count.

You may find that you have unreported usage of stock, unreported scrap, damaged material that is being scrapped and not properly accounted for, etc.

Then you can go from there and wonder about misappropriation of materials (i.e. theft) and such.

 

[Rusty1995]

We have a discussion here. What is the standard for a Tabulated drawing with Bill of Materials?

 

[BillPSU]

Rusty,
A drawing specifies how a part is to look while a bill of material specifies what goes into a part. Think about a part with is 12 feet in length and you saw the part out of a 20 foot bar of raw material. The bill of material for this parts would say 20 feet as the required material while the part is 12 feet long.
Now lets talk about a 2" part using the same 20 foot bar. Lets say the saw kerf (width of blade) is .0625". The saw vice also need material to hang onto to allow sawing and lets say that is 6". Out of a 20ft bar the maximum number of parts is 113. (240"-6")/2.0625 BOM quantity is 20'/113 or .18 feet. or 2.12 inches. If the saw kerf varies so does the number of parts and the BOM.