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Car Factory

Material Criticality Analysis

Criticality Ranking for Material Enabling better process control

What we mean by Material Criticality Analysis
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PiLog would perform the material criticality or Inventory Analysis in order to determine the criticality, consumption value, consumption rate, stock value, lead time, price of single unit and frequency with which it is used by the plants during the production process.

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Inventory management is the ongoing process of moving parts and products into and out of a company’s location(s). Companies manage their inventory on a daily basis as they place new orders for products and ship orders out to customers. It’s important that business leaders gain a firm grasp of everything involved in the inventory management process. That way, they can figure out creative ways to solve inventory management challenges by finding the right solutions.

Usage

This module allows the users to easily view inventory movement, usage and trends. Users can analyse inventory sales over a specified time frame and make decisions on how to best adjust item resource planning values based on sales averages and months availability.

The process of understanding the moving parts and products combined with the knowledge of the demand for stock/product. It is the technique to determine the optimum level of inventory for a firm.

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The following are the various methods to control the inventory process:
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  • ABC Analysis: Based on Consumption Value per Year

  • FMSN Analysis: Based on Consumption Rate

  • XYZ Analysis: Based on stock value accumulation

  • VED Analysis: Based on Criticality & Impact

  • HML Analysis: Based on Unit cost of Material

  • SDE Analysis: Based on Lead time and Availability

Features

  • Products can be classified based on the value of importance

  • Strict control of materials is required

  • Minimum storage cost of the material

  • Time saving

  • The system categorizes the items based on how frequently the spare parts are issued or used

  • Reducing the handling efforts

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Market Analysis

  • To keep the investment on inventories to the minimum

  • To minimize the idle time by avoiding stock outs and shortages

  • To control obsolescence of raw materials, components, tools, spare parts, etc.

  • To determine the criticality of the spare

  • It is useful for monitoring and control of stores and spares inventory

ABC Analysis: Based on Consumption Value per Year
A
It represents the most valuable products. These are the products that contribute heavily to your overall profit without eating up too much of your resources. This category will be the smallest category reserved exclusively for biggest money makers. It requires tight control.
0-75%
B
It represents the middle products. These are the products that contribute to the bottom line but aren’t significant enough to receive a lot of attention. It requires moderate control.
>75-90%
C
It represents the hundreds of tiny transactions that are essential for profit but don’t individually contribute much value to the company. This is the category where most of the products will live. It is also the category where we must try to automate sales as much as possible to drive down overhead costs. It requires least control.
>90-100%
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Steps Performed on ABC Analysis:

  • Identify the objective and the analysis criterion

  • Collect all the data about the inventory and calculate the consumption or sale value

  • Arrange all the consumption values in the descending order

  • Create next column and start adding the cumulative total of consumption value

  • Assign the category based on the accumulated value as A, B & C

Benefits
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  • Improved efficiency and lower margins

  • Promote overall productivity with significantly shortened work cycles

  • Eliminate most inter-department paperwork, taking inventory, and receiving to the warehouse

  • Reconcile missing assets onsite with an easy-to-use visual contrast of collected and original asset data based on tag number, serial number, or asset ID

  • Save time and improve accuracy of data

  • Increasing virtualization

  • Eliminates excel work which are stuck with various formulae to manage inventory

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