What are the steps involved for inventory management and production.

Every single item or component part used in manufacturing should have a unique identifying number associated with it. Every nut, bolt, screw, transistor, piece of paper, retail carton, everything. The quantities of every component received from suppliers should be entered into the inventory control system when a new shipment is received, and subtracted from the inventory system as components are withdrawn to the manufacturing or production line.

Usually inventory is uniquely numbered and then grouped into categories based on a few different factors. Some components common to normal or regular products used frequently fall into one group of factory owned components , while a second category will be product codes based on a unique product or product type as ordered by a customer. Hardware parts go into one category, electronic components another category, packing materials another category, and so on , just for record keeping and warehouse inventory locations.

When a customer places an order for a product to be manufactured, the factory purchasing agent pulls up a BOM, (bill of materials), which is a list of all component parts necessary to manufacture any specific item. They then compare the list to the factory inventory records. They make sure parts pulled from factory inventory have necessary quantities on hand. If not an order is placed with a supplier to replenish stock. They then place purchase orders for the other unique components.

Production planning is given an estimated arrival date for components, and schedule production line time to manufacture the product. The inventory arrives, finished product made, inspection done, and shipping arranged.