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60 SMT007 MAGAZINE I NOVEMBER 2022 als in short supply result in increased quality risks, where compromise may have been made in terms of physical and operational specifica- tions, including the potential for counterfeit ingress. Alternative choices of materials need business and engineering approval in many cases, introducing more delays—that is, where rules are followed. On the other hand, having an excess of materials brings storage issues and costs, effects of aging, volatility in value, and increased investment costs. It is oen difficult to re-assign or sell unneeded materials back on the grey market, especially those that are bespoke for a specific product. Just two years ago, inventory management methods using ERP that were anywhere from completely dependable, to at least acceptable, are now clearly inadequate. A lot more human effort now must be utilized, tweaking the pur- chasing settings based on availability risk, material value, potential effects of inflation, and approvals. Complex decisions can only be effectively made if there is a clear visibility of any problem or opportunity. Visibility of accurate physical material inven- tory levels on the shop floor has always been a challenge. Without it, there have been many cases of work orders not starting due to the incorrect perception that there are not enough materials, and of work orders that are cut short due to expected materials not physically being there when they are needed. At the same time, ironically, there are significant amounts of obsolete materials on the shop floor accruing storage costs and aging. e effects of inaccu- rate material inventory can be seen and felt at the time of a periodic physical stock check. Relying on ERP in isolation, it is quite nor- mal for there to be sig- nificant discrepancies found when comparing the physical stock lev- els with those recorded in ERP, which can run into millions of dollars of value in terms of both expected materials not being present, and physical materials being found that were no longer recorded by ERP. It is ridiculous to think that ERP can perform its role effectively if it does not have the true pic- ture of the actual internal inventory on hand. is is a more significant challenge with com- plex bills of materials (BOMs), with poten- tial use of approved substitute or alternative materials, approved and non-approved ven- dors, variations in products, materials that are used in fractional quantities that age, expire, or need periodic test, inspection, and re-work. e accurate measurement of such inventory usage, spoilage, shrinkage, and managing stock lifecycles, is essential. e secret behind great inventory manage- ment is very simple. It must be possible to effectively account for every individual piece of material continuously across the whole of manufacturing, with direct feedback of changes and results to ERP. It is a fact of man- ufacturing life that the sum of materials con- sumed on any job cannot be exactly calculated by simply multiplying ERP BOM quantities by the number of units produced. It is also non- sense to assume that deviations to the ERP plan will be effectively communicated back to ERP manually. Manufacturing operators are otherwise focused. Counting unused materials at the end of every work order is also not prac- tical, other than perhaps for a small number of critical materials. Expected spoilage losses, for whatever reason, are normally addressed