BIJ BIJU PATNAIK INSTITUTE OF IT & MANAGEMENT STUDIES, BHUBANESWAR, ODISHA

(Inventory Management)
Module- 4
Inventory Management
Introduction:

• A complete list of items such as property, goods in stock, or the contents of a building.

• In the supply chain one of the key variables which has to be managed is inventory. The inventory
includes a vast spectrum of materials that is being transferred, stored, consumed, produced,
packaged, or sold in one way or another during a firm`s normal curse of business.

• The planning, storing, moving and accounting for inventory is the basis for all logistics

What is an Inventory?

1) Inventory is an accounting term that refers to goods that are in various stages of being made
ready for sale, including:
2) Finished goods (that are available to be sold)
3) Work-in-progress (meaning in the process of being made)
4) Raw materials (to be used to produce more finished goods)
5) Inventory is generally the largest current asset – items expected to sell within the next year – a
company has.
6) Inventory has a financial value, which for accounting purposes is considered a floating asset.
However, it may be very difficult to convert physical inventory into liquid assets, hence the
inventory is very risky investment
Thus one goal in operations is to keep the level of inventory in the supply chain as to low as possible
thus freeing up funds for other purposes.

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Figure: Meaning of Inventory

Reasons for Inventories

i. Improve customer service -Provides immediacy in product availability

ii. Encourage production, purchase, and transportation economies

iii. Allows for long production runs

1) Takes advantage of price-quantity discounts
2) Allows for transport economies from larger shipment sizes
3) Act as a hedge against price changes

iv. Allows purchasing to take place under most favorable price terms

v. Protect against uncertainties in demand and lead times -Provides a measure of safety to keep
operations running when demand levels and lead times cannot be known for sure

vi. Act as a hedge against contingencies -Buffers against such events as strikes, fires, and
disruptions in supply

Figure: Inventory Management

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Main purpose of inventory management

1) Inventory management mean methods that are used for organizing, holding and replenishment of
stock. The main goal – keep the inventories on optimal level, without stockouts and excesses.
For this, dependent tasks should be solved:

2) To have enough inventories to fulfill orders of outer and inner clients in a manner satisfying
them. Or with other words – assure high level of customer service. Usually this customer service
level is measured as availability (fill rate).

3) To minimize inventory carrying costs, first of all capital tied into inventories for maximizing the
company`s profitability.

Figure: System of Inventory Management

Inventory Management Objectives

1) Good inventory management is a careful balancing act between stock availability and the cost of
holding inventory.
2) Service objectives -Setting stocking levels so that there is only a specified probability of running
out of stock
3) Cost objectives -Balancing conflicting costs to find the most economical replenishment
quantities and timing
To ensure continuous supply of materials spares and finished goods so that production should not
suffer at any time and the customer’s demand should also be met.
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i. To avoid both overstocking and under-stocking of inventory.

ii. To maintain investment in inventories at the optimum level as required by the operational and
sales activities.
iii. To keep materials cost under control so that they contribute in reducing cost of production and
overall cost.
iv. To eliminate duplication in ordering or replenishing stocks. This is possible with the help of
centralizing purchases.
v. To minimize losses through deterioration, pilferage, wastages and damages.
vi. To design proper organisation for inventory management. Clear cut accountability should be
fixed at various levels of the organisation.
vii. To ensure perpetual inventory control so that materials shown in stock ledgers should be actually
lying in the stores.
viii. To ensure right quality goods at reasonable prices. Suitable quality standards will ensure proper
quality stocks. The price analysis, the cost analysis and value analysis will ensure payment of
proper prices.
ix. To facilitate furnishing of data for short term and long term planning and control of inventory.

Factors Influencing Inventory Management & Control

1) The degree of changes in the nature of the product from raw materials to final product at various
stages of transformation viz., final assembly and packaging determines the nature of inventory
control operation.
2) Process capability is characterized by processing time of various operations e.g. the
replenishment lead time directly influence the size of inventory.
3) The capacity of production system as well as the nature of storage facilities considerably affects
the inventory policy of the organization.
4) The nature of the production system influence Inventory control; It is characterized by the
number of manufacturing stages and the interrelationship between various production operations
e.g. in product-line system, inventory control is simpler than in job-type system.
5) Amount of Protection against Shortage influence Inventory Control; There is always variation in
demand and supply of the product. The protection against such unpredictable variations can be
done by means of buffer stocks.
6) Organizational Factors influence Inventory Control which related to the policies, traditions and
environment of any industrial enterprise. Some of these are
i. Labour relation policies of the organisation
ii. Amount of capital available for stock
iii. Rate of return on capital available if invested elsewhere.

7) There are several other factors related to the overall business environment of the region that
influence Inventory Control viz:

i. Inflation
ii. Strike situation in communication facilities.
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iii. Wars or some other natural calamities like famines, floods, etc.
iv. Difference between input and output

Effective Inventory Management

Figure: Inventory Management Control

i. Inventory management involves determining, how to order products and how much to order as
well as identifying the most effective source of supply for each item in each stocking location.

ii. Inventory management includes all activities of planning, forecasting and replenishment.

iii. The main purpose of inventory management is minimization differences between customers
demand and availability of items.

iv. These differences have caused by three factors:

1) customers demand fluctuations,

2) suppliers delivery time fluctuations and
3) inventory control accuracy

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Figure: Effective Inventory Management in a Manufacturing Organization

Inventory management and control

The primary objectives of the management and control of inventory are as given below.

1) To minimize the possibility of disruption in the production schedule for want of raw materials,
consumables, spares and other stores items.

2) To keep down the capital investment in inventories.

3) To ensure sufficient stock of semi-finished products so that there is no disruption in the

production schedule.

To ensure adequate stock of finished product to meet the delivery requirement of the customer

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Figure: Inventory Management & Control Procedure

Inventory Management and Control Techniques

1) The inventory management and control techniques are important due to the following reasons.

2) A mismanaged inventory can lead to an unnecessary increase in the working capital. Effective
inventory management leads to low storage costs, which in turn leads to an increase in the
organizational profits.

3) It can help to satisfy the customers by providing them with the products they need in the swiftest
manner. Poor inventory management leads to lower availability of the products and higher
delivery time.

4) Item stored in inventory over a long period may spoil. This leads to unnecessary increase in the
operational costs. Proper inventory management can help reduce these costs greatly.

5) If the organization has inventories scattered in various locations, it need to have a proper system
to manage these inventories on the basis of demand and supply.

There are several techniques for inventories management and control. Some of them are described
below;

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 ABC analysis -Always Better Choice

 HML Analysis– H-High Price Items; M-Medium Price Items; L-Low Price Items
 VED analysis –vital (V), essential (E), &desirable (D).
 SDE analysis –scarce (S), difficult (D), and easy (E).
 FSN analysis- F (Fast moving), S (Slow moving), and N (Non- moving).
 Economic order quantity (EOQ)
 Just in time(JIT)

ABC Analysis -Always Better Choice

It is based on the principle that a small portion of the items may typically represent the bulk of money
value of the total inventory used in the production process, while a relatively large number of items may
from a small part of the money value of stores.

Under this method, the inventory is classified into three categories, such as A, B and C. These categories
are based upon the inventory value and cost significance.

1. Also, the number of items and values of each category are expressed as a percentage of the total.
Items of high value and small in number are termed as ‘A’, items of moderate value and
moderate in number are termed as ‘B’, and items of small in value and large in number are
termed as ‘C’.

2. Group ‘A’ items need closer control while for group ‘C’ items control can be relaxed. However
sufficient safety stock of group ‘C’ items is required to be ensured.

Figure: ABC Analysis

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HML Analysis

The items under this analysis are classified based on their unit prices . They are categorized in three
groups , which are as follows H-High Price Items; M-Medium Price Items & L-Low Price Items

Objectives of HML analysis:

1. Determine the frequency of stock verification

2. To keep control over the consumption at the department level
3. To evolve buying policy, to control purchase
4. To delegate the authority to different buyer
5. Determine the frequency of stock verification
6. To keep control over the consumption at the department level
7. To evolve buying policy, to control purchase
8. To delegate the authority to different buyer

Figure: Application of HML Analysis

VED Analysis

1) VED analysis – It consists of classifying the inventory items as vital (V), essential (E), and
desirable (D).

2) Vital items are those items for want of which the production comes to a complete halt.
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3) These are normally long lead items and usually proprietary items.

4) Essential items are those items whose stock outs cost is very high while the desirable group are
those items which does not cause serious production problems since alternatives can be used in
case of stock out of these items.

SDE Analysis

1) SDE analysis – Under this analysis, items are classified as scarce (S), difficult (D), and easy (E).
2) This classification is done to decide the purchasing strategies.
3) Scarce items are those which are short in supply, imported or canalized through government
agencies. Difficult items are those which are available indigenously but are not easy to procure
while the easy items are those which are which are readily available in the market.
FSN Analysis

1) FSN analysis – This analysis is based on consumption figures of the items.

2) Under this analysis, inventory items are classified into three groups namely F (fast moving),
S (slow moving), and N (non- moving).
Economic Order Quantity (EOQ)

 EOQ represents the most favorable quantity to be ordered each time fresh orders are placed.
 The quantity to be ordered is called economic order quantity because the purchase of this size of
material is most economical.
 It is helpful to determine in advance as to how much should one buy when the stock level
reaches the order level.
 If large quantities arc purchased, the carrying costs would be large. On the other hand, if small
quantities are purchased at frequent intervals the ordering costs would be high.
 The economic order quantity is fixed at such a level so as to minimize the cost of ordering as
well the cost of carrying the stock.
 It is the size of the order which produces the lowest cost of material ordered.
Economic order quantity (EOQ) is the ideal order quantity a company should purchase for its inventory
given a set cost of production, demand rate and other variables. This is done to minimize variable
inventory costs, and the equation for EOQ takes into account storage, ordering costs and shortage costs.
The full equation is:

EOQ = √(2SD / H), or the square root of (2 x S x D / H).

S = Setup costs (per order, generally includes shipping and handling)

D = Demand rate (quantity sold per year)
H = Holding costs (per year, per unit)

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Figure: EOQ Model

Advantages of EOQ

1) The main advantage of the EOQ model is the customized recommendations provided regarding
the most economical number of units per order.
2) Maintaining sufficient inventory levels to match customer demand is a balancing act for many
small businesses.
3) EOQ model is that it provides specific numbers particular to the business regarding how much
inventory to hold, when to re-order it and how many items to order.
4) The EOQ model requires a good understanding of algebra, effective EOQ models require
detailed data to calculate several figures. The benefit to resolving the math is the ability to
determine how much inventory should be attached to each order at the lowest possible costs.
5) The EOQ model assumes steady demand of a business product and immediate availability of
items to be re-stocked. It does not account for seasonal or economic fluctuations.
6) Each material can be in the most economical quantity;
7) Purchasing an inventory control personnel automatically devote attention to the items that are
needed only when required; and
8) Positive control can be easily exerted to maintain total inventory investment at the desired level,
simply by manipulating the plant maximum and minimum values.

Disadvantages of EOQ

1) The orders are raised at irregular intervals which may not be convenient to the suppliers;
2) In case the lead time is very high supply of inventory may interpret;
3) EOQ may give you an order quantity which is much below the supplier minimum, and there is
always a chance that the ordering level for an item has been reached but not noticed in which
case a stock out may occur;
4) The items cannot be group and ordered at a time since the recorder points occur irregularly.

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MRP (Material Requirement Planning)

1) Material Requirements Planning (MRP) is a computer-based production planning and inventory
control system. MRP is concerned with both production scheduling and inventory control.
2) It is a material control system that attempts to keep adequate inventory levels to assure that
required materials are available when needed.
3) MRP is applicable in situations of multiple items with complex bills of materials.

Purpose of MRP:

The main purposes of MRP system are to control inventory levels. Assign operating priorities for items
and plan capacity to load the production system which are;

1) Inventory: order the right item, order in the right quantity and order at the right time in order to
receive the supplies at the right time.
2) Priorities: order with the right due date and keep the due date valid.
3) Capacity: plan for a complete load, plan an accurate load and plan for adequate time to view
future load.

The major objectives of an MRP system are to simultaneously:

i. Ensure the availability of materials, components, and products for planned production and for
customer delivery,
ii. Maintain the lowest possible level of inventory,
iii. Plan manufacturing activities, delivery schedules, and purchasing activities.

Objectives of MRP

The Objectives of MRP in operation management are;

a) To improve customer service by meeting delivery schedules promised and shortening delivery
lead time
b) To reduce inventory cost by reducing inventory level.
c) To improve plant operating efficiency by better use of productive resources.
d) To provide the right parts at the right time to meet the schedules for completed products.
e) It determines the quantity and timing of finished goods demanded.
f) It determines the time phased requirements of the demand for materials, components and sub-
assemblies over a specified planning time horizon.
g) It computes the inventories, work-in-process batch sizes and manufacturing and packing lead
times.

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h) It controls inventory by ordering materials and components in relation to orders received rather
than ordering them from stock level point of view.

The three major inputs of an MRP system are the

1) Master Production Schedule(MPS)

2) Product Structure Records (Bill of Material File)
3) Inventory Status Records/File

Figure: Material Requirements Planning (MRP) System

Master Production Schedule (MPS):

The demand for end items is scheduled over a number of time periods and recorded on a master
production schedule (MPS). The master production schedule expresses how much of each item is
wanted and when it is wanted. The MPS is developed from forecasts and firm customer orders for end
items, safety stock requirements, and internal orders. MRP takes the master schedule for end items and
translates it into individual time-phased component requirements.

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Figure: Master Production Schedule (MPS)

Product Structure Records:

The product structure records, also known as bill of material records (BOM), contain information on
every item or assembly required to produce end items. Information on each item, such as part number,
description, quantity per assembly, next higher assembly, lead times, and quantity per end item, must be
available.

Inventory Status Records:

The inventory status records contain the status of all items in inventory, including on hand inventory and
scheduled receipts. These records must be kept up to date, with each receipt, disbursement, or
withdrawal documented to maintain record integrity. MRP will determine from the master production
schedule and the product structure records the gross component requirements; the gross component
requirements will be reduced by the available inventory as indicated in the inventory status records.

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Figure: Input & Output of MRP System

MRP Procedure:

MPS procedure consolidates the independent demands of forecasts and customer orders to determine the
requirements of the end products in each time bucket in the planning horizon. After netting the on-hand
and on-order inventory, and offsetting the lead-time, the production schedule of the end products, MPS,
is determined.
In MPS procedure, the available-to-promise (ATP) is also determined. MPS is then fed into the MRP
procedure to determine the requirements of the lower level components and raw materials. The gross
requirements of components are determined by calculating the planned order releases (POR) of the
parents via single level BOM explosion.
The net requirements are calculated by subtracting the on-hand inventory and scheduled receipts (on-
order) in each time bucket. After the consideration of lot-size, the net requirements are transformed into
the planned order receipts. Planned order receipts appear in every period. Lead-time offsetting shifts the
planned order receipts backward and derives the POR which are the MRP result of current item. The
MRP procedure continues to explode the POR to obtain the gross requirements of its components. The
MRP repeat the procedure until the POR of all the items are determined. The flow chart of the MRP
procedure is described in Figure.
The net requirement in a period is determined in MRP procedure by the following formula,
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Net requirement = Gross requirement – Available inventory

The available inventory for the first period is
Available inventory = On hand inventory + Scheduled receipts of the first period– Allocations –
Backorders – Safety stock.
And, for the other periods
Available inventory = Projected available balance at the end of last period + Scheduled receipts of
the current period

Figure: MRP Procedure

The Advantages of MRP

1) On time availability of the right materials required for production.

2) Little, if any, excess inventory
3) Timely delivery of manufactured goods to your customers
4) Optimal use of manufacturing resources
5) Decrease in capital cost due to decreased inventory levels and optimal use of production
resources.
6) Collecting the business data for analysis and better planning.
7) Tracking & Forecasting Enhancement
8) Data Sharing Accessibility
9) Boost in Customer Aid
10) Easy to use, Integrated System

The Disadvantages of MRP

1) Suitable for make-to-stock manufacturers.

2) Customization Restrictions
3) Inflexible System; Not Compatible for Specific Organizations
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4) Operation Process Re-Organization

5) Steep Cost for Installation/Operating
6) Material planning is highly dependent on inputs it receives from other systems or department. If
input information is not correct than output for material planning will also be incorrect.
7) Material planning requires maintenance of robust database with all information pertaining
inventory records, production schedule, etc. without which output again would be incorrect.
8) Material planning system requires proper training for end users, as to get maximum out of the
system.
9) Material resource planning system requires substantial investment of time and capital.

JIT (Just in Time)

1) Just in time technique can be risky, especially if it is not implemented correctly, but if the
organization can do it in a right way then it can be most rewarding.

2) Just in time technique involves having item received in the organization just at the time when it
is needed.

3) It can be risky because there may be so many variables which may not be always perfectly
predictable.

4) Just-in-time (JIT) manufacturing, also known as just-in-time production or the Toyota

Production System (TPS), is a methodology aimed primarily at reducing times within production
system as well as response times from suppliers and to customers.

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Figure: Just in Time (JIT)

Objectives of JIT

The objectives of JIT are to change the manufacturing system gradually rather than drastically:

1) To be more responsive to customers,

2) To have better communication among departments and suppliers,
3) To be more flexible,
4) To achieve better quality,
5) To reduce product cost.
JIT as a Philosophy

 Elimination of waste:
 Continuous improvement
 Problems as opportunities
 Quality at the source
 Simplification
 Visual Control
 Focus on Customer Needs
 Production to Customer Demand
 Respect for Individual

Figure: Example of JIT System

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Advantages of JIT

1) There should be minimal amounts of inventory obsolescence, since the high rate of inventory
turnover keeps any items from remaining in stock and becoming obsolete.
2) Since production runs are very short, it is easier to halt production of one product type and
switch to a different product to meet changes in customer demand.
3) The very low inventory levels mean that inventory holding costs (such as warehouse space) are
minimized.
4) The company is investing far less cash in its inventory, since less inventory is needed.
5) Less inventory can be damaged within the company, since it is not held long enough for storage-
related accidents to arise. Also, having less inventory gives materials handlers more room to
maneuver, so they are less likely to run into any inventory and cause damage.
6) Production mistakes can be spotted more quickly and corrected, which results in fewer products
being produced that contain defects.

Disadvantages of JIT

1) A supplier that does not deliver goods to the company exactly on time and in the correct amounts
could seriously impact the production process.
2) A natural disaster could interfere with the flow of goods to the company from suppliers, which
could halt production almost at once.
3) An investment should be made in information technology to link the computer systems of the
company and its suppliers, so that they can coordinate the delivery of parts and materials.
4) A company may not be able to immediately meet the requirements of a massive and unexpected
order, since it has few or no stocks of finished goods.

KANBAN (Japanese Inventory System)

Kanban (literally signboard or billboard in Japanese) is a scheduling system for lean and just-in-time
(JIT) production. Kanban is a system to control the logistical chain from a production point of view, and
is an inventory control system.

1) Kanban was developed by Taiichi Ohno, an industrial engineer at Toyota, as a system to improve
and maintain a high level of production.
2) Problem areas are highlighted by reducing the number of kanban in circulation.
3) The Kanban Method is as an approach to incremental, evolutionary process and systems change
for organizations. It uses a work-in-progress limited pull system as the core mechanism to
expose system operation (or process) problems and stimulate collaboration to continuously
improve the system.

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4) Visualization is an important aspect of Kanban as it allows understanding the work and the
workflow.

The basic principles Kanban System:

1. Start with existing process

2. The Kanban method does not prescribe a specific set of roles or process steps.
3. The Kanban method starts with existing roles and processes and stimulates continuous,
incremental and evolutionary changes to the system. The Kanban method is a change
management method.
4. Agree to pursue incremental, evolutionary change
5. Respect the current process, roles, responsibilities and titles
6. Leadership at all levels
7. Acts of leadership at all levels in the organization, from individual contributors to senior
management, are encouraged.

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Figure: Example of kanban Scheduling of Super Market

Figure: Example of kanban System in Manufacturing Environment (Assembly Line)

Types of kanban systems

In a kanban system, the workstations communicate with each other through their cards, where each
container has a kanban associated with it. Economic Order Quantity is important. The two most
important types of kanban are:

Production (P) Kanban: A P-kanban, when received, authorizes the workstation to produce a fixed
amount of products. The P-kanban is carried on the containers that are associated with it.

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Figure: Example of Production (Pull & Push) Kanban

Transportation (T) Kanban: A T-kanban authorizes the transportation of the full container to the
downstream workstation. The T-kanban is also carried on the containers that are associated with the
transportation to move through the loop again.

*Kanban is a scheduling system for lean manufacturing and just-in-time manufacturing (JIT). Taiichi
Ohno, an industrial engineer at Toyota, developed kanban to improve manufacturing efficiency. Kanban
is one method to achieve JIT. The system takes its name from the cards that track production within a
factory. For many in the automotive sector, kanban is known as the "Toyota nameplate system" and as
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such the term is not used by some other automakers. Toyota, for example, has six simple rules, and close
monitoring of these rules is a never-ending task, thereby ensuring that the kanban does what is required.

Toyota's Six Rules

Toyota has formulated six rules for the application of kanban:
1) Each process issues requests (kanban) to its suppliers as it consumes its supplies.
2) Each process produces according to the quantity and sequence of incoming requests.
3) No items are made or transported without a request.
4) The request associated with an item is always attached to it.
5) Processes must not send out defective items, to ensure that finished products will be defect-free.
6) Limiting the number of pending requests makes the process more sensitive and reveals
inefficiencies.

Kanban (cards)
Kanban cards are a key component of kanban and they signal the need to move materials within a
production facility or to move materials from an outside supplier into the production facility. The
kanban card is, in effect, a message that signals a depletion of product, parts, or inventory. For more
production, and the kanban card signals demand for more product so kanban cards help create a
demand-driven system. It help to lower inventory levels, helping companies implementing such systems
be more competitive.

Figure : Kanban Card

Three-Bin System

An example of a simple kanban system implementation is a “three-bin system” for the supplied parts,
where there is no in-house manufacturing. One bin is on the factory floor (the initial demand point), one
bin is in the factory store (the inventory control point), and one bin is at the supplier. The bins usually
have a removable card containing the product details and other relevant information, the classic kanban
card. When the bin on the factory floor is empty (because the parts in it were used up in a manufacturing
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process), the empty bin and its kanban card are returned to the factory store (the inventory control
point). The factory store replaces the empty bin on the factory floor with the full bin from the factory
store, which also contains a kanban card. The factory store sends the empty bin with its kanban card to
the supplier. The supplier’s full product bin, with its kanban card, is delivered to the factory store; the
supplier keeps the empty bin. This is the final step in the process. Thus, the process never runs out of
product and could be described as a closed loop, in that it provides the exact amount required, with only
one spare bin so there is never oversupply.

Figure: Three Bin Kanban System

Electronic kanban

Many manufacturers have implemented electronic kanban (E-kanban) systems. These help to eliminate
common problems such as manual entry errors and lost cards. E-kanban systems can be integrated into
enterprise resource planning (ERP) systems, enabling real-time demand signaling across the supply
chain and improved visibility. Data pulled from E-kanban systems can be used to optimize inventory
levels by better tracking supplier lead and replenishment times. E-kanban is a signaling system that uses
a mix of technology to trigger the movement of materials within a manufacturing or production facility.
Electronic Kanban differs from traditional kanban in that it uses technology to replace traditional
elements such as kanban cards with barcodes and electronic messages such as email or Electronic data
interchange.

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Figure: Electronic kanban

Advantages of Kanban

1) Optimize inventory and reduce product obsolescence (outdated)

2) Reduce wastes and scraps
3) Provide flexibility in production
4) Increased output (productivity)
5) Reduce total cost
6) Improve production flow
7) Place control at the operational level
8) Improve responsiveness to change demand
9) Better machine utilization
10) Quickly improvement for factory control and work in process (WIP) reduction efforts
11) Reduce or eliminate queue.

Disadvantages of Kanban

1) It is less effective in shared- resource situation.

2) Surge in mix or demand cause problem because kanban assume stable repetitive production plan.

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3) Poor quality in term of scrap and rework also effect its good functioning
4) Kanban does not eliminate variability, so unpredictable and lengthy down time could disturb the
whole system.
5) It is not suited for manufacturing environment with short production run.
6) Kanban not suited for highly variable demand, multi product and good quality product.
7) A break down in kanban system can result in the entire line shutting down.

Poka Yoke:

 Poka-yoke is a Japanese term that means "mistake-proofing" or "inadvertent error prevention".

 A poka-yoke is any mechanism in any process that helps an equipment operator avoid (yokeru)
mistakes (poka).Poka-yoke is a technique for avoiding simple human error in the workplace.
 Also known as mistake-proofing, good-proofing, and fail-safe work methods, poka-yoke is
simply a system designed to prevent inadvertent errors made by workers performing a process.
 The idea is to take over repetitive tasks that rely on memory or vigilance and guard against any
errors.
 Poka-yoke can be seen as one of the three common components of Zero Defect Quality Control
performed by Japanese companies.

 Dr. Shigeo Shingo, a renowned authority on quality control and efficiency, originally developed
the mistake-proofing idea. Realizing its value as an effective quality control technique, he
formalized its use in Japanese manufacturing as the Poka-yoke system.
 Poka-yoke is based on prediction and detection. That is, recognizing that a defect is about to
occur or recognizing that a defect has occurred. Consequently, there are two basic types of poka-
yoke systems.

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 The control poka-yoke does not allow a process to begin or continue after an error has occurred.
It takes the response to a specific type of error out of the hands of the operator.

 For example, a fixture on a machine may be equipped with a sensing device that will not allow
the process to continue unless the part is properly inserted.

Example Simple Plug in System as Per Poka Yoke

 As a matter of fact, it won't fit into the drive at all unless properly inserted. A second type of
poka-yoke provides some type of warning when an error occurs.
 This does not prevent the error, but immediately stops the process when an error is detected. This
type of poka-yoke is useful for mass production environments with rapid processing as the
device prevents mass production of scrapped material.

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The potential benefits poka yoke describes as:

 elimination of set-up errors and improved quality

 decreased set-up times with associated reduction in production time and improved production
capacity
 simplified and improved housekeeping
 increased safety
 lower costs
 lower skill requirements
 increased production flexibility
 improved operator attitudes.

Prepared By
Er. Manoj kumar Rout
Asst. Professor,
BIITM, BBSR.

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