Original Date: 11/12/2001
Revision Date: 01/18/2007
Best Practice : Common Inventory Account
Frontier Electronic Systems implemented the Common Inventory Account to track and account for parts availability. This single source system enables users to search via part number and provides an electronic method of determining the dollar value of current stock.
Frontier Electronic Systems (FES) previously used an inventory system that employed redundant accounting processes for 505 job-specific and three common accounts. As such, no easy way existed to determine if a specific part number was in stock and thus, the same part often was purchased unnecessarily for multiple jobs. Visibility was limited among accounts and required the creation of multiple inventory transactions. Most steps were performed manually which resulted in increased costs to the company and its customers. FES resolved this situation by implementing the Common Inventory Account.
The Common Inventory Account provides status of all parts across all programs. This single source system allows users to check for parts availability by searching via part number to reveal all assets. Inventory is now tracked as company assets, which allows direct issue to programs and eliminates the need for transfers. The accounting of material costs is performed electronically, via a Deltek purchasing and accounting system, which eliminates the need to re-enter data and reduces the potential for errors.
The Common Inventory Account enables FES to increase the visibility of parts availability, thereby greatly reducing the risk of buying unnecessary material. The system also provides an electronic method of determining the dollar value of current stock. The value of inventory made visible through this process is approximately $1,100,000 up from $2,000. In addition, FES reduced the receipt-of-contract to customer billing cycle time from 90 days to 60 days, and realized an 80% reduction of material planning hours for a 100-line bill of material list.
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